UK Banks’ Gender Pay Data Shows Impact of Leadership Gap

UK Banks’ Gender Pay Data Shows Impact of Leadership Gap

Several major financial institutions in the UK have submitted their gender pay gap figures to the government in recent weeks in compliance with the law requiring them to do so by April 4. The data illustrate just how far the sector has still to go if it intends to achieve gender parity in earnings and career progression. The most recent bank to release its pay information is HSBC, which on Thursday reported a median pay gap of 29 percent and a mean gap of 59 percent based on hourly pay in 2017, the BBC reports. The bank also a median gap of 61 percent for bonus payments.

HSBC says these discrepancies are due not to pay discrimination, but rather to the underrepresentation of women in its leadership:

HSBC said its pay gap was largely down to the fact it – like its rivals – has fewer women in senior roles, with just 23% of higher positions held by women. Across the whole organisation, however, 54% of its workforce is female. HSBC has a target to try to improve its gender balance and aims to have 30% of senior roles held by women by 2020.

Barclays, meanwhile, revealed a median hourly pay gap of 43.5 percent, the BBC reported last month, greater than all but 28 of the 1,154 companies that had published their data so far. Lloyds Banking Group and the Royal Bank of Scotland reported average gaps of 33 percent and 37 percent, respectively, Bloomberg reported, highlighting that these wide gaps also reflected a dearth of women in senior roles—an imbalance the banks said they were committed to addressing:

The gender pay gap “is not where we want to be,” RBS Chief Executive Officer Ross McEwan, said in a call to reporters Friday. “We need to have more females in senior roles and we set some ambitious targets in the next three years to improve it and that’s what affects the gender pay gap.” Men make up about 70 percent of the employees in RBS highest-paid quartile, mirroring the proportion of women in the bank’s lowest-paid quartile. … Lloyds said Friday that its bonus gender gap was around 65 percent.

That the financial sector suffers from significant gender gap is not new: It’s one of the reasons why London’s overall gender pay gap is higher than any other region of the UK. Common among these firms is the concentration of women in lower-ranking roles with less bonus potential than their mostly male superiors.

Like Barclays, US banks like Bank of America, Wells Fargo, and Citigroup say they pay men and women equally for equal roles: In response to pressure from activist investors, these banks have disclosed pay audits showing gaps of under 1 percent between men and women (and between white and non-white employees) after correcting for role, location, experience, and performance. These disclosures leave open, however, questions of whether the variables of experience and performance are being judged equally for men and women, as these judgments may be subject to conscious or unconscious gender bias.

What the latest disclosures from the UK demonstrate is that banks have a serious problem with group-to-group pay gaps, even if they have managed to close role-to-role gaps. Unfortunately, the former are much harder to close, as HR leaders can’t correct underrepresentation in senior roles simply by adjusting pay. The fact that men are more likely than women to get promoted into upper management, particularly in line functions, continues to drive discrepancies in earnings and career progression between men and women. This imbalance remains despite a growing body of evidence that gender parity on the executive team correlates with improved corporate performance.

This issue is by no means limited to finance. The supermarket chain Aldi also published its gender pay gap figures in the UK last month and while its overall gap of 4.8 percent is much smaller than those of the banks (and well below the median for the country), it similarly claimed that its gap was mostly due to the gender imbalance between management and lower-level roles, along with men’s greater tendency to work premium shifts, Ashleigh Wight reports at Personnel Today:

Tesco said its gender pay gap fell to 2.7% when pay premiums – night, bank holiday or Sunday shifts that attract a higher rate of pay and are more popular with male staff – were taken out of the equation.

Aldi claimed that the majority of its pay gap came from having more men than women in store management positions. While men took up 70% of roles in its upper pay quartile – which encompasses store management positions – the split between men and women across the upper middle, lower-middle and lower pay quartiles remained almost even.