Analysis: Closing the gender pay gap in retail

Today is Equal Pay Day, the point in the year when a woman on an average wage stops being paid relative to their male counterparts. 

The gender pay gap was one of this summer’s big talking points when the BBC revealed its highest-paid stars in July. The internet was up in arms about the startling chasm between what women and men were paid. In fact, of the 10 highest paid, only one – Claudia Winkleman – was female.

However, this furore was likely just the start. By April 2018, all employers in the UK with more than 250 employees will be required by law to have submitted figures about their gender pay gap, retailers included.

Research from the Chartered Management Institute (CMI) and XpertHR found that the average pay gap between retail managers of different genders is 19%.

Although this gap is less than in other sectors, once retailers start to measure their whole workforce, they may have to present a larger number to a media prone to leaping on headline figures with little appetite for detailed explanation.

However, some of the UK’s largest retailers have actually been facing up to the gender pay issue for some time.

What are retailers doing?

As Tessa Boshoff, HR director at fashion retailer Karen Millen, points out: “Women receiving less pay than men for doing the same job is a subject that has quite rightly gained momentum over the past few years. Therefore, it isn’t a surprise that the government has decided to legislate and it should be welcomed.”

“It isn’t a surprise that the government has decided to legislate and it should be welcomed”

Tessa Boshoff, Karen Millen

Boshoff adds that Karen Millen is currently compiling its gender pay gap data and will publish the results before the deadline of April 4, 2018.

Sainsbury’s is also ahead of the game and says it has a number of programmes in place to increase the diversity in its retail management.

The assessment for You Can Be, the programme its retail employees must complete to progress to a more senior position, is designed to create a gender balance and better reflect regional ethnicity.

And a female mentoring programme, launched in 2015, has now reached 2,000 Sainsbury’s employees. In its latest reported figures, Sainsbury’s saw a positive impact, adding 41 female store managers in the year 2016/17.

While Tesco says it plans to publish specific data in line with the legislation, it has already published a gender pay gap figure of 8.6% – much lower than the national average.

If you take account of the greater likelihood that men will work premium hours during Sundays, bank holidays and nights, this gap shrinks further to 2.7%, Tesco says. However, a spokesperson added: “We still recognise there is more to do to close the gap.”

Tesco has embarked on a range of measures, including the Women in Tesco Network, which seeks to support female employees developing their careers by looking to inspiring role models and mentors.

It also trains line managers to understand unconscious bias, and then manage and challenge its impact in the workplace.

Leading the way

Patrick Woodman, head of research and advocacy at CMI, says Tesco is part of a leading pack of retailers keen to publish gender pay data, not just to comply with legislation but for commercial reasons.

“We know there are progressive organisations out there,” he says. “Tesco is publishing data and has shown that, effectively, it does not have a pay gap. While regulation shines a spotlight on those that do, it is important we applaud those that close the gap by facing up to it and taking action.”

“Closing the gap gives better access to talent and better results. It should not be divisive”

Patrick Woodman, CMI

He recommends retailers make closing the gap positive for all employees: “It is good for the whole organisation. It gives better access to talent and better results.

“It can benefit male employees through flexible working and other family friendly schemes. It should not become divisive or a female-only agenda.”

The regulatory requirements should in fact be seen as a minimum, says Woodman. Collecting and analysing more data will help businesses to understand patterns in gender pay and help address them.

“Now is the time to understand your data. It is important that organisations assess the data and make sense of it in a business context.”

Ensuring a balance

Since the gender pay gap takes no account 
of role or seniority, to reduce it organisations need to ensure they have a balance of the sexes right through their organisational structure, Woodman says.

Strategies to reduce the gap include balanced shortlists and selection panels for more senior roles. “Recruitment and promotion are key,” he says.

“Businesses need to identify problems in their recruitment and promotion pipeline. Career stagnation can be a problem, as can appropriate opportunities for women returning to work after maternity.”

“It is really an opportunity, because 
the cost to business of having cultures that do not make the most of talent or match its customer base can erode trust quite quickly”

Patrick Woodman, CMI

Mentoring and sponsorship of junior female employees by more senior colleagues can also help women progress, he says.

“It is really an opportunity, because 
the cost to business of having cultures that do not make the most of talent or match its customer base can erode trust quite quickly,” he explains.

“That is a reputational risk, as we saw with the publicity surrounding publication of gender pay data by the BBC. More and more organisations will be in that spotlight.”

Clare Martin, group HR director for car retailer Jardine Motors Group, says development is a key part of bridging this gap for her company.

“It’s about fairness for all, so that everyone is given the same access to support, training and experiences so they may enjoy a stimulating and rewarding career, and that all colleagues are paid according to their skill, commitment and attitude to the job,” Martin summarises.

The gender pay gap is not necessarily the result of unequal pay. It can result from the proportions of the sexes taking on different roles, with men more likely than women to fill higher-paid and more senior roles and women more likely to take on lower paid, part-time work.

Creating the right culture

Martin says this can be an issue for Jardine Motors. “I think one of the biggest challenges we face is perception; many people, both in retail and outside, view motor retail as a very male-dominated industry.

“This is preventing talented, skilled and high-achieving females from even contemplating motor retail as a potential career choice. This is why our focus is on ensuring an equal pay structure and we actively encourage flexible working within our dealerships for greater work-life balance.”

“One of the biggest challenges is perception; people view motor retail as male-dominated”

Clare Martin, Jardine Motors Group

While the effect of gender stereotypes 
can explain how organisations can have 
a pay gap without having unequal pay, 
it is no excuse for inaction, says Erin Munson, Body Shop director of reward 
and HR operations.

“The Body Shop is planning to publish our gender pay gap report in April 2018, in line with the deadline, and we support the legislation to publish findings on government and internal websites,” she says.

“The Body Shop is always mindful of gender equity in our workforce and have always ensured that this is at the forefront of what we do when we look at employee compensation, and we do not believe we have a pay gap that exceeds the industry norm.”

However, unequal pay can be a contributing factor to the pay gap, says Chris Benson, a partner at law firm Leigh Day.

He says that when women return after having children, they are less likely to press for equal pay for fear of losing their hours. “Once women get the hours that suit them, they are less likely to push for more pay, as they think it may be seen as bolshie and their flexible working will disappear,” he says.

Tipping the balance

The pay gap can largely be put down to a disproportionate number of men in senior roles, says Ingrid Waterfield, a director at KPMG. Although retailers need to address the imbalance, it is not the same as unequal pay.

“There are a number of reasons why men get more senior roles,” she says. “In terms of recruitment, it could be that consultants contact candidates they know – they may not have a diverse network of potential candidates. You can address that by having agreements with consultants to put forward a certain proportion of women.”

“The best female talent has got to feel there is a future within the organisation”

Ingrid Waterfield, KPMG

Aside from recruitment, retailers can address gender imbalance at middle and senior management with an internal talent programme, Waterfield says.

“The best female talent has got to feel there is a future with the organisation,” she explains. “You can establish programmes where people move around different jobs to experience different parts of the business and help prepare them for a more senior role.”

Using data tools, businesses can forecast their likely future balance throughout the organisation should they continue with their current policies and strategy, she says.

“You can ask, ‘If we continue in this way, then are we comfortable with the outcome? If not, what should we 
do about it?’”

Karen Millen’s Boshoff agrees. “We need to analyse the data to ensure any steps we take focus on making changes where they are needed,” she says.

“While we’re a brand focused on women with a predominantly female workforce, we nevertheless believe that attracting a more diverse workforce can only enhance our business.”

What next?

As the deadline to publish data approaches, retailers are thinking about how best to do it.

Timing may be important, Waterfield says. Some organisations are planning to publish over Christmas, hoping any publicity will be buried. However, they should think about the long-term implications: they will then have to publish at this time every year, the busiest period for retailers.

Instead of simply complying with legal requirements, retailers would do better to look at the exercise as an opportunity. Hiring women to more senior roles should improve business performance.

“Retailers should focus on thinking about customers, and for a lot of them the majority are women,” Waterfield says. “If that is not recognised in who they are, they are not being true to the customer. There is more and more evidence that diverse teams get better results.”  

While retailers will inevitably focus on complying in the short term, addressing the gap with measures to ensure equal pay and a balanced management team could create long-term competitive advantage.