The U.K. Is ‘Naming and Shaming’ Employers Into Closing Their Gender Pay Gaps
As of Thursday, U.K. companies with at least 250 employees have a year to publish data points on the gender pay gap that will be compiled into a public ranking geared at eliminating the nation’s stubborn 18.1% divide. Companies will have to disclose:
- Their median gender pay gap
- Their mean gender pay gap
- Their gender pay gap for bonuses paid during the year
- The proportion of men and women in each quartile of their pay structure
The government says the new initiative—covering some 9,000 employers with 15 million workers, about half the nation’s workforce—“will help employers to identify the gaps in their organizations and take action to close the gender gap.” But what the government doesn’t highlight is that once the figures are published, the new rule does not require companies to explain their gaps or do anything to narrow them.
By contrast, Iceland is taking a more forceful approach to eliminating pay discrepancies by gender. Last week it became the first country to introduce legislation requiring employers to prove they are paying men and women equally. Those that can’t show pay parity face fines.
The U.K.’s rule, meanwhile, relies on naming and shaming, a tactic that assumes the fear of landing on the wrong end of the public ranking is enough incentive for companies to change.
But is it?
“Reputation is power,” says Allyson Zimmerman, executive director at Catalyst Europe, a nonprofit that focuses on workplace inclusion. “Companies will want to be seen as an employer of choice; one who gives fair pay for work and a job well done.”
Ann Francke, CEO of the Chartered Management Institute, pointed out that this softer approach to workplace change has worked for the U.K. in the past. In its push to get more women on boards, the government has provided no real stick other than transparency. And while the rate of progress declined in 2016, the share of female directors in the FTSE 100 has increased from 12.5% in 2010 to 26% last year.
She says she’s optimistic about the effectiveness of the government’s softer approach since it invites public scrutiny and encourages companies to set targets for improvement. “That’s how businesses work, they set targets,” she says.
A survey released earlier this week indicates that companies are not doing that on their own. Totaljobs, an online job board, found that among a small sample of companies—145—one in five were unsure if their salaries are equal, more than 50% did not coach their management teams on promoting equal pay, and 82% were not reviewing their policies in the lead-up to the new rule’s implementation.
This data likely exists within businesses, says Melanie Richards, vice chair of KPMG UK and a founder member of The 30% Club steering committee, which aims to put more women on corporate boards. “[B]ut maybe it hasn’t been looked at in this way—with this mindfulness—before.”
A version of this story first appeared in Fortune’s World’s Most Powerful Women newsletter. Subscribe here.