“The gender pay gap is an irrational obsession”. Really?

Spiked’s Education editor and Kent University lecturer Joanna Williams chose International Women’s Day to write an article advocating that the gender pay is a myth used by posturing wannabees and politicians to parade their feminist credentials. Talking about posers … Continue reading

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Eliminating the Pay Gap is Long Overdue

This blog was originally published by Opportunity Now, the gender campaign from Business in the Community. All see Race for Opportunity, BITC’s ethnic minorities campaign.

With party conferences coming up, there appears to be political appetite to make the gender pay gap an election issue in 2015. The Liberal Democrats’ Pre-Manifesto policy document promises to bring into force section 78 of the Equality Act, compelling organisations with more than 250 employees to publish details annually about the pay of men and women they employ. The Labour Party is promising the same. Shelved when the coalition government took office, calls to enact Section 78 have grown louder recently. This attention is entirely appropriate and long overdue.

The pay gap is compelling because it provides a crisp measure of systemic inequality by quantifying discrimination in stark terms everyone can relate to. With everyone feeling the pinch of the Great Recession, it is intolerable that some of us, our colleagues, family and friends take home less pay for doing the same work simply on account of being a women, part of an ethnic minority, older, less abled, and so on.

A word on measurement: The median pay gap is the difference between women’s and men’s pay at the midpoint between highest and lowest pay of each gender. The average (mean) pay gap is the difference between the average pay received by women and men respectively. The median is often preferred to the mean or average because the mid-point between highest and lowest salaries is not affected by extreme values, for example very high wages paid  to a few high earners or large numbers of very low earners. Extreme values significantly affect the average. That said, using average measures conveys women’s experience of the labour market, since the highest earners tend to be men and very low earners tend to be women.

The most recent figures available put the median gender pay gap for all employees in the UK (full-time and part-time) at 19.7% in 2013, according to the UK Office for National Statistics. In other words, women are paid 80p for every £1 paid to male employees doing the same work. A closer look, however, shows considerable variation. Region, sector, age, ethnicity and whether one is a full-time or part-time employee are all significant factors. EHRC research published in 2011 reported the average gender pay gap across sectors of the economy, including Manufacturing (19.6%), Construction (13.5%), Information and Communications (20%), Financial Services and Insurance (38.6%), Professional, Scientific, and Technical Services (28.2%) and Health and Social Work (28.8%).The 19.3% national pay gap is a slight increase from 2012, and several points higher than the EU average. In a ranking of 27 OECD states by gender pay gap, the UK has the eighth largest inequality, and the fourth largest among European OECD state.

Although the gender pay gap has been a focus of media attention recently, it is not the only pay gap nor necessarily the largest. For example, the BAME pay gap In London was 24.4% in 2012 – more than double the gender pay gap during the same period, according to the Mayor’s annual Equality Report. The ethnicity pay gap affects ethnic minority men more than ethnic minority women, who tend to receive similar earnings to white women, according to EHRC research from 2009. Among BAME women, however, Black Africans and Bangladeshis are at greatest disadvantage.

With everyone living longer, we need to give attention to the age pay-gap too. Recent research shows the average pay gap widens to around 25% for all cohorts above 40 years.

Pay gaps vary by equality strand, region, occupation and sector. However, there can be no doubt about salience or impact. Consider trust. Opportunity Now’s ongoing Project 28-40 research (see this earlier blog) found a significant difference between women’s and men’s confidence in wage equality at their organisation.

Female respondents answering question I believe there is equal pay in my organisation

Males respondents answering question' I believe there is equal pay in my organisation'

The implications of such significant disparities across all sectors for employee engagement and well-being, organisational culture, staff retention and productivity cannot be underestimated.

Other factors should motivate action on eliminating pay gaps. It is illegal and costly. Birmingham Council faces a £1 billion bill for settling years of pay discrimination. Companies and organisations are best advised to get their house in order sooner rather than later – it is a question of when not whether section 78 will come into effect. Delay and prevarication is the expensive option, in terms of fines and compensation as well as reputation, standing, competitiveness, and ultimately business sustainability.

Opportunity Now recommends ensuring a single reward structure for all employees as well as undertaking an equal pay audit and publishing the results, among many additional actions. Our 2013 benchmark analysis showed that organisations with the most women in management and senior management positions are more likely to have a single reward structure and publish their pay audit results. The 2014 analysis will be published in early December.

It hardly needs repeating that tackling and eliminating discrimination is also the right thing to do. It’s good for women, minorities, and others routinely underpaid. It is good for their financial security and the financial resilience of households. It weaves strength and sustainability into the social fabric.

Sometimes we think of the business case and the moral case as two clear and distinct rationales for promoting equality in the workplace. Yet research shows that organisations that recognise intersections and work productively with the tensions and contradictions tend to have better outcomes for their employees and their businesses.

The time to grasp the challenge is too long overdue.

Project 28-40 report is here

Project 28-40 report

 

This past week was the long-anticipated launch of the report on Project 28-40, a truly massive survey of women’s experiences in the workplace undertaken by Opportunity Now in partnership with PwC. The survey was aimed at women aged between 28 and 40 years because we know that at around 28 years is when career opportunities available to women and men begin to diverge, women’s careers plateau more than men’s do, and the pay gap widens. Some of this is related to starting families, but that raises more questions. Working on the hypothesis that the problem is with workplaces rather than women, we wanted to understand what was happening. So we asked women (and men) to complete our survey. And did they have something to say! For the 2-3 months the survey ran, more than 23,000 women and 2,000 men spent on average 26 minutes completing the survey. For those of you in the research business, you will know that is a phenomenal response.

Links below will take you to the report, video links and news coverage.

The top line findings are that women are ambitious and confident about their careers. They feel supported by their partners, but less so by their employers. Employers on the other hand are failing to get even the basics right. Workplace policies are failing to create positive and enabling workplace environments, a failure most evident in the staggering incidence of bullying and harassment (52% and higher in some sectors and for some marginalised groups, notably women with disabilities and ethnic minorities; that figure excludes sexual harassment, reported y 12% of our sample). We also found that men do not perceive the challenges women experience in their professional development, not that surprising but nevertheless alarming given that women and men agree that most workplaces are still male-dominated.

If you’re wondering how much any of this matters, businesses are coming around to the challenges of encouraging and supporting women’s professional development. They care for several reasons, including that inequality is objectionable to core human values. They also care because inequality is costly. If organizational policies and development programmes are not delivering results, it’s just money down the drain. If oganisations are investing a lot of money recruiting women but those women are feeling maligned, undervalued, or mistreated, organisations will not get the productivity and commitment they want from their employees, their workforces will continue to be distorted compared with wider society and ultimately constrain new business opportunities, and they will loose out to their competitors in the battle for talent.

This week’s report is only the beginning. We’re moving into the second phase, and currently deciding directions we want to focus on for further research. Definitely it will include some sector analysis, and more focus group work to deepen our understanding. There’s talk of rerunning the survey in thee years to see if there’s been progress.  This is only the beginning.

Here’s a round up:

Download the report here

Watch a short YouTube video about key findings

Kathryn Nawrockyi, Opportunity Now director, on the BBC Today programme: http://www.bbc.co.uk/programmes/b03zbv01 (from 15:34)

An article on Guardian Women in Leadership: http://www.theguardian.com/women-in-leadership/2014/apr/02/52-percent-women-experience-bullying

HR Magazine – Opportunity Now survey reveals gap between policy and reality for women at work

Financial Times – Survey shows 64% of UK women bullied or harassed at work

The Times – Half of young women are bullied in the workplace

Daily Mail – More than half of women say they are bullied at work

Boardroom Mum – Organisational policies failing on actual female employee experience

Balancing Act: Family-friendly practices may burden childless workers

 

The Mandela Legacy

I wrote a blog for Africa is a Country, in memory of Nelson Mandela. Read the full blog here. 

… Madiba’s example of forgiveness, reconciliation, and humility are inseparable from his unwavering commitment to combat white supremacy, and promote equality and justice. That commitment, conveyed in his leadership, provided a beacon to the negotiations to replace apartheid with democracy. We saw it flash bright at CODESA after De Klerk used his closing remarks on the opening day of the CODESA negotiations to complain that the ANC had not abandoned its armed struggle, even as the parties were now gathered around the negotiating table. Mandela had already given his closing remarks and De Klerk was to have been the last speaker of the day. But an incensed Mandela insisted on returning to the podium where he castigated De Klerk so vehemently that two decades later De Klerk is still licking his wounds: “Even the head of an illegitimate, discredited, minority regime as his, has certain moral standards to uphold … he has abused his position because he hoped that I would not reply. He was completely mistaken.” Mandela went on to remind the audience that the armed struggle was suspended to give negotiations a chance and that it was one of the agenda points for the negotiations begun that day. … continue reading

Recent changes to the UK Companies Act should improve gender equality

The public debate around women on company boards galvanised by Lord Davies’ review in 2010 appears to have either stalled or widened, depending on who you talk to – and both perspectives may be right. On the one hand, business leaders who understand the value of workplace diversity argue for widening the debate. Sir Roger Carr, the outgoing Centrica chairman, BAE Systems chair designate, and keynote speaker at this month’s Women’s Business Forum annual meeting, has called on businesses to embrace diversity “in all its forms”, pointedly referencing ethnicity and sexuality.

On the other hand, progress has been stubbornly slow. Just 18 out of 292 FTSE 100 executive directors are women. Among the FTSE 250 it is worse. Not surprisingly, the debate is shifting focus from directorships as a whole to executive directors and the talent pipeline.

Cue amendments to the Companies Act. Effective this month, UK-listed companies must include in their annual reports a new Strategic Report that discloses, among other impacts, the company’s overall gender profile, in other words the total number of employees of either sex, as well as the breakdown at levels of directorships and senior managers.

No doubt some will bemoan the added monitoring burden. Yet we know from our diversity benchmark that organisations that measure and monitor their talent pipeline through a gender lens achieve faster promotion rates for woman than companies that don’t. These pro-active companies will benefit from the well-documented advantages associated with workplace diversity sooner than their competitors: for starters, higher employee engagement and performance, improved retention rates, better innovation and problem-solving, and better quality of services to an increasingly diverse and demanding customer base, all of which means a more attractive proposition for investors, improved corporate reputation, and greater public confidence.

The new reporting regulations won’t achieve these outcomes on their own. But by compelling businesses to monitor gender diversity in their talent pipeline, companies no longer have an excuse not to. More importantly, the savvy among them will seize the opportunity.

This is where the regulations are most significant, because the public reporting requirement sharpens competition between the UK’s largest businesses to improve their gender mix throughout their pipeline and ultimately their executive recruitment pool. Companies seeking to build reputations as employers of choice will report more widely, for example by comparing across different business units or with previous years. Once a gender-monitoring infrastructure is in place, it is not difficult to scale. One can easily imagine businesses broadening the remit of what they monitor and report, as Sir Roger recommends and many BITC members already do. And let’s not forget the transnational implications for (and advantages to) globally trading businesses listed in the UK.

Some will say I am being naïve and the new reporting requirements won’t make much difference. In the short -term, possibly not—although businesses ought to prepare for closer scrutiny by an already sceptical public. Looking further ahead however, the new regulations should be seen as an important part of the jigsaw and another avenue of activity through which the workplace diversity agenda is achieving critical mass.

A small but telling detail of this trend is revealed in the new regulations too. The regulations define a “senior manager” as an employee who “has responsibility for planning, directing or controlling the activities of the company, or a strategically significant part of the company”. The Financial Reporting Council’s (FRC) draft guidance on the new regulations advises that the new regulation’s definition is wider than the definition in both the International Accounting Standard and International Financial Reporting Standard applicable in the UK and Ireland. The point of the wider definition is to enable an analysis that, as the FRC puts it, “should enable shareholders to ascertain the number of persons of each sex who might, in due course, attain a position that would be classified [as director] or an equivalent position.” In other words, the definition of senior manager against which listed companies henceforth must report their gender breakdown should take into account where in the pipeline the role sits as well as progression routes available from there.

Requests for advice and guidance related to diverse pipelines are among the most frequent Opportunity Now receives from our members. They have also contributed to informing Opportunity Now’s forthcoming 28-40 Project, a ground-breaking study of women’s experiences in the workplace. The new public reporting requirements will spur this growing focus on the talent pipeline, and represents an invaluable opportunity for businesses to establish the monitoring processes and baseline data with which to diversify their workplaces and develop their talent.

(This blog was originally published on Opportunity Now.)

A human rights based approach to business?

Recently I attended the Opportunity Now Best Practice Spotlight at Microsoft’s offices in London. Opportunity Now is the campaign on workplace gender diversity from Business in the Community, the business-led charity for responsible business. Disclosure up front: BITC’s diversity campaigns Opportunity Now and Race for Opportunity are my day job, which is also why I attended the best practice showcase.

Presentations from a few of last year’s Opportunity Now award winners were timed to coincide with the opening of this year’s awards entry period (in partnership with The Times Top 50 Employers for Women, read about the Awards here). With presentations from some of the world’s largest companies, including BNY Mellon, KPMG, State Street, Microsoft, PwC and BAE Systems, I was struck by how far the gender diversity agenda has advanced. Although much work remains to be done, as is amply demonstrated in research and monitoring by, among others The 30% Club and Cranfield’s FTSE Female Index, not to mention the continuing challenges STEM industries face attracting and retaining female talent, there is also ample evidence that workplace gender equality and inclusion has been widely accepted in principle, even if unevenly in practice. We know from our annual benchmark that practice is improving too.

So, while I was listening to the presentations I began thinking about human rights. I wondered whether there are lessons to draw from the workplace diversity and inclusion example (of which gender diversity is one strand)? I’m not usually a fan of models of progression through successive stages, but there is a sense in which the business and human rights agenda is at a similar point to where the diversity agenda was a few years ago: a moral case framed in terms of social justice has finally found some traction, in the form of an expanding raft of ‘soft law’ guidelines and principles, and a range of legislative options that have or are about to come into effect, notably reforms to the UK Companies Act, with its transparency and accountability implications for UK-incorporated  companies. As the UK seeks to carve a thought-leadership role among EU and OECD countries with its recently announced Business and Human Rights Action Plan, we can expect to see similar plans and legislative efforts in other countries soon.

I think where the diversity agenda is a little bit further down the road than the emerging human rights agenda is with respect to the business values case and organisational culture change. Workplace diversity good practice offers some useful pointers on incorporating human rights considerations in business decision-making. Not least, they can help us get from a compliance driven, risk management approach towards a human rights-based approach that is authentic, impactful, and makes good business sense.

So what is driving organisational culture change for diversity and inclusion? And how can it be adapted to drive an agenda for advancing human rights in business? A lot more than can be summarised here, but here are a few ideas:

1. Public commitment: a loud and proud commitment to human rights. Many big international corporations are publishing their human rights commitments (for example, BPCoca-Cola, HitachiMicrosoft). BP’s critics might dismiss public commitments as empty public relations, but at least there’s a commitment against which BP can be held accountable. It’s a start,  not an end.

2. Champions: a champion is someone inside your organisation, preferably c-level, who accepts responsibility for advancing a human rights agenda in your organisation. Passionate about the issues and a skilled communicator, negotiator and influencer, their task is to develop and lead on the organisation’s human rights strategy.

3.  Business case: what is the rationale for developing a human rights-based approach to business? What do business operations look like when oriented by positive human rights outcomes? Beyond improved risk management, benefits could include improved stakeholder engagement and reputation advantages with revenue and cost benefits related to business development, client and customer satisfaction, employee engagement, talent recruitment and management, and improved relationships with suppliers and local communities. Be clear about how and why your organisation will benefit from a human rights based approach, and make sure human rights implications are  considered in all objective setting and planning decisions across different business units.

4. Strategy: be clear about what you want to achieve. What is your vision of a human rights-based approach? How will your organisation achieve it? What are the available levers that best optimise the input-impact ratio? Previously I have mentioned David Stubbs,  former Head of Sustainability at London 2012, who explained to a Net Impact meeting a few months ago that procurement and staff training were the twin-pillars of the Games’ sustainability strategy (read a case study here). Supply chains and procurement policies are obvious levers, but there are other ones too, including social and environmental impact assessments, and of course workplace diversity and inclusion. Plan the architecture of influence and accountability, and resource it with a budget and a team.

5. Monitoring and evaluation: you can’t manage what you don’t measure. Begin with an audit so you have a baseline, set realistic and achievable targets and be clear about performance indicators and accountability. Human rights performance measurement is an increasingly active area of collaboration and conferencing for many companies and organisations in the business & human rights arena. Mazars offers clients a human rights auditing service and Maplecroft offers a human rights benchmark. The EHRC has published a Human Rights Measurement Framework, and Shift has discussion papers on, among other topics, reporting and assurance standards, the latter in partnership with Mazars.

6. Communication: be sure to share the message that your organisation is actively engaging its responsibilities to respect human rights. Engage employees and other stakeholders, communicate success, and be honest about your organisation’s performance and challenges.

These ideas are adapted from some of ON’s and RFO’s good practice recommendations for diversity, but are surely useful for human rights more generally. That so many companies and organisations are already engaging these challenges bodes well for advancing rights-based approaches to business. 

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Once more – the case against corporate social responsibility

An interesting and provocative article appeared in the Wall Street Journal recently. Written by Aneel Karnani, it makes the case against corporate social responsibility in plain and simple terms: executives will only act in ways that might be called socially responsible when their interests in doing so align with their obligations to shareholders to maximise profit. When these interests aren’t aligned, shareholder interests will always win.

Compelling in its simplicity, Dr. Karnani’s argument is superficial and relies on questionable assumptions.  To begin with, his list of scenarios is predetermined to lead him to his preferred option: business self-regulation. That sits uncomfortably with his insistence that “the only sure way to influence corporate decision making is to impose an unacceptable cost—regulatory mandates, taxes, punitive fines, public embarrassment—on socially unacceptable behaviour”. I think he’s right, business decisions are driven by desires to improve the ratio between increasing profits and minimising costs. But that ratio can be calculated in many different ways. One view of corporate responsibility (not just ‘social responsibility’) is simply that it takes into account a wider range of variables, and transfers back to businesses various costs of doing business that for the longest time have been displaced onto workers, communities, shared eco-systems, future generations etc.

The real costs of doing ‘business as usual’ are unacceptably high for businesses. There is a case for imposing a form of calculation that insists on that fact – if Dr Karnani is correct, businesses will then modify their socially unacceptable behaviour. That’s the minimum glass-half-empty version. But he also seems ignorant of the data, or at least unwilling to acknowledge it. The notion that execs are beholden to shareholders whose motive is profit maximisation is compelling. Yet global investment data shows a consistent trend: ethical funds outperform non-ethical funds and sector benchmarks. Corporations and investment agencies signed up to (voluntary) standards like the Equator Principles and the UN Principles for Responsible Investment give a better return to their shareholders at that same time that they fulfil their ethical responsibilities. That’s not merely a happy coincidence, there is a causal relation. It is early days, research is ongoing. But the trend is clear, even as ‘soft law’ voluntary standards are being strengthened – the Equator Principles have just been updated to a third version and the UN Guidelines on Business and Human Rights are finding their way into hard law. In light of all this, businesses persuaded by Dr. Karnani’s argument will have an increasingly difficult time persuading smart shareholders and other stakeholders previously excluded from profit calculations of the sustainablity of their business model.