Preparing for Ethnicity Pay Gap Reporting

Grace Duncan, senior account executive and Rima Sacre, director, purposeful business

Four years after mandatory gender pay gap reporting was introduced, we have seen vast change as businesses tackle their gender equality. In fact, now only a couple of companies on the FTSE 350 have all-male boards. Shining a spotlight on the endemic inequalities within corporate structures enabled this change and now attention is turning to the next frontier of inequality, ethnicity.

As the UK awaits the Government next steps on ethnicity pay gap reporting, FleishmanHillard Fishburn’s Purposeful Business team hosted a webinar with Sandra Kerr OBE, CBE, Race Director at Business in the Community, Damien Shieber, Head of Culture and Inclusion at Santander and Simon Manterfield, Lead National Equality Standard Assessor at EY to better understand why it matters and how businesses can start preparing for ethnicity pay gap reporting. In this blog, we capture the discussion and expertise shared last week.

Why report on the ethnicity pay gap?

The reasons for introducing ethnicity pay gap reporting are numerous and in fact, a 2017 review found that an increase in BME workplace progression could give the UK economy a boost of £24 billion. However, looking beyond the economic potential is the fact that with increased transparency of pay numbers, companies can improve employee trust, diversity and inclusion and create a more successful and representative business.

The future is more diverse with one-quarter of British children coming from varied backgrounds. Putting in place pay transparency will help us to ensure that these children get an equal opportunity when the time comes, and that race and ethnicity remain top table issues. It also gives businesses evidence of where changes need to be made and holds them accountable.

What are the barriers?

You could be forgiven for thinking that reporting ethnicity pay gaps would be relatively simple. Fundamentally all a business needs to know is which census category every employee (or at least 70% according to the ONS) aligns themselves to. By collecting and analysing this data across the employee lifecycle, employers can find and understand their pay gaps.

However, as was clear at this event, capturing this data is not always simple, particularly when it comes to trust. Our speakers had several recommendations on how to build trust.

  1. Companies have to tell the story of why the data is needed and be transparent about who has access to it and how it will be used.
  2. Businesses must clearly showcase action plans for how the demographic data will be used to address diversity.
  3. Business leaders should be front and centre, sharing their own story and their commitment to the cause.
  4. Considering different individuals for different trust levels can also be helpful. By engaging with trade unions and employee networks, businesses can demonstrate how it is everyone’s responsibility to create an inclusive environment and inspire company-wide action.
  5. Getting the communications right is essential. Businesses have to be consistent and reassuring, speaking to every member of their community showing why it matters.
  6. Finally, this should not be a one-hit-wonder. Ongoing communication on the goals and progress in meeting these is key to reinforcing trust.

Looking beyond the pay gap

Reporting the ethnicity pay gap is only the start and should be seen as more of an output than a goal within the companies’ DE&I efforts. Of course, companies should hope to see a reduction in their pay gap over time, but it is about more than that – the overall goal should be an inclusive environment for all employees.

By shedding light on the inequalities present in a business, new behaviours and innovative thinking can begin. This includes finding out why there is this gap, understanding the employee lived experience, putting programs in place for diverse employees or setting up networks. As with the gender pay gap, reporting the numbers will not fix things overnight but bringing attention to the business’ current ethnicity status will enable it to take decisive action and set targets.

Given the leaked government consultation results on the ethnicity pay gap, it is highly likely that reporting will soon become mandatory for large companies. To deliver the ethnicity pay gap accurately and efficiently companies require the data, employee trust, and employee networks and champions to inspire cooperation. It may be overwhelming to begin with, but companies should start to think about the steps they can begin making. While for many this may be setting out plans on how they will begin collecting data, this in itself showcases progress and is a step in the right direction.

If you need support with how to start your business’ ethnicity pay gap reporting journey, then please get in touch with FHF’s purposeful business team at: purpose@fhflondon.co.uk.

Contact us