Equal pay and opportunities for women in finance

By Ryan Smith on November 1, 2018

Despite recent efforts across many industries to provide opportunities more equally and to close the gender pay gap, there is still plenty of corporate glass ceiling left for women to break through. Research has shown that this is especially true in the financial services sector, where women are largely underrepresented – particularly in positions of leadership – and underpaid compared to their male counterparts.

Some major strides toward equality have been made by financial institutions around the world, including better maternity leave schemes, flexible work hours to accommodate the needs of families, gender diversity initiatives, childcare subsidies, and women’s professional organisations and support networks.

However, the effectiveness of these programmes in actually levelling the playing field for women is hard to measure, and many greet them with a healthy dose of scepticism and frustration.

The gender gap: by the numbers

According to a 2017 study, the financial services industry has one of the worst gender pay gaps of all sectors in the UK. Based on salary data and staff surveys from nearly 60,000 employees of British financial institutions, about 81 per cent of women and 55 per cent of men believe there is a significant difference in pay between genders.

Official industry figures put the true gender pay gap in the finance sector at roughly 24 per cent. This far surpasses the 9.1 per cent median pay inequality for full-time employees in the nation as a whole.

The main reason for gender pay disparity is that top financial jobs are usually filled by men. Therefore, men are the ones collecting the lucrative bonuses and incentives that pad executive salaries. There is clear data to back this up.

Women comprise just over 24 per cent of senior staff positions at the 25 major global banks that were willing to participate in another recent study. This represents a two-year increase of less than 1 per cent. Participating asset management firms, insurance companies and professional financial service providers reported only slightly better rates of females in senior positions. In the UK, women hold just 14 per cent of the top finance jobs in an industry of more than 2 million people.

Yet another study found that although financial service firms increased female hires in leadership positions by 10 per cent and female hires overall by 7 per cent between 2008 and 2016, women still made up less than a quarter of all industry leadership hires in 2016.

At just one major international financial institution, the gender wage gap hovers just under 14 per cent, despite a three-year push to improve the hiring of women in senior roles and equalise pay between men and women in similar jobs. Of its workers receiving the highest pay, less than 39 per cent are women, while more than 52 per cent of workers in the company’s lowest pay group are female.

Explaining gender pay disparity

The gender pay gap doesn’t necessarily mean that women are paid less than men for doing the same job. Nationwide legislation enacted in 1970 made this kind of workplace discrimination based on sex illegal. What the pay gap does mean is that women are largely left out of the running for the kinds of high-paying upper-level management and executive positions that provide significantly more income. Since it is usually men hired for these top jobs, they receive a greater share of a company’s revenue, thus throwing pay equity out of balance for the organisation as a whole.

Though many women say that policies aimed at improving gender equality have helped, there are still plenty of obstacles for them in the financial sector.

These include:

  • The perception that promoting women to executive positions is inherently risky
  • Unconscious bias – for example, assuming that a woman will need more time off to care for her family or won’t want to return to work after having a baby
  • Allegations of female hires as “token” hires who are just fulfilling a quota
  • Blatant sexism, which can intimidate and prevent women from going after high-level promotions
  • Lack of agile working conditions that often force women to choose between career and family
  • Lack of mentors, sponsors and female role models in leadership positions
  • Cultural norms that keep girls from pursuing careers in science, tech, maths and other stereotypically “male” fields

Tips for closing the gap

Bridging the gender pay gap is not an easy fix, but these tips from LeanIn.org are a good place for most financial guidance firms to start.

1. Conduct a pay audit

You can’t fix a problem if you aren’t aware of it. Take a look at your company’s payroll and break down salaries by race and gender. This should clearly reveal any gaps in your pay structure. Be sure that your firm has a definitive compensation formula so that workers know exactly what factors influence their salary.

2. Strive for fairness in hiring and promoting

In addition to payroll audits, you should conduct regular checks of your firm’s performance reviews and promotions to identify and address gender disparity in those processes. Make sure that managers are trained in unconscious bias and create specific criteria to reduce discrimination in hiring and promoting.

3. Give women equal opportunity

Women at financial adviser firms often get less useful feedback on job performance, fewer prominent assignments, and have less access to mentors. Ensure that women have equal access to the people and projects that can advance their careers, and delegate mundane tasks such as office organisation or event planning to men and women equally.

4. Allow women to negotiate

Cultural norms dictate that women who are strong self-advocates are sometimes considered bossy, unpleasant or difficult to work with. This kind of social constraint can be detrimental when it comes to negotiating for a higher salary or asking for more responsibility at work. Encourage the women in your office to advocate for themselves and praise them for doing so.

Conclusion

Achieving gender pay equity in the financial industry will not happen overnight. Although progress has definitely been made and many companies are at least now aware of their pay disparity and are working to address it, there is still much more work to be done. Starting small in your own financial advice firm may be difficult, but you will ultimately reap the rewards of a more equitable workforce with greater employee satisfaction, commitment and performance.

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