Shocking 91% Pay Gap Raises Questions about Financial Sector’s Glass Ceiling
Recent pay gap records submitted by large UK corporations have revealed that for the highest earning workers within the financial sector there is a huge 91% pay gap between men and women. The discrepancy is caused by more men than women within senior roles, with the difference in the number of men vs women in these high earning positions having increased by 17% in the past six years. This indicates that the glass ceiling stopping women rising to the top within the financial sector is stronger than ever. [i]
It is natural to ask, “how can this be possible in the 21st Century?”
A study of the reasons why, reveal a lack of easily identifiable causes, with some articles suggesting simply that there are few women in senior finance positions because there have always been few women in senior finance positions. In other words, perhaps it is a symptom of a sector that is averse to change. However, the industry must change in order to survive; not only for the sake of a fair sector and diverse operations, but also because hiring more women in senior positions is integral to the profitability of the companies and the good of their clients.
Why does it matter?
Firstly, in modern society a truly diverse group of employees is not only ethically and legally demanded but is also vital to the functioning of a company. How can one expect to appeal to a diverse modern world if one does not employ diversely?
Indeed, we see that the lack of women in finance has a huge impact on profit. Across 6 wealthy developed nations, a survey found that over 50% of high earning women do not have a financial advisor. In the US, 44% of the women in this bracket who do have a financial advisor, feel that their advisor does not understand them.[ii]
The industry needs to change. The missed assets in the US alone from this apparent marginalisation of women may amount to a staggering 5 trillion dollars.[iii]
Surely more women in management (and, more broadly, a management structure that is a truly equal opportunity advocate, in practice as well as on paper) will foster an environment that encourages women to trust a financial institution.
Why are there few women?
This is a difficult question to address. Research into the anomaly found that there is a deep-seated gender bias in the industry, which is based on a traditional perspective of male and female personality types. Males are stereotyped as being aggressive and dominating, and these are seen as traits that are useful for financial leadership.[iv] This misguided bias is insulting to both men and women, and it is largely subconscious, so is difficult to manage. Changing the entire attitude of the industry is integral to mitigating this issue.
The result of this subconscious stereotyping is that women have to prove that they are excellent before any promotion. Firms are unlikely to “take a chance” on a woman where they might on a man.[v]
Fewer women in senior management means that there is little to aspire to. Women may believe that the glass ceiling cannot be penetrated, resulting in discouragement and in a premature abandonment of attempts to continue to climb the corporate ladder.
What can industry do?
It is vital that corporations react now, to change the current, dysfunctional model.
Settings target for management in recruiting diversely will help management think widely about recruitment. As highlighted above, it appears that women have to far exceed men in their dedication and achievement in order to be considered for the same job. This is (hopefully) a subconscious act and targets may help to mitigate this, opening a new chapter with equal opportunities for male and female candidates.
Use industry influence to push for higher education training that targets advertising to both male and female students, as well as marketing in-house training to both men and women.
Recognise the bias – the company itself may have a robust equality policy in place, but it is important for senior management to recognise the unconscious biases described above, whereby women are subconsciously seen as being without certain characteristics that could make them top candidates.
Encourage both women and men to reach their full potential by ensuring that there are equal opportunities for roles and responsibilities that will enhance the desired career trajectory for gifted individuals.
Have a hiring and promotions committee made up of as diverse a range of individuals as possible, rather than leaving one or two (likely male) senior executives to make these decisions independently.
Create and encourage family and lifestyle friendly policies for the sake of both male and female employees and candidates. Flexible working, working from home and the opportunity to work part time will allow a more diverse group of women and men to apply for management roles. This may mean adapting the structure to allow – for example – for two managers to share one role – but this could pay dividends in being able to appoint the right person or people for the job.
Employ a specialist recruitment agency to find the best candidates for your job openings. Aston Charles is dedicated to recruiting the best candidates from as diverse range of individuals as possible. While this article is focused on the discrepancy between the hiring of men and women, there are other groups that are not equally represented within the financial sector. Aiming advertising across the board to appeal to all individuals, and with a firm framework for equal opportunity recruitment, Aston Charles can offer you the opportunity to hire the ideal candidate for senior company positions; with no stereotyping based on gender, ethnicity, background or any other category of diversity.
[i]Caitlin Morrison. 2018. Gender pay gap hits 91% for financial services workers earning more than £1m a year. [ONLINE] Available at: https://www.independent.co.uk/news/business/news/gender-pay-gap-men-women-salary-financial-services-one-million-pounds-salary-a8347141.html. [Accessed 5 June 2018].
Sylvia Ann Hewlett and Andrea Turner Moffitt. 2014. The Financial Services Industry’s Untapped Market. [ONLINE] Available at: https://hbr.org/2014/12/the-financial-services-industrys-untapped-market. [Accessed 5 June 2018].
[iii]Sylvia Ann Hewlett and Andrea Turner Moffitt. 2014. The Financial Services Industry’s Untapped Market. [ONLINE] Available at: https://hbr.org/2014/12/the-financial-services-industrys-untapped-market. [Accessed 5 June 2018].
[iv]Astrid Jaekel and Elizabeth St-Onge. 2016. Why Women Aren’t Making It to the Top of Financial Services Firms. [ONLINE] Available at: https://hbr.org/2016/10/why-women-arent-making-it-to-the-top-of-financial-services-firms. [Accessed 5 June 2018].
[v]Astrid Jaekel and Elizabeth St-Onge. 2016. Why Women Aren’t Making It to the Top of Financial Services Firms. [ONLINE] Available at: https://hbr.org/2016/10/why-women-arent-making-it-to-the-top-of-financial-services-firms. [Accessed 5 June 2018].