Morgan Sindall : 2022 Gender pay gap report

Morgan Sindall Group plc

Gender Pay Gap Report 2022

CHIEF EXECUTIVE'S OVERVIEW

We promote an open and honest culture and want everyone who works with us to feel respected, empowered and valued.

and into the Group, and then to make sure that women are equally supported in their career development. In 2021, we reported that, based on the results of a diversity and inclusion survey we had conducted, our divisions had introduced action plans focusing on changing behaviours, improving recruitment and retention processes, promoting construction as a career choice, and supporting diversity and inclusion in our supply chain. Challenges persist, but as you will see in the following pages, our divisions' initiatives are

Our responsible business committee and the Board are kept updated on each division's progress against its diversity and inclusion roadmap. In 2022, we revised our Board diversity policy to include the FCA targets of women making up at least 40% of the Board and at least one of the senior Board positions being a woman. The policy also states our own target of women comprising a third of our Group management team, which includes the divisional managing directors.

John Morgan,

Chief Executive

Morgan Sindall Group plc is a leading UK construction and regeneration group with revenue of c£3.6bn, employing over 7,000 employees and operating in the public, regulated and private sectors. We operate through five divisions of Construction & Infrastructure, Fit Out, Property Services, Partnership Housing and Urban Regeneration (the 'Group').

Diversity, in its broadest sense, is vital to our long-term strategy of organic growth, as different perspectives help us challenge the status quo and drive innovation.

We want to provide our teams with a positive working environment, where everyone feels included and is treated with fairness and respect. Our commitment to diversity and inclusion is reflected in our Code of Conduct and human rights policy, as well as in our divisions' succession plans, to ensure that we have a diverse pipeline of candidates being recruited, retained and developed throughout the Group.

Our current gender balance and gender pay gap remain high, reflecting the number of men in senior positions in the Group and the historic tendency for the construction industry to attract male rather than female employees. This will take time to change. Our approach is to showcase the wide range of opportunities in construction that are available to women as well as men, so that we can attract more women into the industry

starting to show results.

During 2022, the divisions enhanced existing diversity programmes as well as introducing new initiatives. Efforts continued towards making work in construction more accommodating to women through family-friendly policies, flexible working options, investments in technology to reduce the need for site-based resources and leadership training. Infrastructure's family-friendly policy, for example, now includes fertility and pregnancy support, adoption benefits, and equal maternity and paternity benefits.

New initiatives in the year included programmes focused on women's health, newly personalised career development resources for all employees, and new collaborations with educational institutions to share expertise and innovative insight. For example, Urban Regeneration has partnered with the University of Reading's Henley Business School and the Reading Real Estate Foundation (RREF) on its career initiative 'Pathways to Property' to support the next generation of property professionals. Many of our divisions have rolled out additional inclusivity training to foster stronger communication between employees and managers, and new forms of employee engagement to promote the diversity currently present across the business.

We acknowledge that our progress towards reducing our gender pay gap continues to be slow, as despite making up 25% of our workforce, women are still under-represented in senior roles. We remain committed to narrowing the gap by balancing male and female representation at all levels of the business.

John Morgan

Chief Executive

02 Morgan Sindall Group plc Gender Pay Gap Report 2022

SUMMARY OF THE NUMBERS AND OUR GENDER PAY GAP EXPLAINED

Our 2022 median gender pay gap for the Group based on our April 2022 data is 30.6%. The gap remains high and reflects a higher number of senior male employees in the Group

This report sets out the gender pay gap metrics for each of the Group's legal entities to which the legislation applies.

We have also presented our pay gap for the Group as a whole, including those companies that are not subject to mandatory reporting. The more we understand about our gender pay gap the greater our ability to make aimed decisions.

We have analysed the slight increase in the Group's median gender pay gap on last year and concluded that this is a result of normal business practices (i.e., employees leaving and joining). Women continue to make up 11% of the upper pay quartile (2021: 11%) compared to 38% (2021: 38%) in the lower quartile. Women make up a higher portion of support and junior roles, which predominately fall within our lowest pay quartile.

Our gender pay gap is not a result of equal pay issues, as we have a gender-neutral approach to pay across all levels of the Group and we regularly monitor this to make sure we meet this legal and moral obligation. All divisions pay their teams the national living wage or above, with the majority paying the real living wage rates or above.

Our median bonus gap has decreased to 30.4% (2021: 36.0%), yet it remains high, as does the mean bonus pay gap, due to there being fewer women in senior positions where higher bonuses are paid. In 2022, we achieved parity between men and women receiving bonuses (79%).

Gender pay gap

MedianMean

30.6%	28.8%
2021: 29.6%	2021: 29.9%
Bonus pay gap
Median		Mean
30.4%	58.8%
2021: 36.0%	2021: 57.1%

Percentage of employees receiving a bonus

MaleFemale

79%	79%
2021: 71%	2021: 65%

Proportion of men and women in each quartile band

Upper quartile

22
11%	89%
21
11%	89%

Upper median quartile

22
17%	83%
21
18%	82%

Lower quartile

22
39%	61%
21
39%	61%

Lower median quartile

22
	30%		70%
21
	29%		71%
	Women			Men

03 Morgan Sindall Group plc Gender Pay Gap Report 2022

HOW WE ARE ADDRESSING OUR GENDER PAY GAP

We foster an inclusive work environment where everyone has access to the resources and services they need to achieve their personal ambitions, deliver the best outcomes

for our clients and drive the business forward. We are determined to improve the number of people from all minority groups, including women, across all levels within the Group.

The construction industry is a traditionally male sector, particularly at senior levels. However, we are committed to equal opportunities and fairness in our recruitment, development and promotion practices. As a decentralised organisation, each division is responsible for designing and implementing initiatives to support our aims and is accountable to the Board for improving its own diversity and ultimately reducing its own gender pay gap.

Through our Group HR forum, which is made up of the HR leads in each division, the divisions share best practice and experience of initiatives they have introduced to improve inclusivity. The responsible business committee and the Board are kept apprised of each division's progress and initiatives. 'Developing people' is one of our Total Commitments and drives efforts to recruit from all social backgrounds and invest in training and nurturing employees so that every individual can reach their career potential. Only by ensuring our working environment is inclusive and allows all employees to thrive and achieve their goals, whether progressing through the Group or developing within their current role, will we be able to make significant progress.

In 2022, we made changes to our Board diversity policy. While the policy applies to the Board, its committees, the Group management team (GMT) and its direct reports, it also sets the tone Group-wide. The revised policy states the following targets and we will continue to work towards maintaining or achieving them in our succession planning:

• women making up at least 40% of the Board (including those self-identifying as women).
  In 2022, women made up [37]% of the Board;
• at least one of the senior Board positions
  (chair, chief executive officer, senior independent director or finance director) being a woman (including those self-identifying as a woman). We do not currently have a woman occupying any of these positions.
  This has been highlighted previously and will be addressed as part of any future Board succession; and
• women making up at least one third of the GMT: in 2022, the gender diversity of the GMT was 18%1 (2021: 9%). The gender diversity in the direct reports of the GMT is 32% (2021: 26%). We are committed to increasing the diversity of the GMT and will address this as part of any future succession.

The divisions undertake a variety of employee engagement activities which include surveys, forums, and career and wellbeing initiatives to help identify areas of improvement and monitor the impact of new initiatives. In 2022, all but one division completed employee surveys as Fit Out decided to delay its survey until Spring 2023 to allow more time for new initiatives implemented following its 2021 survey to take effect. Each division continues to progress initiatives broadly aligned to the following themes: changing behaviours to become more inclusive; improving recruitment and retention processes; promoting construction as a career; and supporting diversity and inclusion in our supply chain. Examples of some of the initiatives we have implemented in 2022 are set out on pages 5 to 8.

1 Following Kate Bowyer's resignation on 15 February 2923, female representation on the GMT is 10%

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HOW WE ARE ADDRESSING OUR GENDER PAY GAP continued

Changing behaviours to become more inclusive

As part of our wider health-related campaigns, Construction, Infrastructure and Partnership Housing held menopausal awareness weeks, with specific initiatives to help female employees who may be experiencing symptoms but also for males to understand more about what females in their lives may be experiencing. Our divisions review and revise policies to enhance their inclusivity, advance diversity and inclusivity initiatives, and roll out additional training and awareness programmes to improve people's understanding of inclusion. Some key examples of how our divisions have helped promote inclusivity are listed below:

• Construction developed a strategy in 2021 to improve its approach to inclusion and, in 2022, introduced five new education and awareness modules. Construction has also made it mandatory for all sites and offices to have sanitary products available free of charge.
• Infrastructure enhanced its 'family friendly' policy by making it gender neutral, collectively addressing maternity, paternity and adoption benefits, and adding support on pregnancy, baby loss, fertility support and sabbatical leave.
• BakerHicks is rolling out new inclusivity awareness training and sessions on unconscious bias are scheduled for 2023. The division introduced a new podcast series, 'Wavelength', which explores the journeys of colleagues with a multitude of diversities. The impact of these stories, from volunteers, has been both educational and emotive, fostering kindness and understanding at new levels. BakerHicks has updated its maternity

and paternity leave policies and developed a 'Behaviour Charter' and line manager guidance on menopause, pregnancy, and infancy loss and transitioning at work. BakerHicks' work has been identified for leadership and innovation: the National Construction Equity and Inclusion plan devised by the Construction Leadership Forum, a collaborative initiative between

the Scottish Government and construction industry, cites the business as an exemplar to support the Forum's drive to create new, innovative policies and programmes that in turn will drive real and lasting change in equity and inclusion across the Scottish construction sector.

• To raise awareness and make people feel comfortable talking about periods, Fit Out instigated an on-site Period Poverty campaign at a project in London and raised more than 55,350 sanitary products for food banks and women's homeless shelters, enough to help 615 women for six months.
• Property Services' HR team designed and delivered 'inclusive leadership' training to all line managers and 'creating an inclusive workplace' training to help engineers who spend much of their time out repairing and maintaining properties feel included. Property Services has also signed a 'social mobility pledge' to consider how employment can provide social mobility and commit to recruiting people with diverse backgrounds. Property Services is reviewing the inclusivity of its benefits, improving the cascade of communications through regular bulletins and structured toolbox talks, and supporting wellbeing by launching performance and wellness conversations, menopause support and providing all line managers with mental health awareness training.

• Urban Regeneration set up an equality, diversity and inclusion committee which developed a strategy focusing on five elements: training/ education; promotion; policies; reporting; and recruitment/career progression. The division has also reviewed its hybrid working policy, length of service holiday entitlement, Christmas closure period and paternity leave entitlement.

While there is no quick fix to reducing the gender pay gap, we are committed to implementing initiatives that will enable us to ensure all our employees feel included and able to thrive within the Group.

Recruitment and retention

In line with our purpose, we are committed to providing our people with the resources they need to achieve their maximum potential and progress their careers through the business. We provide collaborative office environments, flexible working arrangements wherever possible and family-friendly working practices all to help our colleagues manage the different priorities in their lives. We monitor our retention rates, provide training and mentorship to help our employees increase their skills and knowledge, and promote internally where we can. Our divisions work with industry bodies and initiatives to attract the best people into the Group. These include the 5% Club, a national campaign to generate opportunities for graduates and apprentices. While not helping to improve our gender pay gap in the short term, our graduate and apprenticeship programmes help us to improve gender and broader diversity among our future managers and leaders and the improved training and clarified career progression will lead to more women being

promoted into senior positions over time. Our 2022 percentage of female graduates has decreased due to an increase in overall graduates joining the business. This means that while there are more female graduates than ever before, their growth rate is not keeping pace. Our divisions are working to develop new ways of attracting female graduates.

Graduates

22
22%		78%
21
37%	63%

Apprentices

22
26%	74%
21
25%	75%
		Women		Men

05 Morgan Sindall Group plc Gender Pay Gap Report 2022