Brands pay the price for gender pay gaps

With today's UK filing deadline for companies to reveal their hourly gender pay stats, most will be pushed to explain how it is that women in their businesses earn up to 71% less on average than their male counterparts (with this figure attributed to leading Magic Circle law firm Allen & Overy according to the FT’s analysis), a differential that’s been consistently wide in the financial and professional services sector.

As you consider the impact of gender pay gaps and the perception around the world of UK business, you may agree that the impact of these pay differences on British companies and their brands will be significant.

What is adding to the reputational noise for companies is the media coverage conflating gender pay and equal pay, the latter made illegal in this country in 1970.  The former is about the average hourly pay in an enterprise when factoring in the hourly calibration of the annual salaries of all employees.  Thus, it is not a view on whether men and women doing the same job are paid the same salaries.

So what’s the bottom line?

• Gender pay gap reporting will prove to be the #MeToo moment for brands and the companies behind them, negatively impacting household names and the unfamiliar.
• Those which reveal wide discrepancies in pay across the sexes can expect social media push-back, boycotting and other reputation-damaging activity while exposing company leaders to the scrutiny usually reserved for A-list celebrities.
• Without addressing the gap causes, trust in these companies and their ability to deliver consistent profits will be hit.
• Fixing their structures and cultures by investing in female retention, promotion and role modeling is the answer.

And the consequences of a gender pay gap...

• A significant threat to the brand and reputation of companies doing business in the UK (whether of British origin or not), as a wide range of stakeholders - customers/clients, suppliers, staff, regulators – will now probe the health of the cultures and decision-making processes of these enterprises.
• High levels of gender pay inequality come at a price: lower staff retention, higher recruitment costs and lower morale.  All of which mean the employer brand suffers in the “war for talent” as their pay practices are widely and instantly publicised via social media.
• They’re evidence of low diversity - of gender and other dimensions -at senior levels of such organisations, which should focus shareholders’ attention given the number of studies that prove gender diversity at senior levels and in the talent pipeline deliver higher commercial returns than those with more pale, male and stale leaderships.  And after all, isn’t the purpose of a for-profit business to make money?

The findings from this pay data will be a watershed moment for British industry, as organisations feel the effects of deeper equality scrutiny from all quarters.  HR Directors and other members of senior leadership teams will be pushed to tackle the impact such disparities necessarily will have on their employer brands and fan bases.