
Leonie Nicks
Head of Crime, Security & Justice
Today the government publishes its first ethnicity pay reporting guidance for employers. Publishing this guidance sends a strong signal to businesses to take a more data-driven approach to improve racial equality, although doing so remains voluntary. As more businesses calculate and disclose their ethnicity pay, this will increase transparency and accountability.
From working with employers, we know that reporting ethnicity pay faces two major challenges: (1) collecting ethnicity data and (2) understanding this data to identify what is driving pay differences.
There’s a lack of evidence on how to collect data successfully, with most employers facing low disclosure rates. However, there are simple, evidence-based actions employers can take to increase voluntary disclosure. We worked with Arup to increase their disclosure rate from 55% to 85%.
We did this by making it easier for employees to complete the form and by focusing messaging on the key concerns highlighted by employees. We interviewed staff and they told us that they cared most about the purpose of collecting data and who had access to it. More information is available in our blog.
Even for organisations that have high disclosure rates for ethnicity, many struggle to make sense of their data. BIT worked with a large public sector employer to understand their ethnicity gaps, what was driving them, and how to prioritise where to focus in their action plan.
Bringing these insights together gave us a holistic view of the employer’s ethnicity gaps and where to prioritise their efforts. For example, in interviews we heard that knowing someone in the civil service is an advantage when applying. It seems likely that ethnic minority applicants are less likely to have this advantage given the low representation in the civil service. This helped to explain some of the quantitative data findings, such as lower recruitment success.
Looking solely at the organisation’s ethnicity pay gap, it looked as though ethnic minority staff were paid more than white staff. However, this pay gap was mostly due to ethnic minority staff being more likely to work in better paid office locations such as London. While 37% of London’s working-age population is from an ethnic minority, the UK average is 15%. Other large employers with offices in multiple locations including highly paid cities like London are highly likely to find a ‘positive pay gap’ overall.
Since most equality, diversity & inclusion (EDI) budgets are limited, data analysis should drive the prioritisation of EDI initiatives. Below are a few examples of the top priorities we found at the large public sector employer.
They needed to focus efforts on reducing bias in the recruitment process rather than increasing applications from ethnic minority candidates. Our data analysis showed that ethnic minority applicants were overrepresented in the applicant pool, but were half as likely to be hired than white applicants. The biggest ethnicity gap was in receiving offers after the interview, suggesting that interviews introduced the greatest bias. This meant the organisation decided to focus efforts on reducing bias in the recruitment process rather than increasing applications from ethnic minority candidates.
Different employers may have different ‘pain points’, which is why understanding your process and outcomes is key. It is a waste to spend time and money attracting more ethnic minority applicants if they never pass the sift stage of recruitment; instead consider how to improve the sift to make it fairer first.
They needed to reduce bias in the recruitment process, which would also support ethnic minority progression. Their promotions are carried out through their recruitment process. While there was no difference in the overall promotion rate, this masked the fact that ethnic minority staff had to apply 3x more than white staff to achieve this. This is likely exhausting and demoralising, possibly explaining their lower retention rate.
DOWNLOAD ETHNICITY PAY REPORTING GUIDANCE
For more information on effective evidence-based actions, look at our guidance on improving workplace equity and inclusive recruitment.
Work with us by contacting [email protected] or [email protected].
Head of Crime, Security & Justice
Research Advisor
Research Advisor
Senior Research Advisor
Principal Advisor
Design and development by Soapbox.