Money

The Gender Pay Gap – Don’t We Have Bigger Problems?

We're dealing with a larger problem of workplace culture, according to columnist Jayne Backett.

By Jayne Backett on April 04, 2017 10:58 am

“Man serves the interest of no creature except himself.”
— George Orwell

We are approaching fifty years since equal pay legislation was introduced in the UK, which is effectively half a century of organisations lying about gender pay equality in the workplace. It is also several decades of witnessing ever escalating short-termism in the way our businesses are being managed. The bonus culture has effectively sent people crazy. They all want to live like Beyoncé and Jay Z so they can Instagram their albino crocodile leather luggage being shipped first class to Antigua. Nothing else seems to matter.

A business will have star performers, and employers will want to reward them for their value in order to retain them. There is really nothing heinous about this concept, and I am always baffled when people are offended by a genuine meritocracy. No business ought to be guided by the lowest common denominator level of performance because it isn’t permitted to incentivise people through pay. However, we’ve lost a sense of value for steady leadership, for investing in the longer game, for loyalty of our workforce, for fostering trusted relationships with business partners, and for client-driven service.

Take Tesco as a classic example. According to published data, the UK’s biggest retailer doesn’t have a gender pay gap to speak about, yet it is reported to be shelling out £235m to settle investigations with the Serious Fraud Office and the Financial Conduct Authority for “aggressive financial accounting”. Essentially it is claimed that Tesco behaved reprehensibly towards its suppliers and paid them as and when it felt like, or perhaps not at all, so as to distort its profits.

Reading an account of the Tesco culture from whistleblowers is like a re-read of Animal Farm. Napoleon the pig seemed, by all accounts, to have been reincarnated as the former Chief Executive of Tesco; as reported by the Independent, he ran the organisation “like his personal fiefdom,” continuing to isolate himself from all forms of accountability and visibility.*

We’ve got bigger problems than a gender pay gap; we’re dealing with a macho culture of middle-class “must haves”. Management teams need to re-visit first principles and ensure that departments function symbiotically to check and balance one another and that no single person or group becomes more important than the overall business and its customers.

That all said, I wholeheartedly welcome the introduction of the legislation that takes effect this week to require a host of employers in the UK to publish statistics on their gender pay gap. Private sector employers with over 250 employees will now have to collect data on their gender pay gap in readiness for publication on their websites by or before 4 April 2018. They will have to make the information available annually and accessible to employees and the public for up to three years, and it will begin to flush out information that has been conveniently opaque for too long.

The UK government, bless them, has been trying to take a soft approach to the issue for a while by creating an initiative in 2011 called “Think, Act, Report,” which was designed to source out companies who would voluntarily agree to find ways to tackle gender inequality in their workplace. A UK newspaper, The New Day, indicated this time last year that five years on from the commencement of that initiative, only 11 of the 300 companies that had committed themselves to the scheme had actually published their gender pay statistics. Clearly the soft approach didn’t work, and legislation mandating the release of the data was needed.

The requirement to publish the data is, in itself, a means to an end, and there is no particular sanction for non-compliance. The Equality Act 2006 established a public body called the Equality and Human Rights Commission that could potentially choose to investigate and penalise those in breach. Naturally, of greater concern to these businesses will be the tide of negative press and the social-media diatribes that would undoubtedly follow a decision not to publish the data.

Asset manager giant Schroders has taken the decision to publish their gender pay gap details ahead of the deadline. Brace yourselves as it isn’t pretty and it fiercely supports the theory that men in the financial services sector are gorging themselves when it comes to the bonus pot. The data is analysed on both a mean and median basis and is broken out into quartiles so that the disparities can be demonstrated through the seniority curve. Almost all of Schroder’s employees, both male and female, are entitled to bonuses (variable pay). When comparing fixed salary at a 2016 snapshot, the mean gender pay gap is 31% and the median gap is 33%, but the fuller picture is provided by the variable pay differential, which demonstrates a mean gap of 66% and a median gap of 59%. Schroders’s defence to their reported pay gap is that there is an under-representation of women in senior management, with 36% of women in the second quartile and 21% in the top band.

I’ve bemoaned the under representation of women in the senior work space for ages. I’m very happy, in the spirit of equality, to point fingers at women themselves who want to progress, who have the skills to progress, but who would rather vacuum the office floor than express discontent about their pay or seniority status. You have to speak up for yourselves, ladies. As naked data now begins to stare us straight in the face, the question I would ask about the gender pay gap is, so what? What are we going actually going to do about it?

Jayne BackettJayne Backett is a partner at Fieldfisher LLP in London specializing in banking transactions, with a particular focus on real estate financing. Fieldfisher is a 600-lawyer European law firm, with a first-class reputation in a vast number of sectors, specifically, financial institutions, funds, technology and fintech, retail, hotels and leisure, and health care. Jayne has a depth of experience in mentoring and training junior lawyers and has a passion for bringing discussions on diversity in law to the forefront. She can be reached by email at [email protected], and you can follow her on Twitter: @JayneBackett.