City gender pay gap: What employers should be doing

Female bankers are getting bonuses worth 80% less than their male counterparts, a survey by watchdog the Equality and Human Rights Commission (EHRC) has found. Phil Boucher asks the experts what companies should be doing about it.

Andrea Eccles, director, City HR Association:

“A recent benchmarking survey undertaken by our members demonstrated that financial institutions take diversity issues seriously, and that a number of initiatives are being undertaken to increase diversity within organisations. Furthermore, during the course of 2008 we ran a working party on diversity in the City which resulted in a best practice guide that was well-received by our members.

“However, what these results do show is that in some areas we still have a long way to go – not just in the City, but nationally. This is often highlighted in well-respected and documented UK, European and global studies. There may also be mitigating factors, such as the proportion of women who have opted for flexible work patterns, which would clearly impact the report.

“In light of the EHRC’s findings, we are going to consult within our membership and determine our next steps in this important area, and the type of support that members would welcome from us.”

Sarah Churchman, director of diversity and engagement, PricewaterhouseCoopers:

“If you look at the headline figures in the EHRC report, it’s easy to be shocked. But pay is only a single measure of equality.

“At the same time a lot of large companies, including our own, are already doing a lot of work in this area, specifically to improve gender equality. We are already seeing more women at board level, for example. Admittedly it is at a slow pace, but things are improving. We can’t be complacent, but things have got better.

“Arguably, part of the problem is that we don’t have the data to understand what the underlying issues are. This is why reports like this shine a light on the importance of transparency around pay and grades. Without transparency, we will never get to understand the real issues. At the same time, women are far less likely to negotiate on pay, and that also needs to be taken into account.

“But generally, it’s a good thing to raise this issue and raise the profile of pay and gender equality. The EHRC needs to work in partnership with business for it to be effective – it needs to use both a carrot and stick approach, working in collaboration with businesses.”

Sarah Williams Gardener, director, Opportunity Now:

“The danger of making pay audits compulsory is that they merely become a tick-box exercise with no real underlying desire to change or address the issues. If an organisation is serious about creating equality and ensuring equity of pay, it needs senior leaders to be engaged and champion action that goes beyond a pay audit, such as a robust job evaluation process, training and guidance for individuals involved in pay decisions, and a timed action plan to address any disparity.

“It is also vital to remember that the huge pay disparity between men and women is not just down to issues within pay structures and scales – it is a much wider and complex issue. It is about the jobs that women and men do, the positions they are in within the organisation, and the fact that women are much more likely to take career breaks or work part-time.

“HR practitioners have a key role to play in creating workplace cultures where equal pay is a consideration. Actions we would recommend include: embedding equal pay principles in all policies and procedures, harmonising terms and conditions between different groups, arranging training and workshops on pay systems, and developing a simple pay policy document and guidelines for managers.”

Leslie McLeod, executive director, British Banking Association (BBA):

“Women don’t tend to apply for the jobs where the high bonuses apply, and are generally more attracted to people-oriented jobs such as retail banking, insurance and fund management.

“This self-selection would appear to revolve around work-life balance questions, because you have to work every hour god sends to make the big bonuses. Plus, the peak years for earning the enormous bonuses are up to the age of 40, which also happen to be the peak years for child caring.

“First, we have got to understand why women are self-selecting out. Then we have to find out if there are any artificial barriers of which we are unaware, that are preventing them from either applying or, once they are in a job, succeeding. If it is revealed that there are particular barriers to women getting on, we would like to see those removed. But at the same time, the BBA does not want them to be artificially removed. As a woman, I would detest getting a job purely because I am female, rather than because I am good.”

Tom Hadley, director, Recruitment and Employment Confederation:

“For a long time, people have thought this was an issue of women not progressing because of a glass ceiling, but the report shines light on the fact that even at point of recruitment there is a gender pay gap issue. So it isn’t just about a lack of progression – it is also a case of not enough people getting into the right jobs.

“The recruitment industry needs to look at the initial sourcing of candidates at an early stage and the make-up of the candidate pools being put forward for the jobs. But it is also about looking at all the different stages in the recruitment process: how are jobs advertised? How do we reach out to potential applicants? Have we have got a good balance of candidates? Are there issues about the interview process? Is it skewed against women going into some of these jobs? There does need to be a look at the whole process and all the different stages in the recruitment process.

“HR should also try and use recruiters that don’t just legally comply, but are also ahead of the game on the diversity and equality agenda.”

Gagandeep Prasad, solicitor, Charles Russell:

“The forthcoming Equality Bill includes a provision to limit the enforceability of contractual ‘pay secrecy’ clauses that are common in the financial services sector. The current drafting doesn’t ban secrecy clauses outright, but instead means that such clauses will be unenforceable against employees involved in a “relevant pay discussion”. This requires a pay discussion to relate, to some degree at least, to the possibility of discrimination.

“Realistically, employers should query whether colleagues discussing their pay are likely to raise the possibility of discrimination. The provisions may not therefore be as robust as they are described.

“The Bill also includes a power for the government to require large employers (250 or more employees) to publish information about gender pay. In the White Paper, the government has stated that it won’t use this power before 2013 and only if sufficient progress on reporting has not been made. Given that the Equal Pay Act came into force some time ago, the further delay before such compulsory reporting is even considered properly has been criticised. In addition, if there’s a Conservative government in 2013, one would assume that they would be less likely to exercise such a power. The provisions may therefore be toothless.”

Beth Hale, associate, Stephenson Harwood:

“Pay audits are a burden on employers and simply provide statistics. These do not address the reasons behind the gender pay gap. They provide a way of naming and shaming employers without looking beyond the employment sphere to society as a whole for the real reasons why women tend to enter less remunerative careers in the first place and why they often fail to progress as far or as fast as their male counterparts. The issues of childcare, flexible working and attitudes towards women at work are deeply engrained.

“Each employer is different, so each should create a tailor-made solution for their own workforce. Otherwise, they will be driven by the short-term targets they are required to achieve. It is, thankfully, extremely rare to find an employer that deliberately pays women less than men – the reasons for the gender pay gap are far more subtle and complex. Bare statistics do nothing to address those underlying causes. This legislation needs to tread a very fine line between protection, and abuse of that protection.”

Stephen Sidebottom, European head of HR, Nomura and chairman, City HR Association:

“The EHRC report is a challenging analysis of the success of the financial sector in achieving diversity objectives. The sector is unique in the range of jobs and reward structures that are in place.

“Our response to the report has to look beyond the headline numbers to the specific practices and behaviours within firms. The sector’s commitment to diversity is very high, and this report provides an opportunity to look in detail at what is working, and what is not.”

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