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How can the third sector achieve greater pay equality?

By Jayne Morris on 18 Nov 2015

Equal Pay Day for the UK was on the 9th November this year, meaning this is when women effectively stop earning relative to men. But TPP’s recent report into the Charity Gender Pay Gap has shown that this point would come even earlier for the voluntary sector – on the 31st October.

In a sector dominated by women and championing social justice and equality, you would expect pay to be relatively equal across the sexes, but in fact, the gap is getting wider.

More than four decades after the Equal Pay Act was introduced, we seem to be getting no closer to pay equality. In this month’s blog, we look at the reasons behind the gender pay gap, how the third sector can encourage pay equality and why every NFP organisation should be looking at this issue.

Why is it so important to tackle the gender pay gap?

New regulations are due to come in to force next year, requiring organisations with over 250 employees to publish their gender pay gap figure. For larger charities, a big gender pay gap could really damage their employer branding by putting off potential female employees. It’s also an area that could well be picked up by the media in their current anti-charity mood, leading to embarrassment, adverse publicity and potentially drops in donations.

These regulations are likely to increase the urgency behind tackling the gender pay gap, but ultimately a sector dominated by women should not be led primarily by men. This can lead to a dramatic disconnect between the senior leadership and their understanding of the needs and motivations of their staff.

There is now a large body of research that clearly shows senior management teams and boards with a balanced gender ratio (40-60%) are more effective than unbalanced teams. Tackling pay inequality is beneficial to both employees and employers.

How to calculate your organisation’s gender pay gap

The first stage in tackling pay inequality is to conduct an equal pay audit and measure the extent to which it is a problem in your organisation.

The formula used for calculating gender pay gap is as follows:

100% - (mean average female pay/mean average male pay)

The gender pay gap is calculated by dividing the average (mean) annual earnings (or full time equivalent) of female employees by the average (mean) earnings of male employees, showing this as a percentage and subtracting the figure from 100 per cent. A figure of 0% would indicate that there is no gender pay gap and a minus percentage would show that women have higher average earnings than men.

The median (middle value) average can be used instead of the mean for this calculation, as it is not affected by small numbers at the extreme ends of the income range. However, we find that the median does not accurately express the pay gap caused by a lack of women in senior management.

You can then go on to break your organisation’s gender gap figure down by pay scale levels, full-time vs part-time employment, type of role etc.

The new regulations are likely to give employers the option of either publishing a single overall gender pay gap figure or a more detailed breakdown across the organisation, eg by seniority or type of contract. Either way, employers should be able to provide additional context to the figures in supporting commentary.

What are the most common reasons for pay disparity?

While there are many factors that affect the gender pay gap, such as more women than men working in part-time roles, or career gaps due to maternity leave, the primary factor is the lack of women in senior roles, so achieving pay parity needs to focus on getting more women into these roles.

Male dominated senior management teams all too often hire in their own image. It is a human tendency to prefer ‘people like us’, which means when promoting or recruiting, we always tend to go for the closest thing to ourselves, leading to a fundamental lack of diversity.

There are also psychological factors at work. Generally, men are better at demanding salary increases and promotions, as well as negotiating their starting salaries before joining a company. Women tend to be more accepting of what is being offered and expect their managers to recognise their net worth without asking. As recently highlighted by Jennifer Lawrence talking about the gender pay gap in Hollywood, women in all sectors generally find it harder to negotiate on pay than men.

Women are also more likely to suffer from imposter syndrome and attribute their success to outside factors, rather than their own work.

What actions can we take?

1.  Set pay scales

This is the most obvious place to start. Setting pay scales or grades ensures that pay is fair across all seniorities.

Unfortunately, it can be very tempting to abandon pay scales when recruiting in order to secure the best candidates, particularly when looking to bring in senior staff from the corporate sector. Setting a salary range prior to recruiting and clearly advertising this is the best way to ensure you stick to your specified levels.

2.  Overhaul your recruitment process

There are many ways you can improve your recruitment techniques in order to help eliminate gender bias, particularly when recruiting for senior roles.

For example, simply reviewing the wording that you use in job advertisements can make a difference; traditionally ‘masculine’ language can deter women from applying for a role that they may be more than capable of filling. This simple online tool can help you do this.

Review the working hours and any travel expectations associated with the role – are these really necessary or simply based on the working practices of previous incumbents? Men are often more likely to be willing to spend extended periods away from home than women.

Make sure roles are always advertised internally and externally. Not only is this best recruitment practice, but it also makes sure you are not overlooking a perfectly qualified internal candidate.

All interviews should be based on competencies and skill and a scoring system should be used to avoid any bias, unconscious or otherwise. Ideally, your managers should be trained in interview techniques (TPP offer regular free interview workshops – contact your consultant for more details), and using more than one interviewer can offer different points of view.

Finally, consider implementing an anonymous CV process, where contact and personal details are removed from CVs before they are submitted to the person in charge of the recruitment. If you are working with an agency, they should be able to do this for you.

3.  Find champions within your organisation

In order for organisational change to happen, someone needs to take responsibility for suggesting and implementing actions. Choosing champions from different levels within your organisation can give your female employees more of a voice and create role models for them. Appointing mentors can also be a powerful way for your future female leaders to get a good start.

These champions do not necessarily have to be women themselves. In fact, men can be equally powerful advocates for women.

4.  Promote flexible working equally

All too often, flexible benefits are offered purely on a case-by-case basis to justify a lower starting salary or instead of a pay raise. Instead, charities need to be promoting a culture where choosing their working hours and location help people to become more productive and achieve more. Flexible working should be encouraged for both men and women.

Share best practice

Is your organisation doing something to address the issue of women’s pay or attract more female leaders? Maybe you have a suggestion for ways in which the sector can tackle the gender pay gap. Use the hashtag #charitypaygap to let us know how you think the sector can improve.​