Gender pay gap

The gender pay gap is the percentage difference between the median hourly pay of men and women in an organisation. A positive gap means men earn more on average; a negative gap means women earn more. In the United Kingdom, organisations with 250 or more employees are required to report their gender pay gap annually under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017.

The gender pay gap is different from equal pay. Equal pay means paying men and women the same for the same or equivalent work, which is a legal requirement. The gender pay gap is a broader measure that reflects the distribution of men and women across different roles, levels, and pay bands within an organisation. An organisation can have full equal pay compliance (men and women in the same roles earning the same) and still have a significant gender pay gap if men are disproportionately represented in senior, higher-paid roles.

The median is the preferred measure because it is less affected by extreme values. A small number of very highly paid individuals (who are disproportionately male in most organisations) can inflate the mean pay gap beyond what the typical employee experiences. The median gives a more representative picture of the gap for the majority of employees.

Closing the gender pay gap requires structural change, not just pay adjustments. It typically involves improving female representation in senior and higher-paid roles, addressing barriers to progression, reviewing recruitment practices for bias, and ensuring that flexible working does not penalise career advancement.

The UK statutory reporting requires both median and mean calculations using hourly pay. Hourly pay includes basic pay, allowances, shift premium pay, and piecework pay, but excludes overtime. Bonus pay gaps are reported separately and use actual bonus amounts paid during the 12-month period.

To calculate the median, list all male employees' hourly pay from lowest to highest and find the middle value. Do the same for female employees. The percentage difference between these two midpoints is the median gender pay gap. For the mean, calculate the average hourly pay for each gender and find the percentage difference.

A metric tree breaks the pay gap into its structural drivers, revealing whether the gap is caused by representation imbalances, progression barriers, or compensation practices.

This tree moves the conversation from a single headline number to specific, actionable drivers. If the gap is primarily driven by low female representation in the upper pay quartile, the interventions focus on progression, sponsorship, and leadership pipeline development. If the gap persists within pay bands, the issue is more likely in compensation practices: inconsistent starting salaries, biased pay review outcomes, or unequal bonus allocation.

The tree also surfaces structural factors that are often overlooked. Part-time working, which is disproportionately undertaken by women, places individuals in lower pay bands and reduces access to progression opportunities. Addressing this requires reviewing whether part-time and flexible roles have equal access to promotion and whether part-time working is available at all levels of the organisation. Tracking gender ratio by pay quartile makes these patterns visible.

1. 1

   Set representation targets for senior roles

   The pay gap is primarily driven by who holds which roles. Set specific, measurable targets for female representation in the upper pay quartile and senior leadership. Track progress quarterly and hold leaders accountable for building diverse succession pipelines.

2. 2

   Review recruitment and promotion practices for bias

   Audit hiring and promotion processes for structural bias. Use diverse shortlists, structured interviews with standardised scoring, and blind CV reviews where appropriate. Analyse promotion rates by gender to identify where progression barriers exist. Monitor employee turnover rate by gender to see whether pay inequity is driving attrition.

3. 3

   Standardise starting salaries and pay reviews

   Remove unnecessary discretion in setting starting salaries. Use defined pay bands with clear criteria for placement. In annual pay reviews, analyse outcomes by gender before finalising decisions to identify and correct any systematic differences.

4. 4

   Support flexible working at all levels

   Ensure that part-time and flexible working arrangements are available and normalised at senior levels, not just in junior roles. When flexibility is only available at lower levels, it creates a structural barrier to progression that disproportionately affects women.

5. 5

   Invest in sponsorship and leadership development for women

   Mentoring alone does not close the gap. Sponsorship, where senior leaders actively advocate for and create opportunities for high-potential women, is more effective. Combine this with targeted leadership development programmes to build the pipeline for senior roles.

KPI Tree lets you model the gender pay gap as a multi-dimensional metric tree that connects the headline number to its structural drivers: representation by pay quartile, promotion rates by gender, starting salary consistency, and bonus allocation. This turns annual reporting into a continuous monitoring tool.

The tree makes it possible to see whether pay gap initiatives are working in real time, rather than waiting for the next annual report. If you launch a sponsorship programme for women in mid-career, you can track whether female promotion rates in the relevant cohort improve over the following quarters. Linking the pay gap to eNPS data by gender helps you understand how perceived fairness affects engagement.

Each branch of the tree can be owned by the relevant stakeholder: talent acquisition owns the recruitment pipeline, department heads own representation targets, and compensation teams own pay review equity. This shared accountability ensures the pay gap is treated as an organisational priority, not solely an HR reporting obligation.