Why governance should always come first

Gender pay gap reporting has now been part of the corporate landscape for several years. For many companies it has become a familiar annual exercise - gather the data, calculate the figures, publish the report, move on.

But beneath the headline stat sits a more complex reality.

For governance professionals and boards, it shouldn’t be as simple as looking at what the numbers say but questioning what they mean. And perhaps more importantly, whether the reporting process itself is helping them create meaningful change, or merely producing statistics that can be easily misunderstood, or dare we say it…manipulated.

For many governance professionals, the conversation around gender pay gap reporting is evolving from compliance to scrutiny.

Kerry Round, Founding Director of Round Governance Services (RGS) says,
“I struggle with this because I think ultimately the calculations for producing the gender pay gap are flawed – companies with large group structures can simply manipulate the data and until that’s rectified, I continue to have my doubts whether this is taken this seriously at all by the executive”

That perspective may sound provocative, but it reflects a growing recognition that the current reporting framework tells only part of the story.

The challenge isn’t to dismiss the reporting process but to use it more intelligently.

The team at Round Governance Services have been helping clients report meaningfully on their gender pay gap for over a decade.

Get in touch if you want to go beyond the headline stat.

What the gender pay gap does and doesn’t measure

One of the most common misunderstandings about gender pay gap reporting is the assumption that it measures whether men and women are paid equally for doing the same job. It doesn’t.

The gender pay gap measures the difference between the average pay of men and women across a business, not the pay of individuals performing equivalent roles. Equal pay legislation already requires employers to pay men and women equally for the same work.

As Jane Powell FCG, Associate Director at RGS says,
“The gender pay report doesn’t really say anything about pay policies in the organisation. Companies should be complying with equal pay legislation so people on the same jobs should be on the same pay.”

Instead, the gender pay gap often reflects workforce composition.

Industries with large numbers of part-time or lower-paid roles traditionally held by women may show a significant gender pay gap even when equal pay policies are being followed.

Jane says as an example, “In food retail where there are a lot of female part-time workers on minimum wage (or just above it) and the male workers are full time in manager/head office roles there will be a large gender pay gap.”

The headline figure alone tells very little about what is actually happening inside an organisation.

The risk of managing the metric

Because the gender pay gap reflects workforce composition rather than pay equality, it can theoretically be influenced without addressing underlying structural issues.

Jane says, “The results can be improved by employers focusing on taking on lower paid male workers it makes your gender pay balance look better. However, it doesn’t deal with any of the issues.”

This is why we advise boards that they shouldn’t rely too heavily on the headline figure itself. The risk is that companies focus on improving the statistic rather than improving the workplace.

Which brings us to the key governance question.

The one question boards should ask before signing off

Before approving a gender pay gap report, boards should ask management teams a simple question: “What does this data actually tell us about how people progress through our organisation?”

Kerry explains it by saying “In simple terms: imagine Pippa and Phil start the same job on the same day, at the same salary, with similar ages and experience. Fast‑forward five years. Both may have had children, but only Pippa has taken maternity leave. Was she considered for the same promotions as Phil? Did she receive comparable bonuses and pay rises? Even if their work is of the same standard and quality, does Pippa end up in the same financial position as Phil?

That disparity, the accumulation of small differences in opportunity, progression, and reward, is what we mean by the gender pay gap.”

Gender pay gap data is most valuable when it reveals structural patterns. Where do women and men sit within the hierarchy? How do promotion pipelines work? Are there certain roles that act as gateways to leadership?

Claire, RGS Solicitor and Senior Governance Associate believes this is where the real insight lies,
“I always think the more interesting aspect than pay are the barriers to progression which still exist.”

Those barriers can take many forms:

Limited senior roles offering job shares or flexible working

Networking and development opportunities scheduled at times that are harder for caregivers to attend

Organisational structures where people remain in senior positions for decades, limiting progression opportunities

Claire says, “Take a look at stagnant structures where the same people sit in jobs for decades so juniors can’t progress.”

These structural realities rarely appear in the headline gender pay gap number, but they often explain it.

The leadership pipeline problem

Another overlooked factor is the type of roles that typically lead to executive leadership.

Jane points to a recurring pattern, “If you look at the jobs CEOs do before they become CEO, they’re generally finance or operational—very few senior women are in these sorts of jobs.”

Women in senior management are often concentrated in functions such as HR, marketing and legal.

While these roles are critical to organisational success, they historically provide fewer pathways to CEO or COO positions.

Jane says, “I’m a firm believer in offering secondments to operational roles for women in those sorts of senior jobs so they can get the experience needed to progress.”

This kind of structural change does far more to address gender imbalance than adjusting hiring patterns to influence pay gap statistics.

What separates reporting from real change

Organisations that treat gender pay gap reporting as a compliance exercise typically follow a familiar pattern. They calculate the numbers > publish the report > provide a short narrative explanation > move on until next year.

By contrast, companies that use the data to drive change take a more analytical approach.

They ask deeper questions and they treat the report as a starting point for conversation, not the end of the process.

Jane reflects on this cultural shift, “What the gender pay gap reporting does is get people to start talking about these things. And that conversation, when taken seriously, can reshape organisational thinking.”

Practical ways to report your gender pay gap more meaningfully

1. Provide context around workforce structure

The raw gender pay gap numbers rarely explain why the gap exists. Companies that report well tend to include a clearer picture of their workforce composition.

For example, they may explain:

The proportion of full-time vs part-time employees

Where men and women sit across the four pay quartiles

The gender balance in senior leadership and middle management

Whether certain roles (for example retail, call centres, or customer service) are predominantly part-time

This kind of context helps stakeholders understand whether the gap reflects structural workforce patterns rather than unequal pay for similar work.

Without that explanation, readers are left to interpret the headline figure in isolation.

2. Look beyond pay and analyse progression

Many organisations find that the most useful insights come not from pay data, but from analysing career progression.

Questions worth exploring include:

Where in the organisation do women tend to exit the promotion pipeline?

Are there specific grades where female representation drops sharply?

Do promotion rates differ by gender?

What happens to career progression after maternity or parental leave?

Some organisations now supplement their gender pay report with additional internal metrics such as:

Promotion rates by gender

Retention after parental leave

Gender balance in leadership development programmes

These indicators often reveal structural barriers that a single pay statistic can’t capture.

3. Report on the actions being taken

A credible gender pay gap report shouldn’t just explain the data, it should show what the company plans to do with it.

The most effective reports tend to include a mixture of initiatives, for example:

Leadership pipeline initiatives, such as secondments into operational or financial roles

Flexible working policies at senior levels, not just at junior grades

Mentoring or sponsorship programmes designed to support women into executive positions

Reviewing promotion criteria to ensure career breaks do not unintentionally disadvantage candidates

These kinds of structural initiatives address the underlying issues that often sit behind gender pay gap statistics.

4. Be honest about the limitations

Finally, companies that report credibly tend to acknowledge the limitations of the data itself.

The gender pay gap metric is a useful indicator, but it isn’t a complete picture of equality within a workplace. Explaining what the figures do, and don’t measure builds trust with stakeholders.

Recognising those limitations doesn’t weaken the report, if anything, it demonstrates your company is engaging seriously with the issue rather than treating it as a compliance exercise.

Why getting it right matters

Despite its imperfections, gender pay gap reporting can play an important role in forcing organisations to examine their internal structures.

It has created visibility where little existed before.

Even critics of the methodology recognise its value in prompting reflection and dialogue.

The challenge for boards is to ensure that the exercise doesn’t stop at compliance. Because, when companies engage with the underlying issues the benefits extend far beyond reporting.

They include:

Stronger leadership pipelines

More diverse decision-making

Greater talent retention

Improved organisational resilience

Ultimately, gender pay gap reporting shouldn’t be seen as a scorecard. It should be viewed as a diagnostic tool, imperfect, but useful when interpreted thoughtfully.

Let’s chat if you’d like your reporting to create meaningful and lasting change.

Rethinking gender pay gap reporting