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Breaking up the Old Boys' Club: what can we do about the gender pay gap in Financial Services?

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Change is afoot in Financial Services...

The Financial Services sector’s struggles with the gender pay gap have been well-documented. Earlier this year, employers working across all sectors in the UK were required to publish salary figures for their employees. Though the average pay gap is 9.7%, Financial Services reported a gap of 22%, which increased to a 46% gap for bonuses.

Why is this? 

One of the main reasons for this huge discrepancy is the striking absence of women in senior roles. From London to New York, the results have made for rather sobering reading: in fact, the number of women in Financial Services roles diminishes the higher up the ladder you go. Only7% of executive board directors in Financial Services are women and only 9% work as the heads of divisions. Clearly, women are finding it hard to progress in their careers to the same degree as their male counterparts.

One reason for this can be attributed to the culture of the ‘Old Boys’ Club’ that has persisted throughout the sector. A survey by the University of Sydney recently published a report that raised serious concerns about the culture of sexism and discrimination in finance, with22% of women saying that they’d experienced offensive remarks about their gender in the workplace. The ‘alpha male’ culture of investment can also sometimes prove discouraging for women in the industry, especially if they feel that they’re being excluded from events due to their gender, suffering from the ‘motherhood penalty’ and missing out on promotions thanks to a combination of both factors.

If change is to happen, this club needs to be broken up, and women need to be given the right opportunities to thrive. 

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Fortunately, this is already starting to happen. It’s not a secret that having a more diverse board pays when it comes to profits: in fact, Credit Suisse discovered that companies where15% of senior managerswere women actually had a 50% higher profitability than competitors with 10% or less. In male-dominated workplaces, women can bring fresh perspectives to the table, enable better decision making and even drive higher levels of employee retention. 

People are starting to take note of this. The government’s recent mandate that companies with 250 or more staff disclose their pay gap every year is driving a push for transparency in the workplace: this spotlight on the gender problem is encouraging companies to make a change. The result is a push for greater diversity and representation: now, apprenticeships, graduate programmes, and leadership programmes, all designed to nurture a pipeline of female talent, are gaining prominence and popularity, especially in the City. 

Thanks to this, Financial Services is changing. The higher influx of female talent into entry-level roles will eventually result in a higher percentage of women in senior positions in ten or more years’ time. In the meantime, companies are making an effort to redress any prejudice within the sector by investing in unconscious bias training and even by running schemes like the Women in Finance Awards to encourage ambitious professionals to push themselves and succeed. Many companies are also going one step further by introducing flexible working hours and parental support, the better to attract and retain mothers who are struggling to fit their children’s needs around their working days.

Women are also playing their own role in making change happen. The 30% Club, which launched in 2010, now operates across eleven different countries with the goal of increasing the amount of female talent across Financial Services. The organisation encourages men and women to create change by working together, with an eventual target of having women make up 30% of senior leadership teams in all FTSE100 companies by 2020. 

This focus on better representation is having a profound effect on the recruitment process. At IDEX, we’ve seen a dramatic upsurge in the number of clients requesting at least one or two female candidates be put forward as part of the shortlisting process for our Retained Solutions services. Similarly, there’s been a newfound emphasis on hiring for key skills and deliverables, rather than the connections-based ‘who you know’ approach that has characterised some companies in the past. With the market becoming increasingly competitive, finance companies are looking to take on the person that’s right for the role, further increasing the chance for women to get a foot on the ladder.

With new schemes, new approaches to encouraging female talent and governmental incentives in place, the future is looking bright for women in finance. Little by little, the Old Boys’ Club is disappearing, and in its place, we can see a vibrant, diverse and dynamic industry. Hopefully, in time- and by recruiting in the right way- the gender pay gap will be a thing of the past.

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