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The gender pay gap is most pronounced in the financial services industry

Posted: 04/04/17 by Chartered Management Institute

Following the FT’s research that found the majority of junior staff working in financial services are women, but only one in four of those who reach a senior role is female, Ann Francke, Chief Executive of the Chartered Management Institute (CMI) comments, along with supporting data, on how the gender gap is most pronounced in the financial services industry.

“The FT’s research highlights what we’ve long known – the gender pay gap is most pronounced in the financial services industry. This needs to change as promoting more women up the ranks of the industry will benefit all. Gender diversity is good for business, with gender balanced management proven to prevent the kind of ‘groupthink’ that has led to some of the most notorious corporate failures.

“A combination of transparency and targets is essential to make financial services employers more aware of their own ‘glass pyramid’ that sees more women at the bottom than at the top. Employers must also promote practices that will benefit women and men alike. There are the big things like championing better flexible working arrangements and sponsoring and mentoring women. But there are the everyday things, like giving everyone an equal chance to be heard in meetings, and to cut out the ‘locker room’ banter that is holding us all back.”

Problem

The UK economy needs two million new management roles for it to achieve predicted growth. The problem for many organisations is the ‘missing middle’. While women out-number men at junior levels, not enough make it through middle management and to the top. To achieve a 50/50 split of management jobs between men and women by 2024, we will need 1.5m new female managers over the period. Today, there are over half a million ‘missing’ women from management. On today’s diversity forecasts, we’ll still have 480,000 ‘missing women’ from UK management in 2024.

Solution

The CMI launched CMI Women, a new initiative that aims to achieve gender parity across the UK’s management population by 2024, and to help employers unlock more value in the UK’s workforce to address our productivity gap. To address these issues, CMI has created a ‘Blueprint for Balance’, an innovative open source tool that helps organisations achieve 50/50 management. The tool is a free online resource that allows employers to share information and learn from others the practices and policies that have helped improve gender balance in their organisations.

Supporting research from the CMI

  • 73% of entry-level roles are occupied by women, this reduces to just 43% of women in middle management roles.
  • Gender-diverse management teams deliver an 18% Return on Investment premium and diverse companies are 15% more likely to outperform competitors.
  • Diversity could add $12 trillion annually to the global economy and £150 billion a year to the UK economy in 2025.
  • Four in five managers (81%) have witnessed some form of gender discrimination or bias at work in the past 12 months.
  • Half (50%) of managers have pointed to gender bias in recruitment/promotion decisions, while 42% said they had seen inequality in pay and rewards.
  • Over two-thirds of managers (69%) said they saw women struggling to make their views heard in meetings, and four in five (81%) said they had witnessed inappropriate remarks (such as comments with sexualised overtones masquerading as ‘banter’).
  • The difference in promotion rates is one of the main causes of the gender pay gap, which remains largely unchanged this year at 23.1% compared to 22.8% in 2015.
  • The average full-time equivalent salary for male managers now stands at £38,817, £8,964 more than the average female manager’s. The pay gap is even higher for those in the ranks of director and CEO, with men on an average basic salary of £131,673 earning £16,513 more than women at the same level.
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