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Why SMEs should grow with gender equality in mind

3 Jul 2019 By Hephzi Pemberton

Expanding companies shouldn’t wait until they hit the reporting threshold to start thinking about their gender pay gap, argues Hephzi Pemberton

As of 6 April 2017, employers in the UK with more than 250 employees have been required – by law – to publish their gender pay gaps. This year, the second year of reporting, the median pay gap showed that women in the public sector are paid 14 per cent less an hour than men. While gender pay reporting is incredibly important in assessing the progress businesses are making towards gender equality, the main priority is actually what businesses do with the data. With a staggering 99 per cent of the UK private sector serving as SMEs – only 1 per cent of the entire spectrum of the UK workplaces needs to adhere to reporting their gender-led salary profiles – the numbers don’t add up and neither does the pay.

Fixing the gender pay gap requires a huge amount of work for every business, not only by way of a cultural shift, but a practical overhaul in the make-up of senior executive leadership teams. The issue that huge corporates and institutions have to contend with, is the fact that size equates to sluggishness. This isn’t necessarily a reflection of the ethos of the company, or their determination to instil change, it’s the sheer amount of bureaucracy and long-entrenched work cultures, that slow this intention down drastically.

What is clear from the various calibre of firms, institutions and quite frankly British legacy brands contributing to the issue, is that the older the entity, the more cumbersome its call to arms is, and we as industry influencers need to apply pressure and support measures at every end of the spectrum, as clearly even the largest and most respected require help.

Given the substantial amount of work, and time, it will take companies with over 250 employees to invoke change and close their gender pay gaps, why aren’t businesses implementing and growing with positive policies to avoid the ultimate overhaul? Moreover, why are we eliminating the critical mass of the private sector based on the presence of a certain quota of staff – the gender pay gap is no less important if you’re only at 249 employees. Those with fewer than 250 employees must be monitoring their gender and ethnic pay gaps in order to grow with equality at its founding premise, rather than get to 250 employees and have the difficult task of retrospectively implementing positive change and undoing years of systematic wrongs. 

If SMEs grow with set targets around fair, gender-balanced hiring and transparently benchmarked salaries, they will grow in line with a future facing private sector, free of the dark cloud that gender disparities have presented in the last decade and long before. The results of which are inherently positive – 33 per cent of gender balanced businesses increase in profitability and according to the OECD, projections show that by 2030, if the share of women working reached the same level as for men, annual growth rates in GDP per capita would rise by 0.5 percentage points in the UK.

It has been proven that one of the most effective ways to close the gender pay gap is to secure more women into senior, board and/or management positions as that is where the chasm really occurs. In order to do this, businesses need to start addressing the systematic issue that lies at the core of the inequalities, particularly at senior/management/board level positions. Five year plans that are validated and tracked at policy level are vital to ensure the SMEs of today can grow into the multi-nationals of tomorrow, delivering solely inclusive cultures and salary infrastructure at all levels.

Hephzi Pemberton is founder of Equality Group

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