Inclusive leadership: advice for HR and business leaders on ethnicity pay gap reporting

Many employers are committed to addressing inequalities in the workplace, but the global outcry in response to the tragic death of George Floyd has prompted a widespread sharpening of focus on racial inequality at work and many employers are looking at how they can re-focus their agenda.

What should and could employers be doing to bring about change? 

Whilst the moral case for change is and always has been undeniable, sadly it often takes legislative changes to prompt significant change. The UK government closed its consultation on ethnicity pay gap reporting in January 2019.  Whilst this has not yet resulted in legislation, the introduction of mandatory ethnicity pay reporting is widely anticipated.  Consequently, employers also have the anticipation of an increase in the number of grievances, complaints and claims as a result of greater internal and external scrutiny to motivate them into action.

Although many employers have made statements of intent, and a number of organisations have signed up to the Race at Work Charter, very few have voluntarily published data on their ethnicity pay gap.  

As organisations with over 250 employees who are already required to collate and report on their gender pay gap data will know, failure to address the need for workplace equality can not only give rise to grievances and legal claims but also can lead to equally costly damage to culture and reputation.

Taking positive, proactive steps to address workplace inequality will have a positive impact on an organisation’s reputation, improve recruitment and retention and, in some cases, help to defend discrimination claims which may still arise.

What do we need to know?

Collecting, and reporting on, ethnic pay data is more complex than gender pay gap reporting.  There are a number of legal, HR system and GDPR implications to consider with plenty of practical challenges to address. The government acknowledges that defining the overall approach to ethnicity pay reporting is an important step to encouraging consistency. Given the complexity of ethnicity data, contextual factors such as gender, location and age variations could also form part of the information that will need to be collected.

Many organisations also do not have systems in place to record data on ethnicity categorisation in a way that can be easily cross-referenced to payroll data.  As such, employers who choose (or, in due course, are required) to report, will have a significant data collection task which will require careful consideration of GDPR implications.

Of course, whilst it’s important that employers prepare for the introduction of ethnicity pay gap reporting, it’s essential to recognise that reporting is part of the diagnosis and not the solution. However, it certainly shines a light on the importance of finding solutions and directs attention to the most problematic areas. 

Like gender pay gap reporting, ethnicity pay gap reporting will provide a welcome trigger for many organisations to review and revitalise their approach to diversity and inclusion (D&I). Many organisations have well-developed D&I agendas focused on building diversity – improving recruitment processes, educating about unconscious bias, reducing discrimination in policies and practice. However, diversity alone means little – and is unlikely to be sustained - without inclusion.  Too often, the issue of inclusion is delegated to D&I committees, allies, supporter networks and often lone representatives of minority groups to resolve.  However, your leaders have a key role to play in creating inclusivity.  

Read our other article to learn more about inclusive leadership and how you can ensure that inclusive behaviours become a core part of how ALL of your leaders lead.