Every time I walk into a room to facilitate a session at a financial institution, I mentally check what the male / female ratio is; it will be unsurprising for you to learn it becomes more skewed to the male as the seniority of the group increases. It isn’t uncommon for me to be the only female in the room. We all know that gender bias is a huge problem, and this lack of diversity at the highest levels will ultimately stifle growth.
The latest McKinsey research states that “companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians”. In Mark Carney’s speech on 22nd March 2016, he stated that “For too long the representation of women in middle and senior tiers of management has lagged that in other leading sectors. For too long, results have fallen short of good intentions. And for too long the financial sector has suffered the economic consequences of this inequality while society has borne the broader costs. Greater diversity – in all its forms, cognitive, gender, background, ethnicity, religion – can help transform the financial sector”. So we all know gender diversity is important, and Carney’s comments were made in response to Virgin Money’s Jayne-Anne Gadhia’s report “Harnessing the Talents of Women in Financial Services”. Her report notes that more women than men join financial services, but many women get stuck at the middle management level, with the top jobs in the hands of men; for example women make up only 14% of Executive Committees in the Financial Services sector.
Gadhia has set out “Ten Positive Actions” to redress this imbalance, such as investing in supportive people managers, creating the right culture, providing technology which supports flexible working and implementing good flexible working practices. Gadhia has also suggested ensuring that there are transparent pay structures. For a long time, this last initiative has been proposed on many occasions, but to date has proved deeply unattractive to employers.
However, things might be set to change. The Government is introducing mandatory pay gap reporting. This will require employers with at least 250 employees to publish an annual report showing the overall gender pay gap in their business across a specific pay period. The report must include information on the gender balance in each of four salary quartiles. There is also a requirement to publish information in respect of bonuses paid to men and women over a 12 month period. It is anticipated that these regulations will come into force in October of this year, with the first gender pay reports published by April 2018.
So what impact will these new regulations have? Well, unfortunately there are no financial consequences for failing to publish this data, however there is talk of “naming and shaming’ those organisations which fail to comply. Gadhia’s report notes that “What gets measured gets done”, and I believe there is truth in that. In order to comply with this new regime, businesses need to be looking critically at this data, and perhaps it isn’t a pretty sight. The figures speak for themselves and maybe it is an uncomfortable truth. Whilst there aren’t financial penalties, that doesn’t mean there aren’t serious repercussions to hit financial institutions at a time when they are acutely conscious of their image and perception. Leaders need to ask themselves “what do these figures say about us, about our culture and the values we espouse? How can we attract and retain the best people?” This new regime will force large employers to confront the gender pay gap head on, and hopefully lead to the start of many conversations, and positive actions, to redress this long overdue imbalance.