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Why Gender Pay Gap Regulations Benefit us all

Whilst new regulations for gender pay gap reporting are of immediate and long term interest for women (and there are many more qualified than I to cover that angle), as easily comparable and regularly communicated performance metrics, this could be a watershed moment in corporate transparency for us all.

For Individuals

As the graph illustrates, how an organisation treats its employees matters to us. Whilst the new regulations offer only a tiny glimpse behind the corporate curtain, it is a level of transparency we have not previously enjoyed. It will still require mental leaps to judge an organisation’s wider sustainability commitments, but is - at least - a more reliable point to anchor on.

This should build sought-after consumer trust in organisations committed to (and able to evidence) fairer employment practices, and provide prospective employees and investors with data that supports more informed decision making (One of the major challenges currently facing investors).

For organisations

Communicating corporate responsibility or ethical behaviour is a challenge because it is a credence good: intangible and difficult to measure and assess. When promoted, it is routinely received with scepticism as an effort to simply greenwash or virtue signal - which is not without some justification:

The new regulations provide a key opportunity to change this. Producing easily understood, comparable and repeated performance measures will help an organisation better substantiate commitments and values over time - and against peers. This will make it easier for the walkers to differentiate themselves from the talkers.

For the Future

Perhaps - most positively of all - it might usher in a new era of corporate transparency. If this creates meaningful discussion, a heightened awareness of corporate responsibility and even a slight change in how we engage with organisations, it could serve to highlight a growing demand for braver and bolder corporate disclosures. A ‘race to the top’ whereby transparency is directly linked to better reputation, greater media attention and a growing market share.

This might seem wildly optimistic. After-all, these regulations only shed light on one specific area of corporate responsibility, which is otherwise shrouded in ever-growing narrative of aims, intentions and polices. However, to paraphrase the proverb: in the land of the blind, the one-eyed women is Queen. So whilst it might not be total transparency, it’s a welcomed start!