Feature insight - Payroll data and benchmarking
A tale of payroll data, benchmarking and gin
Lisa Gillespie, Moorepay’s human resources director, provides advice
U nless you have spent the last few months hiding under the sofa trying to avoid electioneering and Brexiteering you will no doubt be aware that recently it became a legal requirement for many companies to record and report on pay gaps between genders. Since 6 April 2017, employers in Great Britain with more than 250 staff are required by law to publish the following four types of figures annually on their own website and on a government website: ● gender pay gap (mean and median averages) ● gender bonus gap (mean and median averages) ● proportion of men and women receiving bonuses ● proportion of men and women in each quartile of the organisation’s pay structure. The results are to be published by 4 April 2018; however, I have spoken to some organisations which have already started analysing and reporting their results. They fall into two distinct categories which I will call ‘Phew! We’re okay!’ and ‘Woah, a bit of a problem here'. If you think about it though, for organisations which have the requisite analytics and resources to be so fast out of the traps since the 5 April when data was to be collected are – in all likelihood – mature enough in their human resources (HR) model to take any remedial actions required before they must publish in 2018. Not so for others I have been speaking to, who find themselves mired in spreadsheets, V-look-ups, querying opaque bonus structures and reaching for the gin. For HR professionals, many of whom work in organisations of such a size which still do not have joined up payroll
and HR data, the next few months could be a rollercoaster because this data, once published, will be subject to scrutiny by employees and trade unions alike. If they do not like what they are seeing it could pave the way for awkward questions, workplace disputes, employment tribunals and ultimately, more cost for organisations. ...measurements are position specific so helpful in providing a range of minimum, a midpoint, and a maximum... So, what’s to be done whilst the clock is ticking? Firstly, put the gin down, as spreadsheets and gin do not mix. Start with the data. Are you absolutely sure it is correct? Have you included/excluded individuals correctly? Where there are gaps, can you identify the reasons e.g. historic acquisitions, employee tenure, unusual events which may have led to peaks or troughs such as laying off a group of people, seasonal working etc? If you are able to explain gaps there should not be any problems; however, I do expect some organisations will have to take a close look at their reward structures and accept they need to be revised. There are hundreds of reward specialists in the market but it does not have to be a complex exercise for most, as online you can find a rich resource of industry- based benchmarking and make a start. If you have real issues ask a specialist but
most HR professionals are well-equipped to start building transparent pay and reward structures if they aren’t spending their time fire-fighting an onslaught from unions and staff. Be creative; if you need help why not ask the union and staff for assistance. Use reliable tools to benchmark such as the comparative ratio (known as the ‘compa-ratio’) which is a calculation of the employee’s current salary divided by the current market rate. These measurements are position specific so helpful in providing a range of minimum, a midpoint, and a maximum for industry averages for the position. For example, a compa-ratio of 1.00 or 100% means that the employee is paid exactly what the industry average pays and is at the midpoint for the salary range. A ratio of 0.75 means that the employee is paid 25% below the industry average, so a possible flight risk or if there is a gender pay gap in the equivalent peer group, a risk of a dispute. A ratio of 1.15 compa-ratio means the employee is paid above the industry average, so useful if you need to undertake some red-circling to flatten out salary rates after you have analysed your gender pay gap data! Finally, make sure you do your sums before you start discussions about addressing pay differentials with employees or unions, as otherwise you will be extremely unpopular with your head of finance. Nobody likes surprises but of course it’s worthwhile supporting a business case to address inconsistencies with the cost of losing staff, poor morale, legal disputes and soon you may even get a budget approved to get off those spreadsheets and onto a contemporary platform to get you ahead of the curve. Then you can have a gin to celebrate! n
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Issue 32 | July/August 2017
| Professional in Payroll, Pensions and Reward |
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