It is a little-known fact that the financial services sector has been under recent scrutiny for its gender pay practices, as the spotlight has been on tech companies the last several years. A report from the World Economic Forum found that gender parity is more than 200 years away, and the financial services industry includes many of those largest pay gaps, largely due to the lack of women in senior roles. This shift is one of the first indicators that these expectations are only increasing across industries.
Recently, pay disclosures in financial services have been erratic. In the U.S., large financial institutions such as banks cluster around 99 percent pay parity (adjusting for level, seniority and location). Internationally, however, the numbers tell a different story. HSBC, the UK’s biggest bank, reported the highest mean gender pay gap (59 percent), while others, such as the Bank of England, are as low as 21 percent.
This is an issue that is complicated beyond the numbers. While U.S. companies have adjusted for level, seniority and location in their gender pay data, UK laws specifically require an average wage calculation across the organization, without adjustments. Given this, many UK banks have noted that equal pay within their company isn’t the problem; it is the percentage of women in senior roles. In fact, a recent survey found that at current rates, female representation at executive levels is not set to hit 30 percent until 2048; it was at 16 percent in 2016.
Several factors are driving recent gender pay disclosures in financial services, including shareholder demands, societal and customer expectations, government requirements and other industry practices. The two main catalysts have been pressure from Arjuna Capital, an impact investing firm, on nine of the top financial institutions in the U.S. to share detailed wage disclosure reports, as well as the UK law requiring companies with over 250 employees to report their unadjusted gender pay gaps to the Government Equalities Office by April 4, 2018.
Below are a few takeaways for the financial services industry as it continues to strive for workplace pay equality:
- Be transparent. Releasing information such as gender pay data is an indication that a company is willing to hold itself accountable publicly. Greater transparency may yield greater scrutiny, but it is also a valued attribute that can establish trust with employees, customers and shareholders—essential in today’s competitive environment.
- Start from within. Organizations must look internally before thinking about external communications. This may mean incorporating a pay equity audit, culture survey or workforce diversity analysis. It is important to identify the strengths, pain points and areas for improvement so as to engage stakeholders in an honest, authentic and measurable way.
- Be self-aware. After completing any necessary internal company audits, organizations must evaluate where they stand versus their industry peers. This will ensure they don’t appear unaware, ignorant or tone deaf to industry standards and relevant cultural conversations. It also equips companies to join the conversation and prepare for any potential issues.
- Act natural. Releasing data regarding pay equity and workforce makeup is now standard operating procedure. This expectation is different than it was only a few short years ago, so organizations should not expect a media splash or praise for their efforts.
The optics surrounding pay equality have intensified the last decade and will continue to be on the minds of customers, shareholders, employees and media. And while releasing these figures is the absolute correct first step for financial services companies, it’s only the first of many. The next, more difficult step is to work to eliminate the actual pay gaps themselves and to effectively support the movement of women into leadership roles at these companies.
Courtney Mains is an account executive, Corporate Affairs, San Francisco.