David Cameron’s announcement that the Government was going to proceed with their manifesto promise created significant headlines. Clearly this focus is to be maintained; Nicky Morgan the Equalities Minister and Education Secretary said: “We are committing to eliminating the gender pay gap in a generation”. Combined with the EU reporting obligations on diversity policy and statistics coming in 2017, it is clear that the Government is becoming firmer on compelling business to address diversity in the workplace.
Findings from Mercer’s global gender study (‘When Women Thrive, Organisations Thrive’) and discussions with the FTSE 100 members of the Mercer Vanguard network (the UK’s longest established diversity and inclusion network) demonstrate that this concerted push falls on fertile ground.
The business case is clear, the evidence compelling, and increasingly moving beyond correlation:
• Companies with better gender diversity on their Boards or top management teams have 53% higher return on equity (McKinsey 2014)
• For every 1 % rise in the rate of gender diversity and ethnic diversity in a workforce there is a 3 and 9 % rise in sales revenue, respectively (American Sociological Association study)
• A 2012 Deloitte study of 1,500 employees in Australia found an 80% increase in business performance among businesses with high levels of diversity and inclusion
Removing the gender pay gap is a key element of an effective diversity strategy, and for organisations to address their gender pay issues they will need to look more broadly than pay. The gender pay gap goes beyond the mechanics of pay and is reflective of women’s participation in the workforce, their representation at all levels of the organisation, and the culture of that organisation which influences attitudes and behaviour.