Managing Employee Relations - University of Brighton

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					   Gender Inequalities and
Corporate Social Responsibility:
A Role for Reflexive Regulation?
Colm McLaughlin – University College Dublin
Simon Deakin – Centre for Business Research,
          University of Cambridge
   ESRC – Gender Network (GeNet) Project
• We examine equal pay and gender issues in the context of
  wider debates about the effectiveness of different regulatory
   – Hard versus soft law
   – More specifically the question of mandatory pay audits
   – We apply a ‘reflexive regulation’ framework to examine the issue of pay
   – Part of a wider project looking at the various pressures on organisations
     to address gender inequality (e.g. business case, capital market
     pressures, unions, public procurement, law, etc.)
• Draws on 40 interviews with: organisations (20), fund
  managers, unions, and other stakeholders.
   – Eight private sector organisations, eight public sector organisations, two
     Universities, two not-for-profit.
   – Access issues: Private sector firms all ‘diversity-friendly’
   Equal Pay and Mandatory Pay Audits
• 30 years after the Equal Pay Act significant pay gap remains
  (16.4%; 20.8% for private sector)
• Mandatory equal pay audits???
   – Equal Pay Taskforce (2001) – mandatory pay audits
   – Kingsmill (2001) – voluntary approach
       • mechanisms of corporate governance, human capital management,
         institutional investors, reputational risk
   – Women in Work Commission (2005) – no agreement
   – Discrimination law review (DLR, 2007) – contravenes ‘better regulation
     principles’; business case arguments
• Range of public policy supports for voluntarist approach
   – But, proportion of large private sector firms voluntarily conducting equal
     pay audits still under half (see EOC and EHRC surveys)
   – Most firms “do not believe they have a gender pay gap” (EPTF)
   – → Equality Act (2010) (requirement for large organisations to
      report their gender pay gap from 2013????)
    Limitations of a ‘hard’ law approach
• Dominant discourse:
  – Encourages compliance rather than real engagement
  – ‘Red tape’ - endless bureaucracy - one size fits all
  → DLR: “contravenes better regulation principles”
• Law translates incompletely into the economic and
  organisational spheres – Autopoiesis – systems
  theory (Teubner, 1992)
  – Systems are autonomous and closed
  – Legal system has unique linguistic forms and institutional
  – On-going ‘juridification’ of law = complexity
  – E.g. equal pay legislation in the UK
                  Reflexive Regulation
• A shift from substantive to procedural regulation
   – Involving deliberation by stakeholders
   – Standards set by law can be modified, within limits
• Stimulates enforced ‘self-regulation’
   – Includes default rules acting as a stimuli for self-regulation
• A flexible process, but one involving external benchmarking –
  shared learning – ‘best practice’
   – Proactive rather than reactive solutions
• Law still has a number of roles to play
• Bridging institutions necessary component – ‘structural coupling’
  of the legal and organisational systems
   – E.g. collective bargaining or employee representation mechanisms
Issues and Limitations of Reflexive Regulation
• Conditions under which this approach might be successful?
  (‘the frame’)
   – e.g. disclosure rules ineffective without adequate system of PIs

• Capacity of the bridging institutions to play their ascribed role
   – e.g. employee representation mechanisms

• May ignore conflicting political and economic interests
   – Deliberation versus distributive bargaining (e.g. equal pay in local
   – Law may be framed by business case discourse (efficiency) rather than
     employee rights
   → De-politicisation of the law through deliberation
     Gender Equity and Corporate Governance
• Growth in CSR reporting, codes of conduct, CSR indices....
• Socially responsible investment (SRI)
   – United Nations Principles for Responsible Investment (UNPRI)
     – US$14 trillion
   – UK SRI – €331 billion (tenfold rise 97-01)
   – US SRI – 13% of all equities
   – Supported by reporting requirements:
      • SRI Pension Disclosure Regulations: extent to which social ethical and
        environmental (SEE) issues affect investments
      • Myners Principles: pensions to report investment principles on an
        annual basis
      • ‘Enhanced Business Review’: aimed at firms, disclosure of SEE
• Increase in shareholder activism,
   – e.g. Unions training pension fund trustees
• But impact of these developments on employment issues
  generally, and gender specifically?
    Limitations of Corporate Governance
• Extent of institutional activism marginal:
    – Pension fund trustees conservative and concerned with fiduciary duty:
        • “I was at a meeting the other day and an actuary said that the downfall of the
          pension fund was when you let women in. This was publicly, in a meeting called
          by the xxxx pension fund… that’s what an actuary said…… There are some
          severe barriers to overcome”. (Union official)
    – NGO and trade unions – disconnect between trustees and the aims of the
    – Union official on equal pay: £70 million → £70 billion is material interest
• Hierarchy of CSR issues: diversity issues very low down the list
   • Women on boards raised, but few other gender issues
   • Pay audits = micro managing
• Lack of transparency and meaningful quantitative information on both
  institutional side or PLC side
    – Pensions: Statements of Investment Principles “sit in a drawer”, minimal
      reporting about how policy is implemented
    – Limited reporting of employee PIs by PLCs
    – On gender issues, PLC policies may be reported but rarely the impacts
      (Grosser & Moon, 2008) – lack of quantifiable information for any
      meaningful assessment or comparison
      Pay audits as ‘reflexive regulation’
• Mandatory Pay audits = reflexive regulation
  – Commit actors to a process (analyse pay) not a specific outcome,
    requires transparency about process and results
  → might open up deliberation about the pay gap and potential

• Pay audits in our sample of organisations
  – All had conducted pay audits but only one private sector firm had
    shared the results with staff
  – “We would only do it voluntarily if it would show us in a good
    light… Without the law we would never do it” (HR Manager, PLC)
  – Fear of reputational risk (e.g. not-for-profit) and litigation
  – De facto mandatory in the public sector
     Mandatory vs Voluntary Pay Audits
• Mandatory pay audits more effective because of transparency &
   – Deliberation leads to deeper analysis, e.g. Issue of appointments
   – Voluntary process ≠ reflexive
       • No transparency, no deliberation
   – “Publicly I don’t like transparency, privately I think it can only help”
     (Diversity Manager, large PLC).
   – Private sector firms: ‘equal pay not an issue for staff’
   – Canadian experience: Effective where unions had a presence – otherwise
     manipulated by management (Canadian Pay Equity Taskforce, 2004)
• Benefits of deliberative pay audits can go well beyond pay
   – E.g. Part-time staff at one University
          Role of law in organisations
• Private sector companies did not see law in any way as a driver
   – Bridled at the suggestion
   – “We would very rarely refer to the law as the reason for doing something… our
     aspiration is best in class approach… We would want to do better than that”
   – Q Does the law play any role in driving you? A. No, none at all.
   – → Influence of strong ‘business case’ discourse
• Upon probing: law as a powerful tool for ‘gender champions’ to change
  attitudes/behaviours within their organisations (so as a way of opening
  up dialogue and deliberation within the management team):
   – “yes, if there was new legislation that came in we would use that to review our
     existing policies and also as a platform for a change of behaviour as well. So yes,
     from that point of view it would be a driver”.
• These firms are leaders in the field → influence on government policy
   – Strong resistance (hostility) to legal solutions
• Only one private sector firm had shared the pay audit results with staff
    –   Tension between law and business case – want to be ahead of the law when they
        agree with the law – but slow to respond to impending transparency
            De-radicalisation of Gender Equality
• Organisational resistance to ‘business case’ constraints, e.g. internal
   – “what are women going to contribute that is going to make us more
   – Changing culture a slow process → In the interim provide supports, networks,
     etc. so women can “survive in a political environment [and] play the game”
   → change women rather than the organisation??
• Business values prioritised over rights, e.g. Work-life balance
   – About changing the work so people can find balance or about helping
     employees fit the demands of the job around their lives?
   – “if the pace is relentless, what can we do to help you fit that around your life”
   – women returning from maternity leave who don’t want to travel and work
     long hours “give working women a bad press”
• Most ‘pressing issue’: lack of women in senior roles
   – Not occupational segregation or low-paid women or......
• The “exclusive reliance on management action risks promoting
  conceptions of equality that are partial and insecure” (Collings & Dickens
• Strategy of ‘encouraging’ organisations to voluntarily undertake
  pay audits on their terms ineffective
• Institutional mechanisms of corporate governance and CSR
  envisaged by Kingsmill have had minimal impact on gender
• A ‘reflexive regulation’ approach has the potential to overcome
  some of the barriers to both hard and soft regulatory strategies
   – Mandatory pay audits could fit within a reflexive approach →
     potential for deliberation and shared learning
   – Much to be uncovered about the ‘frame’
      • Transparent, detailed and standardised information
      • What sorts of deliberative mechanisms are needed?
• Shadow of current legislation over reflexive law
• Wider questions about the de-politicisation of equalities

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