Can benefits help close the gender pay gap? ‬‬‬‬‬‬‬

How flexible working for both genders can improve diversity at senior levels and boost profitability as a result

Can benefits help close the gender pay gap? ‬‬‬‬‬‬‬

In brief:

  • Employers report that pay is the same for both genders at any given level, which means there are fewer women in more senior roles.
  • This is largely due to the effects of starting a family, specifically the prevalence of maternity over paternity leave, and flexible, family-related benefits are the first opportunity to address this. The key is to offer them to both parents.
  • The right benefits and communication will not just help to close the gender gap lead to greater diversity among managers, and this has been shown to increase profits.

The government has pledged to close the gender pay gap, and legislated that by April 2018, all large employers will have to calculate and report the pay gap within their organisation. Early reports indicate the scale of the challenge, with companies finding pay gaps of up to 36%. Breaching that gulf requires a co-ordinated effort across HR, and benefits have a vital role to play.

Charles Cotton, Performance and Reward Adviser at the CIPD, comments: “It’s important that organisations recognise the opportunity presented by Gender Pay Gap Reporting. It’s not just about reporting the right figures, at the right time and in the right way. It’s also an opportunity to explore why the gap exists and looking at what practical steps can be taken to reduce it.”

When does the gender gap begin?

There is one striking theme among employers explaining their gender pay gap. The majority of them insist that employees at the same level are paid the same – regardless of gender. The difference, therefore, comes from the fact that there are far more men in the upper echelons of the business, because women take on more caring responsibilities mid-career, and their progression at work suffers as a result.

The gap begins to open when employees have children, and having the right benefits at this stage can keep women on the career track. It begins with ensuring maternity leave is not seen as a barrier to promotion.

Virgin Money, for example, has set a target to achieve a 50:50 gender balance by 2020. It has introduced a range of measures for parents, including an app to enable staff on parental leave to stay in touch with the business and access personalised information. Deloitte, meanwhile, has a maternity returners’ programme, based on guiding and coaching new mothers back into the workforce.

Maternity and paternity leave should be more in tune

Earlier this year, the All-Party Parliamentary Group on Fatherhood reported on the issue, saying that measures to encourage more men to take their share of leave are vital for equality. It has called for three months of non-transferable paid leave for fathers, and a strategy for low-paid jobs.

Duncan Brown, head of consulting at the Institute of Employment Studies adds: “Employers need to harmonise maternity and paternity leave. At the moment most men are offered the statutory minimum, while women are offered higher maternity pay. Men may be entitled to take three months of leave, but while it works against them financially, they will not take advantage.”

Temporary decisions have permanent effects

When women return to work after maternity leave, inequality endures, as they often find themselves sidelined. According to a study by PriceWaterhouseCoopers, three in five professional women who return to work are moved into lower-skilled or lower-paid roles. In other cases, they leave the workforce, become self-employed, go part-time, or move into a part-time job closer to home – effectively downgrading their career.

Unfortunately, while these may be intended as temporary moves, their impact will be permanent. As the CIPD puts it: “If a woman either leaves the labour market altogether for even a short period of time, or continues to work, but on a reduced hours’ basis, she is more likely to be in a low-paid and low-skilled job, and to remain there throughout her working life.”

Benefits for both parents, not one

Once new parents return to work, therefore, benefits need to be designed to provide the practical assistance to enable them both to continue their career unhampered. Childcare benefits can offer a lifeline if they are generous and well considered, but in many cases, employers simply tick the box of enabling employees to salary sacrifice in order to access tax-efficient childcare vouchers. However, care options can go far further, to include on-site childcare, emergency childcare arrangements, leave for caring responsibilities, or flexible working arrangements for unexpected childcare issues.

This kind of flexibility is key. A study last year by the Women and Equalities Select Committee, chaired by Maria Miller, concluded that flexible working lies at the heart of closing the gender pay gap. Parents can benefit from shorter working hours, flexibility over where they work, and specific child-friendly forms of flexibility, such as term-time working or compressed hours. Benefits professionals should therefore look at the package of flexible working on offer, and assess whether it meets the needs of working parents within the organisation.

This needs to continue at a senior level, not just apply to more junior roles, so women can continue to take advantage of flexibility as they progress p the career ladder. Virgin Money, has, for example, introduced a flexible matching recruitment policy. It means that when applicants for senior roles are already working flexibly, the company will commit to matching their current flexible-working arrangements.

Communicate your strategy for both genders

However, Brown points out that providing the benefits is just the first stage in establishing a functional flexible working strategy: timely and effective communication is also essential.

Many organisations focus on the easy wins of talking to new mothers about flexibility, claims Brown – and often on their return to work. However, as the Chartered Institute of Personnel and Development says: “Family leave and flexible working arrangements are not about getting more women into more part-time jobs, but about enabling working parents to redistribute the responsibility for children between themselves, so as to reduce the motherhood pay penalty.” Benefits professionals therefore need to communicate the support available for fathers too at the point when they start a family.

Offering flexibility for fathers helps differentiate an organisation in the recruitment market, because there is a large unmet demand at present. Working Families’ 2017 Modern Families Index found that 47% of fathers would like to downshift into a less demanding role, so they can support their family. However, a Fawcett Society report found that over a third of men with children under the age of 18 say that dads who take time off for childcare reasons are not supported.

Flexibility across the board

Brown says that in order to ensure the benefits are taken up, flexibility needs to go further – to become part of the DNA of the whole business in all roles and levels of seniority.

Flexible working, he says, should be considered attractive by a man in his 50s just as much as a woman in her 30s. “It may be a harder sell, but benefits professionals should rise to the challenge.” He highlights Lewisham Council, an organisation he works with, where the male chief executive works the equivalent of three days a week, and where flexible work for men and women is considered the norm.

For organisations with a cultural barrier to tackle, the CIPD suggests employers start by measuring the take-up of flexible working, and the numbers of men who apply for and are granted flexible working hours – and the level at which flexible working operates. If men are not applying, it says, employers need to consider the cultural changes required to improve take-up among men.

A cultural shift

The Select Committee wants to see all jobs flexible by default, to remove any stigma associated with requesting flexible working. Brown points out: “It wants all roles to be advertised as flexible, unless there is a specific business reason why it can’t be. If every job advert had to offer flexible working, then over time that has to have a cultural effect.”

A commitment to a real change in culture, supported by the right employee benefits, can help close the gender pay gap. Not only will this help employers worried about the PR implications of publishing the details of their pay gap, but it also has the potential to offer a meaningful boost to the business.

Flexibility brings greater diversity, and more profitability

Research by McKinsey found that organisations with more diversity among senior managers were more profitable than their peers. This could be because it enables the organisation to reflect the diversity of their customer base. Alternatively, it could simply mean that by enabling each employee to work to their full capacity – regardless of their gender or their family responsibilities – it enables staff to be more productive, which will have a positive impact on the bottom line. 

Saturday 19 August 2017
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