"Come April 5th firms with a significant pay gap will have to be ready with an answer for the media, their own employees, prospects, customers and the business community."
On April 5th of this year, under a new legal requirement, every UK firm with more than 250 employees must reveal the size and scope of their gender pay inequality. So far only a handful of 9,000 UK firms have submitted their data. For financial services, it makes for uncomfortable reading: the sector currently ranks bottom out of all UK industries. On average, men are paid 24.6% more than women working in financial services, considerably above the 18.4% national average, and not a single sector firm pays women more than it pays men.
It is a depressing if unsurprising statistic. The financial services sector has been dogged for decades by cases of gender inequality and a lack of senior female representation within firms. Women constitute only 14% of executive committees in the sector.
Come April 5th firms with a significant pay gap will have to be ready with an answer for the media, their own employees, prospects, customers and the business community. The wider the gap, the brighter the spotlight and the greater need for action. There are three paths a firm faced with a gender pay gap can take – and only one is the right choice.
Firstly, a firm can bury its head in the sand and do nothing. However, inaction will only set a firm apart as one that doesn’t recognise its problem, or worse does not care to solve it. It will tar itself unnecessarily and be open to long-term reputational damage. Ultimately this strategy could hurt bottom lines.
Secondly, a firm can offer hollow corporate platitudes or excuses as to why it is paying its male employees more money. It can promise to reassess its practices, pledge to treat women more fairly and hope that in a few weeks or months, the issue is forgotten.
Fortunately, this issue will not be forgotten. The new law will require firms to annually share data and those who are not making changes will be seen as charlatans by the public. Avoiding action will only serve to exacerbate the issue. The media has already been quick to unearth those who are trying to post questionable data rather than proactively address the issue, and they will be ready to pounce on those who only offer sentiment or superficial promises.
Finally, a firm can react with a plan of action that is communicated clearly and succinctly – no obfuscation or corporate speak, just clarity. Importantly, words are no substitute for actions. For example, institutions such as Clydesdale and Yorkshire Banking Group are already making wholesale changes. Facing a 37% gap, the bank pledged to increase minimum wages to help more than 600 female staff, and it also signed the HM Treasury Women in Finance Charter, pledging to place women in more senior roles by 2020.
There’s much more firms can consider when planning their April 5th response as part of an integrated plan – for example, create internal fast-track training for young female staff; better support new mums and women juggling families; develop female-led mentoring programmes; champion non-profit groups that seek to empower women in financial services; or support financial services training and education for girls and young women. Firms know what their gap will be today – everyone should be acting now.
Fundamentally, the key is to back up messages with actions. With data shared annually, policies and their effects over time will be transparent, and scrutiny inevitable. The OECD predicts that equalising the gap could increase GDP by 10% by 2030. The financial services sector produces 12% of the UK’s economic output and hires more than 2 million Britons. Real change has to start here.
