The last minute and presumably reluctant release of their gender pay gap reports earlier this month by the majority of companies with over 250 employees warned us that there would be some difficult reading. No doubt hoping theirs would be buried in the swamp of thousands of others if they left it to the last day shows that leaders know full well some of the inequalities that still exist in their organisations. I know that in some instances PR consultants as well as lawyers have been hauled in to restore any brand reputational damage.
Yes the gender pay gap is a clumsy measure. To know that there are more men at the top of almost all organisations is nothing new to us, but it is still uncomfortable to see this uneven representation when it is laid out in statistics. And as well, to see this vertical segregation of men and women result in some huge pay disparities. But the exercise is useful because by looking closely at the figures we can also use them to see where more work or even some work needs to be done.
Vertical and horizontal segregation
The publication of the quartiles is revealing and these numbers are invaluable to companies in any gender audit. In the vast majority of organisations women dominate the bottom two quartiles and it switches for the next higher two. Looking at ways to promote women into more senior positions is on most companies’ to do diversity list and efforts can be redoubled. The missing statistic which I am sure companies may have themselves and should also look at it is in which divisions in the organisation men and women are working. Horizontal segregation is as important as vertical segregation. Who works where and what is the impact on gender pay differentials? Are women over represented in certain departments? Which departments are most valued? This should provoke a debate on the meaning of value and whether it is time to address some of the assumptions that dictate levels of pay.
A further line of questioning for organisations is this. Is there a correlation between the highly paid parts of an organisation and their cultures? Does the culture operate to exclude and/or marginalise women from the most highly prized parts of a company? In my experience this is very often what happens and my survey is designed to capture this kind of exclusion / marginalisation.
A useful measure of success of diversity initiatives
The gender pay audits can be used as a measure of success of gender diversity initiatives. Organisations are part of a wider labour market with its own inequalities and that itself is part of wider society where there is still gender inequality. So there are limits on what can be done. But some organisations have worked hard over many years to achieve better representation of women throughout their organisations and it is interesting for these companies to see when and to what extent the work has paid off. Certainly a company like National Grid which has invested in many years of diversity work shows that even a numerically male dominated organisation can still achieve good results in gender parity.
Women at National Grid make up less than a third of the bottom quartile but are still nearly a quarter of the top quartile – a far less differential than in many female dominated companies. And the pay gap is much smaller than the average with women’s median hourly rate being only 1.9% lower than men’s.
A female dominated company, Marks and Spencer also started implementing equal opportunities policies years and years ago like other retailers with predominantly female workforces. Women’s representation throughout the organisation is fairly consistent and two thirds of the top quartile are women with 75% in the lowest quartile. The median pay gap is very low at 3.3% (mean 12.3%)
However some organisations have found it difficult to achieve good results despite a focus on gender equality and diversity. Goldman Sachs has been noisy enough about gender equality over the years. It has even won an Opportunity Now award a few years for its initiative 10,000 Women which aimed to provide microfinance for this number of women in Africa. However closer to home it is struggling to get women into senior positions. Only 17% of the top quartile are women whilst 62.4% of the lowest quartile are. Women’s mean hourly rate is 55.5% lower than men’s and median rate 36.4% lower.
The bonus gap
Almost everywhere I looked, whatever the size of the median hourly pay gap, the bonus gap was way, way bigger. Goldman Sachs, renowned for its huge remuneration packages, published a whopping 72.2% mean bonus pay gap (67.7% median).
And in organisations where the pay gap hourly rate figures were ‘good’, these were often not matched by similar size bonus gap figures. At Marks and Spencer although more women (76%) than men (66%) received bonus pay the bonus pay gap is vastly skewed in favour of the minority of men, with the gender gap shooting to 53% mean (15.9% median) lower for women. I do think the mean is important to look at when talking about bonuses because these large gaps mean the figures are being skewed by some very large numbers at the top, an important part of the story.
Ernst & Young, another organisation with an exemplary history of diversity and inclusion work, reported a 15% pay gap with 35% of women making up the top quartile. Yet when it came to bonuses a similar pattern emerged. Women’s mean bonus pay was 43.5% lower than men’s and women’s median bonus pay is 35.2% lower than men’s.
McKinsey has been consulting on and researching the benefits of gender diversity for a number of years now, publishing their reports Diversity Matters annually. The management consultancy had reasonably good statistics for women in the top quartile… 35% were women compared to the bottom quartile where 60% were women and the median hourly rate was a little below the average at 14.3%. However these relatively good figures get blown out of the water with the publication of their bonus figures. Women’s mean bonus pay was 76% lower than men’s and 52.5% lower than men’s (median).
Whilst companies sought to explain differences in pay by the fact that there were not enough women in senior positions they were pretty silent on the bonus differences.
The pattern I see in these reported figures is consistent. It is that whatever the demographic of the organisation, or how evenly distributed men and women are throughout an organisation, there exists a top most senior group of predominantly men whose pay is so high it skews the figures dramatically (you can tell this from the mean averages of bonuses as against the median).
It is to be applauded that bonuses were included in the reporting requirements as one of the biggest obscurers of pay is the bonus culture. The accepted use of the bonus system to pay men disproportionately more than women needs to be challenged.
The glass ceiling is in fact very flexible… it shifts like cling film to protect the most elite, the most powerful and the best paid in any organisation. Yes, we are talking at this level about the kind of salaries few of us would dream of, but the exposure and analysis of this is important when addressing the lack of women in leadership roles.