For organisations serious about offering a level playing field for a truly diverse range of people, socioeconomic background is a characteristic they cannot ignore. Yet it is an area that many employers, perhaps subconsciously, fail to address.
Over the last 10 years, Bridge Group, a non-profit consultancy that uses research to promote social equality, has been looking at how socioeconomic background affects career prospects. This includes application rates to accountancy firms, success rates, progression rates and, more recently, pay gaps.
“What we find is that compared with gender and race, socioeconomic background often has a stronger effect on those things,” explains Nik Miller, Chief Executive of Bridge Group. “I’m not suggesting we play diversity top trumps, but if we care about inclusion and identifying the best talent for a particular role, if we don’t think about socioeconomic background as well as all those other important characteristics, we miss a really important part of the jigsaw.”
Bridge Group analysis highlights the inextricable link between class and opportunities to progress; 89% of senior roles in financial services are occupied by people from professional backgrounds – nearly three times the UK working population. Those from lower socioeconomic backgrounds take 25% longer to progress. This gap could not be explained by performance and increased to 32% for people from those backgrounds who also identified as Black.
Pay gaps are an important barometer of class inequality. Social Mobility Commission research published in 2017 found that professional people from working class backgrounds earned £6,800 less each year than their more privileged counterparts. How much we choose to pay people is an important expression of how much we value what they bring to a company, but it’s the piece that’s often missing, Miller says. “Instead, there’s a welcome but disproportionate focus on early outreach and entry level hiring in addressing social mobility.”
Miller, who also sits on a government-backed taskforce launched to boost socioeconomic diversity at senior levels across the UK, has been working with KPMG UK, which published its socioeconomic background pay gaps for the first time in September last year as part of the firm’s ESG plan. Socioeconomic pay data is based on parental occupation, widely recognised as the most robust and reliable indicator of socioeconomic background.
The Big Four firm wants to see 29% of UK partners and directors come from a working-class background by 2030. Currently 23% of the firm’s partners and 20% of its directors are from a working-class background and working-class representation across KPMG’s board is 22% and 14% in its executive committee.
KPMG Interim Head of Inclusion, Diversity and Equity, Senda Kavindele, says a 70% disclosure rate among its UK employees paves the way for targeted interventions as part of the firm’s broader social mobility action plan. “We’ve explained to our colleagues why we need that information in order to improve outcomes for all.”
Meaningful reporting hinges on high disclosure rates, Miller warns, and for employees to feel comfortable to voluntarily disclose their socioeconomic background. “It’s not just about asking for the data. It’s about saying to employees, inclusion is strategically important to us and we can’t act without understanding what’s going on.”
But Kavindele admits that one of the biggest challenges is making sure you understand what your data is telling you as a business. “There is a business imperative to understand the socioeconomic makeup of your workforce and to address some of the challenges that come with that. Our social mobility action plan goes hand in hand with all our other goals around protected characteristics including gender, sexual orientation, disability and ethnicity. It’s about getting to a point where none of these areas are barriers to access the profession or to progression within the organisation.”
The Social Mobility Foundation’s employers index places a large focus on encouraging employers to put socioeconomic pay gap reporting in place and its Class Polish campaign, launched last October, encouraged employers to collect data and publish class pay gaps. But progress is slow, admits Katy Johnson, the charity’s Communications Officer. It has a range of toolkits offering advice on how to collect data. “There aren’t any excuses – the guidance is there,” Johnson says.
Subsequent analysis of the pay gap data should inform what happens after, Miller explains. “The firms that do this best don’t just publish their pay gaps, they publish an action plan around what they’re going to do in response to it,” Miller says. Analysis should also focus on intersectionality and how the combination of a working-class background with other protected characteristics could play out in terms of career opportunities.
Addressing class inequalities requires you to understand the cradle-to-grave employee journey. “We need to understand the reasons behind what the data is showing us so it can inform what we then do along the whole pipeline – including ensuring that people can progress based on talent, hard work and competence in the role,” Miller says.
Miller also warns that the sorts of things that affect pay can be less about discriminating against a person and can be to do with a whole range of secondary factors: for example, work distribution and who gets the kind of clients that give you a springboard into progression; and the kinds of people that senior colleagues choose to support and give advice to.
The focus on class pay gaps is welcome and well-meaning, however, too often the structural changes needed to address the root causes unearthed by class pay gap reporting fail to materialise, warns Mac Alonge, CEO of consultancy The Equal Group. “The monetary imbalance is probably one of the easiest issues to tackle, but robust and continuous work is needed to uproot the systems, processes, procedures and underlying ideologies that allowed these pay disparities to form in the first place.”
Any aspirations to mandate class pay gap reporting remain problematic, not least because socioeconomic background is not a protected characteristic in law. However, the combination of wanting to do the right thing and reaping the business benefits of social diversity should be enough to spur organisations into action, Miller says. “A pay and reward system that recognises the competencies for the job while other factors that might affect pay and reward such as gender, race and socioeconomic background are filtered out – that’s less to do with equality and just good talent management, isn’t it?”
As a society, we are quick to judge when it comes to making class assumptions, and yet the human desire to fit in also means that employees from working-class backgrounds admit to expending huge amounts of energy to mask their social background to get ahead.
Until we begin to collect the data and people are comfortable to talk about these things it will continue to remain a largely hidden diversity characteristic, Miller says. “Often I will talk to senior leaders who say ‘this doesn’t feel like an issue in our company’ and when we look at the data and play back the lived experiences of colleagues, the converse is true.”
Johnson too is quietly confident that the light shone on social mobility by the pandemic should help to further galvanise pay gap reporting action. “Employers are recognising that social mobility needs to play into the diversity agenda. There’s no overnight fix and it takes a whole company strategy but if you have the motivation, with senior buy-in, it’s easy to do.”
This article was originally published by ICAEW at the following URL: https://www.icaew.com/insights/viewpoints-on-the-news/2022/Feb-2022/Social-mobility-do-we-need-a-class-pay-gap