CIPD chief executive urges focus on productivity and fundamental long-term change – but isn’t convinced by equal pay reporting.
The forthcoming national living wage (NLW) should be seen as a chance for HR to seize the change agenda inside organisations, according to CIPD chief executive Peter Cheese – and that means challenging business leaders to think about the long-term future as well as short-term costs.
At the Future Talent Conference in London, Cheese pointed out that 20 per cent of employees would be affected by the introduction of the new basic salary standard for over-25s, which will be set initially at £7.20 but is expected to rise beyond £9 by 2020.
Recent surveys from the CIPD and others have suggested that organisations see productivity as part of the solution to rising salary costs, but are also anticipating layoffs and constrained profitability when the national living wage is introduced in April.
The wage “should be used as an opportunity to raise productivity,” Cheese argued, and should be a spur to tackling more systemic issues in the workplace: “We’ve not invested enough in the workplace, we’ve not invested enough in technology to raise productivity, and we’ve not prepared our workforces for the future. We’ve got to move towards not just talking about talent management or performance management… we’ve got to talk about redesigning work.”
The CIPD leader suggested that HR should seize the moment to talk to business leaders about the nature of their workforce.
“Go and challenge in your own way,” he said. “If you have a CEO who doesn’t get this stuff – perhaps because they’ve come from the finance function, or because of how they’re rewarded – just go and start that conversation. If the numbers are all you have to start with, start there.”
A simple conversation on workforce demographics, particularly around ageing, could open doors, he suggested.
Cheese also tackled the other pressing legislative issue facing HR departments – the requirement for UK businesses with more than 250 employees to report on the size of their gender pay gap. Reporting will become mandatory from 2018 and draft regulations were published last month.
But Cheese said focusing purely on metrics risked obscuring a broader and more important debate: “The real difference in gender pay is about the jobs that women do versus those that men do. The real issue hidden inside all these knots and these areas we’ve got to report on, is how we get women into better-paying and more senior jobs.”
There were important discrepancies in the number of women in senior roles, particularly in functions such as IT or in certain sectors, he said: “Can we ever aspire to achieve gender parity in the executive ranks? And is that what women want?”
New figures from Korn Ferry Hay Group appear to back up this assessment. Analysing payroll reports from 292 large companies who already track gender parity, the consultancy recorded a 28.6 per cent average pay gap in favour of men, but concluded that all but 0.8 per cent of this could be attributed to variance in seniority, sector and function.