6 Things to Consider When Preparing for Ethnicity Pay Gap Reporting

Addressing workplace equality can significantly benefit an organisation’s culture and reputation. It ensures talent is supported and helps businesses achieve their organisational objectives. And whilst diversity headlines have largely been dominated by the Gender Pay Gap over the last couple of years, we’re now moving into the age of ethnicity pay gap reporting.

The consultation period for this compulsory reporting initiative closed in January 2019, and we are still waiting to hear the outcome from the Government. For instance, what ethnicity information should be reported by employers to allow meaningful action; who should be expected to report; and what are the required next steps?

Oasis HR Think Tank Ethnicity Pay Gap Reporting

We all agree that transparency in data and reporting helps accelerate the progress of a business. However, according to PwC, 95% of businesses have not conducted any analysis into their ethnicity pay gap and 75% do not have sufficient data to conduct said analysis. It’s essential that organisations act now to prepare for this next wave of pay gap reporting, not only because they’re likely to be required to by law, but because it’s unquestionably the right thing to do.

Whilst most businesses don’t seem to have their formalised ethnicity pay gap reporting strategy in place yet, results from the Annual Population Survey have been quite telling. According to this first analysis of ethnicity pay gap data (ONS, July 2019), we know that in 2018:

  • Chinese, Indian and Mixed or Multiple ethnicity employees all had higher median hourly pay than White British employees
  • Pakistani and Bangladeshi ethnic groups had the lowest median hourly pay
  • The percentage difference in median hourly pay between people of a White ethnicity and all those who belong to an ethnic minority group is largest in London at 21.7%
  • The existing pay gap between White British and other ethnic groups is generally smaller for younger employees than it is for older employees

So what factors should businesses be considering when getting ready for ethnicity pay gap reporting? We put it to our HR Think Tank Series community to find out…

1. Creating an inclusive culture

Data or no data, the first step to tackling this subject in a meaningful way is to put inclusivity at the centre of your initiative. You need to build trust with your employees. They need to want to share their data with you and feel confident that there will be positive action taken as a result. 

  • What are your business’s key objectives with it comes to D&I? How does recruitment, onboarding and promotions tie into supporting these goals?
  • How can you re-engineer your engagement survey to focus more on diversity? Is this your opportunity to capture data?  
  • Are you looking beyond London and certain pockets of your workforce? Remember to view ethnicity pay gap reporting as a National or International initiative. Whilst London is known for being particularly problematic in this space, this issue needs addressing across your whole workforce regardless of location.

2. Addressing bias in recruitment

One of the biggest influencing factors preventing organisations from being truly inclusive and diverse is not taking measures to address bias in the recruitment process. Conscious or unconscious, it’s incredibly damaging when trying to achieve workplace equality. So what steps should employers take to address bias in recruitment?

  • Ban the word ‘fit’! What does it really mean? Is it just being used as an excuse to rule out candidates for the wrong reasons?
  • Ensure that when recruitment teams collect candidate data it’s not being used as part of the decision making process
  • Recruitment data should be separate from employee / HR data 
  • Observe recruitment patterns to ensure that hiring managers are not repeatedly offering jobs to certain ethnic groups 
  • Set expectations with your recruitment teams to provide diverse shortlists and challenge them when it’s not happening 
  • Take any potential biases out of job adverts using ‘textio’ 
  • Ensure your career site reflects and promotes inclusivity and diversity
  • Consider the benefits of assessing candidates ‘name-blind’ to remove any bias

3. Taking action and looking beyond the data

Most organisations are swimming in data. And ethnicity shouldn’t be as difficult to address as it’s often considered to be. The important part is actually doing something positive with the data and taking some action.

  • Be transparent about why you’re collecting the data and lead from the front
  • Be prepared to deal with questions around ‘positive discrimination’ and your stance for managing this fairly
  • Utilise the data from your exit interviews. What is this insight telling you and are there any trends?
  • How is your organisation fairing on Glassdoor? Are there any patterns emerging from a diversity or ethnicity perspective? If so, make sure these issues are being addressed and a suitable person from your organisation is replying to any negative comments.
  • Create internal networks for different employee categories to support with any challenges they might be facing 

4. Overcoming barriers and false perceptions

The subject of D&I is often considered to be a little ‘taboo’, particularly when it comes to ethnicity. It’s, therefore, crucial to tackle any sensitive areas and de-mystify false assumptions that exist in this space. The bottom line is ‘good communication’ and opening up the channels to ensure all employees are engaged. We need to get comfortable with the language we are using and to have conversations in an open and safe way. For example, using the word ‘black’ is an acceptable term. 

5. Getting clarity on your ethnicity categories

One of the challenges that exist with ethnicity pay gap reporting is categorising different ethnicity groups. For example, If an individual is half Italian and half Jamaican, where do they sit in terms of categories? It’s worth reading Baroness McGregor-Smith’s report and checking out her recommendations. The ‘McGregor 12’ is a good framework for global businesses. Combining this with the ONS/census criteria is a sensible place to start. 

6. Remembering to consider ethnicity pay gaps at all levels of seniority

When it comes to ethnicity pay gap reporting, it’s not about level. A lot of firms are wrongly just focussing on junior/entry-level positions. You need to get the message out there that you are an inclusive organisation, you welcome anyone to your business, not just at the lower levels. Inclusivity doesn’t just mean having black representation in your security team! We need to know what representation we have on our Senior Leadership Teams across different ethnic groups.   

Further reading and useful resources on the ethnicity pay gap:

  • PwC Ethnicity Pay Reporting – Building an effective reporting strategy >> View
  • Gov List of ethnic groups >> View
  • Race in the workplace: The McGregor-Smith Review >> View
Fiona Desmond

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