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Addressing the gender pay gap in the financial services industry

Addressing the gender pay gap in the financial services industry

3 months ago by Sanjoy Sanyal

Companies of over 250 employees in the UK had until 5 pm on April 4th 2019 to file their gender pay gap figures with the government.

Of the almost 10,000 companies that met the deadline, just under half demonstrated that they had made any progress in closing the gap on gender pay differences. The financial services sector is amongst the worst performing, with the figures, based on median hourly pay rates, showing women in finance earned an average of 26.3% less than their male counterparts. The gap is even wider when it comes to bonuses and is actually worse than the figures reported in 2018. In comparison, across all industries, around 25% of organisations have a gap of over 20% in favour of men, with the national average being just under 18%. The pay gap is calculated by taking the median hourly pay of all women within an organisation, and so many firms argue that as it doesn’t take into consideration factors such as age, experience or qualifications, meaning it is not truly representative of firms that do have equal pay policies in place. Nevertheless, closing the gap is seen as an important aspect of achieving diversity and equality in the workplace.

Source: BBC 2019

But why does this gap exist and what can employers, as well as recruitment businesses, do to support the narrowing of this gap? There are huge discrepancies between individual firms and sectors, but the general sentiment is that firms need to take action to improve their chances of parity. In the business areas, Aquis Search primarily operates in there is much room for improvement.  Several high-profile firms in the UK financial services industry have initiatives in place to address the issue, but so far the figures are showing that year-on-year leading banks, asset managers, hedge funds and insurance firms are not making any progress in narrowing pay gap between men and women. Anecdotal evidence that I have seen suggests that the situation is even more stark within the front office. Indeed, when I conducted research on investment staff, the data showed that female representation was under 6% at traditional asset managers. Other sources are showing similar results.  

*Companies that have reported to gov.uk by 3.45pm Tuesday 19 February 2019

             Source: BBC 2019

Much talk has been made of the importance that fostering a culture of equality is essential in readdressing some of the imbalances that exist. Every business should question whether they have an environment that is conducive for gender equality, and diversity in general. In the recruitment industry, we can also play a part, particularly as it is our role in the acquisition of new staff needs to be able to effectively champion the culture of any business we work with. This is where a partnership approach between recruiters and employers is essential and if a business can work closely in articulating the culture of a business and the ways in which it    helps to encourage gender diversity, then the  pay gap that exists can be narrowed.

I currently work with a number of clients, helping them to implement their gender diversity and equal pay strategies, and feel quite passionately that we must be a lot more proactive in ensuring women are equally represented and remunerated - especially in revenue generating roles.  There is a myriad of data that suggests that over the long term, funds run by women perform comparably to those run by men, and that in the long run diverse teams are more successful.[1] To achieve this some flexibility is necessary; a strong hire can come from a rounded approach and a diverse workforce who are committed for the long term will help any
organisation succeed.

The most successful initiatives will consider every aspect of the recruitment process from candidate sourcing to on boarding, as well as on going awareness and support from line managers, senior leadership teams and human resources departments. In short, we are looking at policies that initially redress the balance, then seek to ensure that teams across the board are gender diverse from here on in.

Set quotas

Setting achievable quotas may seem like a relatively rudimentary approach, but it focusses policies. Countries such as Norway have signed up to committing to having women make up 40% of all board members. At a company level, we have started on a smaller scale, but I have several clients that have stipulated women account for a minimum of 20% of the candidates put forward for a finance role. This may sound like a low percentage, but in male dominated functions, we must make a conscious effort to seek out the best in class women in finance.

Broaden the search

Female talent pools are finite in financial services, as mentioned, and conducting a search that covers all suitable talent needs to be approached more laterally. Companies can help by looking to hire talent, such as analysts or sales for example, from corporate or related industries, or from lesser known organisations, rather than only looking at the obvious choices from within the industry. Similarly, looking to candidates that have a non-traditional educational background, or even recruiting internally from more female-centric divisions can present some excellent quality options.

Provide and promote family policies

I use the term family policy, as it refers to anything that supports employees with their commitments outside of the workplace be it childcare or caring for elderly or sick family members through flexible working environments and facilities such as on site creches. Whilst these are some of the provisions women look for in choosing a firm to work for, such policies are often already in existence, yet not promoted and can only serve as a benefit for all employees, men and women. One of the world’s largest financial institutions that provides on-site childcare in the heart of London’s city, recognises running costs are prohibitively high for many organisations, but that such facilities are key to retaining an albeit small group of successful female executives as well as adding incalculable value to the broader male and female workforce.

Mentoring

Men and women enter the financial services sector at equal levels, but men progress at a far greater rate and reach the dizzy heights of senior leadership more often than the women that started with them. Mentoring is one way that financial institutions can break what seems to be a self-perpetuating cycle. Providing career support and help to achieve goals is an important element of mentoring programs, along with building peer networks.

There are many other ways that we can help our clients in making positive changes in the way in which women are engaged in the hiring process. Paying heed to research that suggests we look at all aspects of our interactions with candidates by incorporating  gender neutral language in job adverts and the promoting family policies, for example. All help attract and retain women in the workplace. We recently published an article on International Women’s Day about such measures, which you can read here.

The factors contributing to gender pays gaps are multilayered and complex, but in the long term, many experts are purporting that there need to be systemic changes at grass roots levels such as encouraging girls to study more STEM subjects, as well a cultural change that encourages men take on more domestic duties in the home. In the short term, government ministers are hoping that forcing firms to be transparent with their pay scales will encourage organisations to act to reduce the deficit, including programs such as those mentioned above, that enable women to move into senior positions more easily.

Why choose Aquis Search to help you with your gender diversity hiring?

We take gender diversity, in fact all diversity, very seriously at Aquis Search. As a business we are almost exactly 50% women to 50% men, and across our offices in London, Hong Kong, Singapore, Taiwan and China we have consultants that speak almost 20 different languages and hold passports from too many countries to count. I am very proud to work in a truly diverse, and successful, organisation and when we offer our clients recruitment advice, we are doing so safe in the knowledge that we are working from a diverse background ourselves.

Need more information? To discuss this article, or to find out more about current openings, salary levels or market trend please contact Sanjoy on +4420 3375 8021 or email sanjoysanyal@aquissearch.com

[1] https://www.columbiathreadneedle.co.uk/en/market-insight/investment-blog/gender-balance-in-asset-management/