Adjusted v Unadjusted
Picture this, you’ve run all the calculations, you’ve got your gender pay gap figures, and you’ve submitted the results. You’re getting the report ready for your Board/Directors/Execs and you know the questions they’re going to ask; “so what?”, “what does this mean for us?”, “do we have a problem?”. Well, what does it mean, and do you have a potential gender pay problem? Read on to find out!
The Unadjusted Pay Gap
The number you have in front of you, that you submitted to the government portal, and that you’re building your reports around is what is known as an “unadjusted pay gap”. This isn’t a bad thing, and in fact the UK and EU pay gap reporting is built around sharing unadjusted figures. It’s a simple, clear, and concise number that compares the average salaries of men and women in your business and allows for straight forward comparisons across organisations. But if you want to answer the questions at the beginning of the blog, the unadjusted pay gap might not give you the full picture.
The Adjusted Pay Gap
So how do you get the full picture? If you’ve got a mind for statistics, you’ll run a regression analysis, or if you prefer to leave statistics to the Match of the Day pundits, then you’ll look at how different factors might also be influencing pay and compensation within your organisation. Do you, for example, have multiple locations in different cities and pay your people slightly more in London than in Leeds? Do you pay people more if they have more experience or qualifications? Or does your job structure mean you pay a premium for certain roles? You can now compare a female and a male employee, in the same role, with the same experience, in the same location (an apples-to-apples comparison, if you prefer). This can better highlight if you have a gender pay disparity that needs to be addressed; for example, are your male and female Accountants in London, with ACA/CIMA qualifications, performing to the same standard, and with 5 years’ experience being paid the same?
Which should you use?
In reality, you’ll need both. The unadjusted gap is like your big picture and can highlight your overall position, whilst the adjusted gap is the magnifying glass that helps you identify potential problem areas. Going back to the start of this blog; reporting your unadjusted pay gap is a statutory requirement (assuming you have at least 250 employees), whilst the adjusted pay gap will help you identify possible areas of concern.
One last thing to note; it’s entirely possible to have a minimal adjusted pay gap, but a more significant unadjusted pay gap. An example of this might be that you pay people in the same roles fairly, but your organisation generally has a distribution more female employees in lower paid roles. In this case, whilst comparable work is paid fairly, perhaps equal opportunities for progression are lacking.
How can Innecto help?
If you don’t know where to start and want some expert assistance, then get in touch!
Our gender pay reporting can support you in finding the headline figures in your organisation, and help you uncover potential risks. We’ll work with you to find your unadjusted pay gap and then discover the other factors that influence pay.
Speaking of other factors, when was the last time you reviewed your job structure, evaluated your roles, or benchmarked your salaries? Our digital tools can transform the way you manage pay in your organisation and provide you with the confidence in decision making and delivering a fairer compensation package for all employees.
If you would like to know more, get in touch today.
