Gender Equality Plans help address gender pay gap in Business and Management Schools

Robyn Remke, Valerie Stead, Marina Yusupova, Claire Leitch (Lancaster University)

When it comes to gender pay gap (GPG), the latest figures indicate that there are reasons to celebrate and areas where we need to continue to work. Many people (and even some business leaders!) think GPG is a result of side-by-side comparisons of men and women employed in the same or identical job. But this is a misunderstanding of the metric. Gender pay gap (GPG) is, essentially, the difference between what men and women, collectively, earn in paid work, usually measured in average hourly earnings. The mean and median hourly earnings as well as bonuses are calculated to established differences based on sex. More comprehensive metrics consider the gaps in labour market earnings of men and women and reveal ongoing patterns of systemic disadvantaging of women impacted by forces such as occupational segregation, family leave policies, and promotion opportunities. These practices perpetrate workplace inequity and widespread discrimination of women around the globe. Importantly, these metrics also reveal organisational waste of resource and talent, leading to inefficiency and loss of productivity.

Despite years of efforts to reverse gender pay gap (GPG) in the UK, it persists. We know this because since 2017, all organisations in the UK who employ 250 or more employees – including Higher Education Institutions – must report their GPG annually. The public is now privy to the GPG for most organisations, bringing insight, and sometimes criticism, to some of our most popular and well-known organisations (E.g.: See the report from BBC Studios as well as criticism resulting from earlier reports).

On a positive note, across most industries, GPG is declining; for example, the Department for Education’s 2021 Gender Pay Gap report, released in January, revealed that the government’s GPG headline figure has decreased to 4.0%, which is a reduction of 3.9 percentage points compared to 2020. But, this figure is slightly misleading as the methodology for calculating GPG has changed from 2020 to 2021. Without going into painstaking detail, the new methodology uses annual salaries (taken in March 2020) to determine hourly rates, which are then compared based on sex.

The recent change of methodology aside, the concept of GPG continues to be a contested if not confusing concept. Governmental GPG reporting is a rather blunt measurement with little ability to account for nuance, which can lead some critics to dismiss its relevance outright. Typical GPG metrics often fail to account for differences in occupations, types of work, full and part-time work, and even geographical location. There is also no accounting for personal preferences, cultural trends, and social support that impact workplace practices. Increased caring responsibilities during the Covid-19 pandemic meant more women left or reduced their level of participation in the workforce. We still do not know the full impact of this ‘great resignation.’ As the world enters an economic cycle of increased inflation, decreased productivity, supply-chain shortages, and possibly recession, we know that women’s employment and wages will be further impacted.

While the concept and metrics of GPG can be someone confusing or unclear, the resulting point is not: Business and Management Schools must take action to address the ongoing disadvantaging of women. Gender Equality Plans (GEPs). Research from partner universities in the TARGETED-MPI project indicates that bespoke GEPs that are created and adapted in response to the specific organisational, industry, and cultural influences and constraints of that particular group are more likely to result in positive change. Informed by detailed cultural and organisational analysis of the institution, GEPs are poised to address the specific barriers that prevent gender pay parity to date. With this caveat in mind, some general best practices include:

• Transparent GPG reporting: In the UK, government requirements have forced the issue of GPG into public discourse. However, confusion about the actual meaning of the GPG figures and questions about how these figures are ascertained means that conversations about correcting the GPG are often distorted or lost. Transparency and full explanations as to how GPG is measured in each organisation decreases the chances of misunderstanding and shifts the debate from the GPG metrics to solutions for the problem.
• Addressing specific cultural and organisational barriers: There are often a number of structural forces that create and then perpetrate GPG. For example, salary negotiating practices vary not only by national cultural practice, but within various industries. Organisations like B&M schools who hire global talent from a variety of disciplines and industries should be more streamlined and transparent about if and how salaries are negotiated. In addition, even in organisations that offer comprehensive and supportive parental leave, often employees and, more importantly, managers, are unaware or even misinformed as to what the policies actually provide. Without correct information and implementation, women are more likely to make career sacrifices(which result in increased GPG) than men.
• Include GPG into evaluation and reward structures of the organisation: Internal audits are essential tools for helping to measure, track, and, ultimately, reduce GPG. Holding managers accountable for GPG within their departments and groups will create a sense of ownership and responsibility for the gap, which could/should inspire managers to be more proactive at addressing the causes of GPG. Importantly, managers, including academic directors in B&M schools, many of whom may have little managerial training, must be trained to understand the nuances of GPG. They should be held accountable for GPG within their departments and groups, but then equipped with tools to correct for gaps and inequalities.