Why we’re choosing to publish our gender pay gap data
We write a lot about diversity, equity and inclusion for our clients. These are critical subjects for all businesses – not just the right thing to do, but fundamental to commercial success.
Collectively, the world has a long way to go in some areas. Just this week the World Economic Forum has published its annual gender gap report, highlighting the extraordinary differences in how much men and women are paid for the same work.
Here in the UK, it’s been a legal duty for a number of years for companies with more than 250 employees to report their gender pay gap data annually. The aim is to use transparency to help reduce the large gaps most companies still have.
At Formative, we’re firmly committed to the principle of equal pay for equal work and a zero pay gap between men and women at all times. We also believe that transparency is important for companies of any size. This is why we’ve made the decision to voluntarily publish our gender pay gap data each year, even though our growing team of 80 is still well short of the legal threshold.
Before I get to the figures themselves, it’s worth explaining that the UK government insists that companies report six very specific data points. We’re reporting all six, even though some aren’t all that relevant to our business. I won’t go into too much detail here about how the calculations are made – the government’s website has a step-by-step guide if you’re interested.
The quick version
The figure we’re proudest of is our average gender pay gap using hourly pay. This is a negative figure – minus 3.6% – meaning that our female team members are paid slightly more than our male team members, on average. We certainly aren’t aiming for a negative result – our ideal outcome would be a zero gap. But the fact that the gap is small and in this direction, when so many companies’ figures show that men are paid 10%, 20% or even 30% more than women, feels like a significant achievement.
That’s not to say we don’t have work to do. Our median pay gap using hourly pay is a positive figure, 11.8%. This is caused by a skew in the number of men we employ at a certain level (our “upper middle” salary quartile, if you’re familiar with the language – more details available below). The fact that the figures highlight this is a perfect demonstration of the impact transparency can have. We’re already exploring possible causes and whether we need to review how we’re advertising and recruiting certain roles.
The full version
I’ll now outline all six of the data points specified by the UK government for its gender pay gap reporting, which are based on the situation at Formative Content on 5 April 2022 – what the legislation calls the “snapshot date”.
The percentage of men and women in each hourly pay quarter
This is designed to show how men and women are distributed throughout the company’s pay scale. We create a list of all team members, sorted from lowest to highest hourly pay, and then split this into four equal parts and count how many men and women are in each quarter:
The table shows a reasonably even split between women and men in all of the salary quarters except the “upper middle” quarter, which is only just over 20% female. As I mentioned above, we’re looking into the potential causes of this and whether or not we need to make any changes as a result.
The mean (average) gender pay gap using hourly pay
This is designed to show the difference between how much men are paid and how much women are paid. We find the average for men and the average for women, and calculate the difference as a proportion of the men’s average.
Our figure is -3.6%.
This means we have a small negative gender pay gap – i.e. Formative’s female team members are paid slightly more than Formative’s male team members, on average. Given how small the gap is, we don’t see this as a significant issue, but we’ll certainly keep it under review.
The median gender pay gap using hourly pay
This is also designed to show the difference between how much men are paid and how much women are paid, but it uses a different measure to the previous data point. In short, we create sorted lists for men and women (high to low salary), find the team member in the middle of each list and then calculate the difference as a proportion of the men’s median.
Our figure is 11.8%.
This means we have a positive pay gap – i.e. the median male pay is higher than the median female pay. This gap is caused by the skew towards men in the upper middle quarter of the pay scale, as shown in the first table above. This means that the gap is the result of having more men than women employed at this level of the business rather than the amounts our female team members are paid. We’re reviewing this, as I mentioned above.
The percentage of men and women receiving bonus pay
This is designed to show what proportion of each gender has received a bonus over the last 12 months. Here are our figures:
This is one of the data points that isn’t particularly relevant to our business, as we pay bonuses to all team members once they’ve been employed for six months. The numbers shown here reflect the fact that we’ve recruited a large number of new team members over the past year who had not yet received a bonus payment on the snapshot date of 5 April.
The small difference between women and men in these figures reflects the fact that we have recruited slightly more women over the past year, meaning that a higher proportion of our female team members had not yet received a bonus payment on 5 April.
The mean (average) gender pay gap using bonus pay
This is designed to show the difference between how much men and women are paid in bonuses. We find the average bonus payment for our male team members and the average for our female team members, and calculate the difference as a proportion of the men’s average.
Our figure is -3.2%.
Again, we have a small negative gap here, which means our female team members received slightly higher bonuses, on average, than our male team members. This is another result we’re really proud of, even though we do aim for a zero gap.
The median gender pay gap using bonus pay
This is designed to show the difference between how much men and women are paid in bonuses, using the median measure.
Our figure is -4.2%.
So we also have a small negative gap here – i.e. the median women’s bonus payment was slightly higher than the men’s median bonus payment. Once again, we’re very happy with this result but will keep a close eye on in future years to ensure the negative gap doesn’t grow any larger.
By the way, the reason this figure is negative when our median pay gap using hourly pay is positive is that we’re required to include a different mix of team members in the calculations around bonus payments compared to those around hourly pay. For bonus payments we have to measure only those team members employed on 5 April this year who received bonus payments within the last 12 months, whereas for hourly pay we’re including all team members employed on 5 April.
If you’ve reached this far, thank you! I think this information is really important and I’m extremely glad to be able to share it with you. We’ll be voluntarily reporting our gender pay gap data each year from now.
If you have any questions about anything you’ve read here, I’d be delighted to receive them. Just email me on email@example.com.
About the author: Paul Muggeridge is the Managing Director of Formative Content. Connect with Paul on LinkedIn here.
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