Unravelling the Gender Pay Gap in the UK's Finance Sector

The gender pay gap remains prevalent in numerous industries, particularly in the financial services sector, where the gap is narrowing slower than in other sectors. According to multiple reports, the median average pay gap within financial services is currently 26.6% compared to 12.1% across different sectors.

If you do not know, the gender pay gap refers to the difference in average earnings between men and women, and it is an essential indicator of equality. It is helpful to differentiate the gender pay gap from equal pay. Equal pay ensures that men and women receive the same compensation for performing the same job. For the past 47 years, the Equal Pay Act of 1970 and the Equality Act of 2010 have dictated that all employers, regardless of size, must not discriminate against gender in terms of pay. However, a company may still have a gender pay gap if men predominantly occupy top positions despite receiving equal pay for comparable roles. Companies with 250 or more employees in the UK must publish their gender pay gap data. This measure, introduced in April 2018, aims to promote transparency and accountability. By examining the data, organisations can identify the extent of their gender pay gap and take proactive steps to address it.

As the pressure to increase ESG metrics reporting and heighten regulatory scrutiny, companies in financial services are increasingly expected to be transparent and act on diversity and closing the pay gap.

The causes behind this gap are complex and multifaceted, intertwining various factors contributing to this inequity. The major causes of the gender pay gap in the UK's financial services include:

• The underrepresentation of women in senior roles is a significant factor driving the gender pay gap. Women face challenges in progressing up the career ladder and accessing high-paying senior positions. Despite legal requirements ensuring equal pay for equal work, the distribution of men in top jobs remains skewed. This imbalance leads to a gender pay gap, even when the compensation for similar roles is fair.

• In terms of managerial positions, women face significant challenges. In 2020, it was reported that women comprised only 34% of managers in the EU despite representing almost half of the employees. They also earn 23% less per hour than their male counterparts.

• Additionally, family and care responsibilities significantly influence women's career choices, leading to career breaks and a subsequent impact on their earnings. A third of employed women in the EU experience work interruptions for childcare reasons, compared to only 1.3% of men. These interruptions can limit opportunities for career advancement and contribute to the gender pay gap. 

Current and prospective employees value inclusion, diversity and fairness more than ever. Your organisation must demonstrate that it is willing to and is currently doing more to address the pay gap to not lose out on valuable talent. 

What can Hanover do?

Executive Search: At Hanover, we understand that having the right people in leadership positions is crucial for your organisation's success. With nearly three decades of proven executive search and recruitment expertise, we are dedicated to guiding you through the process. Our commitment to diversity, equity, and inclusion (DEI) is an integral part of our approach, ensuring that we apply the same passion for excellence to all our clients, promoting a diverse and inclusive workforce at every level. Hanover delivers tailored recruitment solutions that drive your organisation's growth and foster an inclusive culture.

Market intelligence: We recognise the value of market intelligence in helping your organisation stay ahead of industry trends and events. Our market intelligence service offers in-depth insights to help you fully understand the factors that impact your organisation and the broader market. Whether you need bespoke insights or on-demand information, we tailor our offerings to meet your needs. Embracing our commitment to diversity, equity, and inclusion (DEI), our market intelligence is driven by a deep understanding of diverse perspectives, ensuring you receive comprehensive and inclusive insights to make informed business decisions.

Talent solutions: Our talent solutions are designed to enhance the performance of your organisation, teams, and individuals. Our comprehensive offerings include diversity and inclusion training, career transitioning, outplacement services, and succession planning solutions. We also provide engagement and retention programs to foster a thriving workforce. Recognising the importance of inclusivity, we offer specialised initiatives to support employees during significant life stages, including menopause, maternity, and return to work. With our expertise and dedication to diversity, equity, and inclusion (DEI), Hanover is your trusted partner in driving organisational excellence and creating a supportive and inclusive workplace for all. 

What are some examples of clients actions to close their gender pay gap?

Recruitment Efforts: Aviva's recruitment initiatives have yielded remarkable results, with the female hire rate reaching an impressive 44% in 2022, a notable 10% increase from 2018. The organisation fosters diversity by ensuring diverse shortlists for internal and external hiring processes. Moreover, Aviva's commitment to attracting more women is evident through its specialised graduate, apprenticeship, and intern programs designed to increase female representation within the organisation.

Retention Efforts: Aviva is proactive in cultivating a pipeline of female talent, evident through establishing the HERoes Women Role Models mentoring program. This initiative aims to engage and retain female employees, providing them with valuable mentorship and support throughout their career journey. Additionally, the company sets ambitious goals for female leadership, aiming to achieve 40% senior female leaders by 2024. As of December 2022, the organisation has reached a commendable 37.3%.

Progression Efforts: To accelerate the progression of women into senior leadership roles, Aviva has implemented a women's sponsorship program. This initiative demonstrates the organisation's commitment to fostering the professional growth and development of its female talent, ensuring they have access to opportunities that pave the way for advancement.

Legal & General

Legal & General has taken proactive steps to address the gender pay gap, identifying two long-term focus areas that aim to promote diversity and inclusivity within the organisation.

Building Diversity through Wider Talent Pool Recruitment: Legal & General recognises the importance of fostering diversity at all levels, particularly within senior positions. To achieve this, we are committed to recruiting from a broader talent pool, actively seeking to improve female representation. As proud Women in Finance Charter signatories, we publicly pledge to enhance gender diversity, championing women's advancement in the financial sector.

Retaining Female Talent and Investing in an Inclusive Employer Brand: At Legal & General, they understand the significance of retaining female talent and cultivating an inclusive work environment. Their goal is to establish themselves as a company where individuals of all genders can build rewarding and enduring careers. By investing in their employer brand, they aim to showcase their commitment to diversity, creating an environment where all employees can thrive and contribute their unique perspectives.

Willis Towers Watson

Willis Towers Watson is actively working to narrow its gender pay gap through three key actions:

Attracting and Hiring Diverse Talent: The organisation is implementing an inclusive recruitment approach, promoting diversity by ensuring diverse candidate slates, using inclusive language in job adverts, and focusing on transferable skills and competencies. They are also training hiring managers on inclusive recruitment practices and building relationships with external organisations to increase the pipeline of diverse candidates.

Developing and Promoting Internal Talent: The organisation uses a consistent methodology to assess talent, identify development priorities, and support the progress of underrepresented talent within the company. They are expanding resources and leadership development programs with diverse participation to facilitate internal mobility across their talent pipeline.

Embedding Inclusivity in Leadership and Culture: The organisation promotes diversity events, inclusive communications, and inclusion networks to support the recruitment, retention, and development of underrepresented talent. They also promote their Respect at Work policy and conduct workshops on respectful and inclusive behaviour.

Final Thoughts

The gender pay gap remains a significant challenge in the UK's financial sector, necessitating collective efforts to address and rectify the disparities. While some progress has been made, much work is still needed to achieve true gender equality within the industry. The commitment to diversity, equity, and inclusion (DEI) is paramount in driving positive change and fostering a workplace where all individuals can thrive.

As companies navigate the path towards closing the gender pay gap, Hanover is a reliable partner offering tailored talent solutions, market intelligence, and executive search expertise. By embracing inclusive practices and prioritising diversity, companies can drive their success and contribute to the broader goal of creating a more equitable and prosperous society.

The journey towards closing the gender pay gap requires persistence, collaboration, and unwavering commitment. Together, we can foster a financial sector that exemplifies fairness, equality, and the value of diverse perspectives. Let us stand united in this pursuit, shaping a future where opportunities are accessible to all, regardless of gender, and success knows no gender boundaries.