Action, not platitudes, will close finance’s gender pay gap

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In four months, many of the City’s leading firms will be forced to admit the size of their gender pay gap. This will be a wake-up call for many in financial and professional services, and only those who offer a real plan of action will come out untarnished.

On 4 April of this year, under a new legal requirement every UK firm with more than 250 employees must reveal the size and scope of their gender pay inequality. So far, around 500 of 9,000 firms have submitted their data.

For financial services in particular, it makes for uncomfortable reading: the sector currently ranks bottom out of all UK industries. On average, men are paid 24.6 per cent more than women working in financial services, considerably above the 18.4 per cent national average, and not a single sector firm pays women more than it pays men.

This is unsurprising. The financial services sector has been dogged for decades by cases of gender inequality and a lack of senior female representation within firms. Women constitute only 14 per cent of executive committees in the sector; more than 73 per cent of board members of FTSE 100 boards are men and they make up more than 80 per cent of FTSE 250 boards.

Come 4 April, firms with a significant pay gap will have to be ready with an answer for the media, their own employees, prospects, customers, and the business community.

The wider the gap, the brighter the spotlight and the greater need for action.

Some firms will bury their head in the sand and do nothing, or offer hollow corporate platitudes or excuses and hope the problem goes away.

Fortunately, this issue will not be forgotten. The new law will require firms to annually share data. Inaction will only set a firm apart as one that doesn’t recognise its problem, or worse does not care to solve it. It will tar itself unnecessarily and be open to long-term reputational damage.

Ultimately this strategy could hurt bottom lines.

Alternatively, a firm can react with a plan of action that is communicated clearly and succinctly – no obfuscation or corporate speak, just clarity. Crucially, any response should be part of an integrated plan because words are no substitute for actions.

Firms know what their gap will be today – everyone should be acting now. For example, plans should be in place to articulate how they will better support new mums and women juggling families. Firms could be planning internal fast-track training for young female staff or developing female-led mentoring programmes.

Also, firms could be considering how they could do more to champion non-profit groups that seek to empower women in financial services or support financial services training and education for girls and young women.

With data shared annually, policies and their effects over time will be transparent, and scrutiny inevitable.

And rightly so – the OECD predicts that equalising the gap could increase GDP by 10 per cent by 2030.

The financial services and related professional services sectors produces 12 per cent of the UK’s economic output and hires more than two million Britons, many of whom work in London. Real change has to start here.