Charities in need of equal pay audits

The equal pay gap is widening in the voluntary sector, and
charities are being urged to perform salary audits now – or face a deluge of
compensation claims in the future.  By
Mike Broad

Plummeting income levels are the current preoccupation of the voluntary
sector.

The larger charities have watched their endowments devalue with each
successive crash in the stock market, and new figures suggest that corporate
giving is tailing off fast.

But the challenges facing the sector do not concern income alone. There are
potentially high costs hidden within many charities’ payroll systems.

Two recent studies show a significant pay gap between men and women working
in the voluntary sector – despite 30 years of anti-discriminatory legislation.
The gap is particularly severe at management level, and could become a
compensation time bomb if left unchallenged.

Female chief executives of charities earn 88 per cent of their male
equivalents salaries, while deputy chief executives are paid just 79 per cent,
claims research by the National Council for Voluntary Organisations (NCVO).

Research by the Association of Chief Executives of Voluntary Organisations
(Acevo) shows that male finance and fundraising directors currently earn at
least £5,000 more than women in the same role.

Stephen Bubb, chief executive of Acevo, said: "We are still seeing a
big gap between men and women’s salaries, and it’s time for a wake up call.

"There is a problem if we espouse equality and justice as a sector, and
find that our own practice is not exemplifying that," he added.

But charities risk more than just losing the moral high ground. Branding – a
key commodity in the voluntary sector – is also under threat.

Julie Mellor, chair of the Equal Opportunities Commission (EOC), urges
charities to perform equal pay reviews to tackle the problem.

"Organisations are risking their reputations as fair employers, which
will affect their ability to recruit and retain people with the right
skills," she said.

"A pay audit can reveal the under-use of women’s skills, and a lack of
flexibility at work preventing their progression. It makes business sense to
tackle this waste of resources."

But compensation culture presents the biggest threat, as figures suggest
that charities are vulnerable to tribunal claims.

There were more than 24,000 applications to employment tribunals last year
concerning equal pay or sex discrimination, with the average award totalling
£19,279.

The threat of litigation is set to rise this year, with the introduction of
an equal pay questionnaire as part of the forthcoming Employment Act. Female
staff members will be able to ask their employers for the pay rates of other
employees, and the reasons for them.

The answers will be admissible as evidence in tribunal claims, and legal
experts predict this will cause a rash of tribunals.

NCH Action for Children is one of the Government’s Equal Pay Champions –
organisations that conduct and promote the use of equal pay audits. Initial
findings suggest the charity does not have a gender pay problem, but HR
director Janice Cook still believes it is a worthwhile exercise.

She said: "It shows our 6,000 employees that our organisational values
are in place. Publishing audit results shows that you are fair, open and
transparent."

But many in the third sector believe the figures reflect a lack of women in
senior roles in large charities, rather than unequal pay.

Geraldine Peacock, chief executive of the Guide Dogs for the Blind Association,
is one of only five women in the top job at charities with annual incomes of
more than £10m.

She said: "Women run small charities, and men run big ones – it leads
to men being paid more."

Clare Smith, HR director of care provider Leonard Cheshire, agreed:
"While organisations cannot assume that they are equal pay employers, it
is more important that chief executives and directors sit down, examine how
many women they have in senior positions, and ask themselves whether they have
made enough of an effort to achieve a gender balance," she said.

When Peacock joined the Guide Dogs Association in 1997, its entire board was
male. Now women outnumber men by five to three. She believes successful women
must act as role models, and charities need to create career development
programmes.

But Peacock admits there is still a long way to go. She recently received 90
applications for the finance director vacancy at her charity. Two of them were
women.

She said the tendency for boards of trustees to recruit in their own image
has presented a glass ceiling to female employees.

"Women have to be fairly represented on boards of trustees as this will
both send a clear message about the role of women within the charity and
increase the likelihood of fair and representative recruitment practices.

"The choice of head hunters is important, too, as senior posts in the
voluntary sector are traditionally handled by mainly male recruiters," she
said.

Acevo’s Bubb believes the low take-up of work-life balance practices such as
flexible and home working, is also hindering women’s progress up the career
ladder, and the reduction of the gender pay gap.

He said: "Is it good enough that just 24 per cent of charities have a
policy promoting work-life balance? And only a small number provide childcare
support. For a sector that places such high value on diversity and equality,
this is definitely not good news."

Grant-giving organisations are also to blame for the predominance of white,
middle class men on the boards of large charities, said Joanna Wootten, HR
services manager at NCVO.

"The real challenge for the voluntary sector is persuading funders –
including the general public – that an integral part of supporting good causes involves
providing for adequate training and staff development," she said.

"With more investment, charities could set up structured fast- track
programmes and mentoring schemes to enable women, ethnic minorities and
disabled people to take the helm at more of our larger charities."

There is increasing pressure for equal pay audits to become mandatory. So
far, the Government has advocated a voluntary, best practice approach. But the
EOC’s Mellor warns that slow take-up by employers could harden this stance.

Research by DLA MCG Consulting shows that more than eight out of 10
employers are at risk from equal pay claims. Charities must react now, before
they end up having to settle attention-grabbing claims.

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