Can Gender Pay Gap Reporting Help to Build Out Your Diversity and Inclusion Strategy? | Mercer

Can Gender Pay Gap Reporting Help to Build Out Your Diversity and Inclusion Strategy?

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Can Gender Pay Gap Reporting Help to Build Out Your Diversity and Inclusion Strategy?
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Can Gender Pay Gap Reporting Help to Build Out Your Diversity and Inclusion
Calendar30 July 2019

European countries are increasingly addressing the gender pay gap, with new disclosure requirements for companies in the UK, Germany and France as well as upcoming disclosure laws in additional countries and expanding legislation at the EU level.

In France, in particular, the rules are quite specific, requiring organizations to calculate their gender equality index using five indicators, from which their final score is calculated. If companies do not reach the target threshold of 75 points out of 100 within three years, they will face a financial penalty of up to 1% of the payroll of the legal entity

As compliance obligations grow, it’s important to consider an across-the-board view. Global efforts can complement country-specific efforts, even if they don’t directly address regional requirements. Reducing the gender pay gap goes a long way toward strengthening your diversity and inclusion (D&I) strategy.

Required gender pay gap calculations in France

France’s “Professional Future” law, passed on September 5, 2018, requires companies with more than 50 employees to conduct a pay gap analysis and publish the results online annually.

The deadline for reporting depends on the organization’s size:

  • 1,000+ employees — March 1 (starting in 2019)
  • 250 to 999 employees — September 1 (starting in 2019)
  • 50 to 249 employees — March 1 (starting in 2020)

Organizations will also be required to share this information with their social and economic councils.

Gender equality indicators

Each of the five indicators below provides a unique perspective on your company’s position and gives you a starting point for further investigation while highlighting opportunities to improve your D&I strategy. (The target threshold is 75 points out of 100.)

Indicator

Legal requirement

Leading companies can …

1. Weighted gender pay gap in employee compensation

(40 points)

Based on the average pay of women compared to men, the gap is calculated by age group and by comparable job category. A 2%–5% tolerance is allowed depending on the job classification used.

 

  • More fully account for legitimate pay drivers — for example, tenure, location or performance — by conducting statistical analyses, and consider pay adjustments to counter gaps along with greater transparency in pay decisions

     

2. Gender equality of annual individual salary increases

(20 points)

The score is based on the percentage of employees, not the salary increase. It reflects the weighted gap between the percentage of men and women receiving salary increases and not the actual increase (monetary value).

  • Incorporate a formalized annual pay review process to improve gender equity through pay adjustments across the organization

3. Gender equality in promotions in each professional category

(15 points)

The score is based on the weighted gap between the percentage of men and women whose salary increased due to promotion. Employers can assess promotions over a three-year period to determine whether they align with their human resources policies. (Organizations with 50 to 250 employees can merge the promotion and individual salary increase criteria.)

  • Identify choke points for progression of women, and review diversity and inclusion policies to better support the flow of improved diversity throughout the organization

4. Salary increases paid to women returning from maternity leave

(15 points)

This measures whether women returning from maternity leave are awarded salary increases, provided that salary increases were awarded during their absence.

  • Ensure that women, upon returning to work, are given equal opportunities to not only resume but also grow within their roles

5. Number of employees of the least-represented gender among the 10 most highly paid employees in the organization

(10 points)

Maximum score requires employers to have at least four individuals of the least-represented gender among the top 10 earners.

  • Improve the overall employee value proposition to better attract and retain female talent at the top of the organization

  • Hold workshops and training sessions to create awareness and build a culture of developing a diverse talent pool for the next generation

Action plan

At Mercer France, we can you help you improve your scores for each of the indicators above to enhance your D&I strategy. A few of the key tools we use are listed below:

  • Pay Equity Analysis
  • Internal Labor Market (ILM) Analysis
  • When Women Thrive proprietary benchmarks
  • Awareness workshops and employee engagement surveys

These data-led insights help organizations align their D&I and supporting HR strategies to drive workforce change and create long-term business impact.

Get in touch. To learn more about France’s recent pay equity legislation and Mercer’s recommendations for developing an effective gender equity strategy, please email ayce.nisancioglutopcan@mercer.com.