In the last week I had the pleasure to attend not one, but two influential events driving the agenda for ethnicity pay gap reporting in the UK. This blog post summarises what makes pay gap reporting so important, and lessons to take away from both events.
How my advocacy for pay gap reporting started
Pay gap reporting first caught my attention when the UK introduced gender pay gap reporting in 2017. I was studying for my Organisational and Business Psychology MSc, and carried out a small study to research how news of their organisation’s pay gaps affected women working in tech – where gender disparity is a well-known issue that plagues the industry. Concerned that news of a pay gap may cause more harm than good to women’s motivations to remain in their tech career trajectories, my results were encouragingly optimistic. The women participants welcomed the report, and found it reassuring to see what they “already knew” quantified into a measure that showed action was urgently needed. Here was hope for change.
Roll forward three years, my studies had concluded, and I was working as Director of People Data and Insights at a global industrial software firm. Following George Floyd’s murder, the CEO committed to provide greater support to our Black and ethnic minority colleagues, and introduced ethnicity pay gap reporting as a means to demonstrate transparency and drive accountability. I had the privilege to be asked to lead this important project – from tragedy, here was new hope for change, and with my data governance and analysis skills I felt honoured to be able to play a part.
You can read more about that project in this case study report, but to cut a long story short, the project was a success. From a starting point of not even having data, we built a built a foundation of trust with employees and leaders, resulting in over 85% of colleagues confidentially sharing their ethnicity and an evidence-based action plan for change. Like with gender pay gap reporting, colleagues welcomed the report and the new agenda for change.
The company became only the 13th FTSE 100 organisation to have reported its ethnicity pay gap, and with the Director for Diversity, Equity, and Inclusion, we brought together those organisations and investigated the steps we’d each taken to achieve reporting. We convened an event in Parliament, and I was thrilled to present the findings alongside a colleague from another FTSE 100 firm.
An imperfect measure
The pay gap is far from a perfect measure, as any single metric is a poor representation of a complex social issue. It is also often misunderstood as meaning a gap in pay equality, which is when people are not paid equally for the same work. That’s illegal (although of course can still happen), and the law will be strengthened under the new The Equality (Race and Disability) Bill to be introduced by the current government. The same bill will also make Ethnicity and Disability pay gap reporting mandatory, a step which I strongly welcome.
The meaning of the pay gap is the average pay of one group (e.g. one ethnic group) across the whole company, compared to the average pay of the dominant group (e.g. white people) in that company. More than any other factor, the pay gap is dominated by differences in representation in the job roles that attract higher pay – i.e. typically the more senior and leadership positions. So if the percentage of ethnic minority people in senior jobs is less than the percentage in lower level jobs (and conversely a that means a higher percentage of white people in senior jobs than lower level jobs), there will be a pay gap.
Despite its shortcomings, the reason I like the pay gap measure is it because it brings together the outcomes of multifaceted social and organisational dynamics to highlight the impact of disparities to communities. Those disparities may include being paid fairly, and also fair opportunities to progress and reach higher paid positions.
Event 1: The Ethnicity Pay Gap Summit
So with that background, let me tell you about the two events.
The first was the Ethnicity Pay Gap Summit, led by Dianne Greyson. I’ve followed Dianne’s work since my own experience of leading ethnicity pay gap reporting, and her tireless campaign for mandatory reporting. This was the second Ethnicity Pay Gap summit, and if anything even better than the first that was held last year. Held at Lloyds of London, there was again a fantastic range of speakers and panel events. I particularly appreciated the clever ways the presenters taught the audience the meaning of the pay gap, and how to analyse how it has arisen – considering that not everyone is a data-nerd, but making those insights us data-nerds love very accessible to everyone. That was nicely balanced with a strong people (not just data) focus, and sessions about factors the organisation can control to make change, and employee experience and inclusion.
I came away with some new ideas for additional insights from the demographic data analysis I do with Inclusioneering’s clients, and inspired by the rich discussions both from the panels of speakers and conversations during the networking sessions.
Event 2: Change the Race Ratio roundtable discussion on ethnicity pay gap reporting
A similar topic, but different type of event, Change the Race Ratio brought together HR and diversity, equity and inclusion leaders from their signatory organisations to share insights in a roundtable discussion.
With guest speakers the Minister for Equalities, Seema Malhotra MP, and Jisha Hales from the Office for Equality and Opportunity, this was a valuable opportunity not only to learn from other organisations, but also to support the work of policy makers in preparation for the consultation on mandatory reporting. The Minister spoke about the government’s commitment to grow the economy more fairly, and to shine a light where there is inequality and take action to address it.
There was broad consensus that building colleague’s trust is critical for ethnicity pay gap reporting. Ethnicity pay gap reporting has greater complexity than gender pay gap reporting, but it is achievable with good education, and working to understand the factors behind the pay gap for meaningful, evidence-based action. Accountability and governance are key, and the work must get beyond a tick-box exercise to achieve a compelling plan for systemic change.
Conclusion
I’m encouraged by the increasing momentum and depth of work now happening around ethnicity pay gap reporting. But there is still a long way to go before most large organisations are ready to report. A first step can be collecting data, and working with employee groups and employees to start building a foundation of understanding and trust.
Please reach out to us if you are beginning your pay gap or data analysis journey. We are here to help you.
