Why SMEs should care about the gender pay gap

gender pay gap

What are the reasons SMEs should care about the gender pay gap? The gender pay gap refers to the difference between the average hourly amount of pay earned by men and the average hourly amount of pay earned by women.

In 2019 the gender pay gap was 17.3% in the UK, which means that on average, women were paid approximately 83p for every £1 that men were paid.

Since April 2018, all employers with 250 employees or more are required to publish their gender pay gap data every year. So as a SME you may wonder why you should care about the gender pay gap as there is no requirement for you to publish it.

Small and medium-sized companies in Britain remain exempt from the requirement to publish gender pay gap information. However, around half (44 per cent) of all employees in the UK work for SMEs who do not have to publish their gender pay gap data.

The gender pay gap is not to be confused with equal pay, which refers to the legal requirement that men and women must be paid the same amount for similar work. This applies to all businesses.

Why SMEs should care about the gender pay gap

As an SME there may be a number of reasons that you think excuse you from worrying about your gender pay gap:

  • Your business may be in a male dominated, higher-paid sector (such as science, technology, engineering, law or finance). You may consider that the challenges of attracting women to these sectors are beyond the scope of your small business.
  • Your business may be small enough that a male (or female) CEO may skew your averages. So you consider your gender pay gap data not worth analysing.
  • You have a higher proportion of men in senior, higher-paid roles and have justifiable reasons for this.
  • You have more women working in lower-paid roles because they are more likely to work part time or have taken breaks for caring responsibilities.

However, there are a number of reasons that SMEs should care about the gender pay gap. There are clear business benefits:

  • It affects your brand. Your reputation and brand are improved, which can affect consumer choices.
  • It makes you attractive to talented employees. A workplace where women flourish makes you an attractive place to work.
  • It motivates your existing employees. Perceptions of unfair pay are demotivating.
  • It is the right thing to do. However small, any changes you can make contribute to wider societal change. You can help fix the unfairness of women earning 83p for every £1 a man earns.

How SMEs can close their gender pay gap

You may agree that you should care about the gender pay gap. But as an SME you may have a very stable workforce with little turnover or opportunities for promotion. Or you may operate in a sector where there is a dominance of male talent. So what can you do?

Whatever the size of your business, it is possible to implement a fair pay and benefits structure. As an SME you likely have the advantage of less bureaucracy to navigate to effect significant change.

Practical changes include:

  • Promotion of flexible working practices to both help women work longer hours and to normalise men taking on caring responsibilities. (See my post on leading a flexible, remote workforce). In the long term, this may help create more senior, higher-paid roles that are also flexible.
  • Review your shared parental leave policy. Are you encouraging men to take up this option? Again, over the longer term this will help a societal shift away from women being primary carers and suffering from the associated career disruption.
  • Subsidise childcare. For many, the huge cost of childcare is a barrier to women re-entering the workplace. Or perhaps you could consider something more radical. Such as allowing babies in the office, working from home, or a workplace crèche.
  • Be transparent about what pay and benefits your employees receive and why. Making it clear how pay rises and promotions are awarded removes secrecy and possible resentment among employees.
  • Could you offer apprenticeships to attract or promote women in a male dominated industry?
  • Review your processes around recruitment and promotion. Be aware of the effects of unconscious bias in these processes. It is all too easy to surround yourself with people that are similar to you.

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