Over the past two years, as Financial Director’s latest salary survey finds, the pay gap between male and female finance directors has widened. Women are now earning 68 percent of the average remuneration package of their male counter-parts – that is two percent less than the last time we checked in 2008.
Employment lawyers suggest that the root cause could be the result of women being more likely to take reduced working hours, a sabbatical or even a pay cut in order to contribute to the cost-reduction strategies of their employer.
It is difficult to make an exact comparison on pay data because there are simply too few women FDs – just four percent of those in the FTSE-100 and FTSE-250, a more or less constant figure in the last few years – to compare remuneration in a like-for-like way. For this reason our comparison is more of a guide. But the lessons from it stand. The average remuneration for a male FD over the last 12 months is £717,769, while for a woman the figure drops significantly to £479,593.
The UK’s Equality and Human Rights Commission reported in October that in 2009, only 12.2 percent of FTSE-100 directors and 7.3 percent of FTSE-250 directors were women. There were 11 female FDs in the Financial Director 2006 salary survey, with 10 in 2008 and 2010. Of these, the number of women FDs working for FTSE-100 companies has not changed much: three in 2006, two in 2008 and currently four.
The Equality Act, which came into force in October, ends pay secrecy clauses so female colleagues can compare their salaries with their male counterparts. The Act contains rules – presently delayed for further consideration – that purport to give employers greater scope to select from equally qualified job candidates on the basis of their sex. But lawyers and human resources experts do not expect its reach to extend to board appointments.
In August, Lord Davies announced that he is spearheading a new inquiry into why there are so few women in top positions in business. His findings are due in December. Ministers say that, by 2015, half of all appointments to the boards of public bodies should be women.
Fixed quota on cards
The question over whether positive discrimination is the right way to foster equality has not been adequately explored. Audrey Williams, head of discrimination law at Eversheds, believes there are limits to what can be legally done to increase the proportion of women on UK boards. Unlike the position in some other European countries, such as Spain and Germany, fixed quotas are not presently permitted by UK equality laws.
In September, the European Commission warned that if companies did not improve the gender balance on their boards, European Union-wide legislation may be introduced to force the pace of change, possibly including compulsory fixed quotas.
“The threat to force legislation through should be taken seriously,” says Williams.
If fixed quotas are introduced, demand for top-level female talent will naturally increase. “Businesses and public bodies need to take a close look at their talent development programmes now to ensure they are doing enough to nurture the careers of those women who could be the directors of the future,” she adds.
But it will also be down to the upcoming generation of women FDs to forge and get board-level buy-in for jobs that work with the realities of both family life and emerging lifestyle choices. Career sabbaticals, gap years, longer holidays, project work, secondments, breaks for charity work, for younger and established professionals – these increasingly common additions to working life will draw more women at more senior levels.
Rethinking not just the working week, but the requisite remuneration if women FDs are to become greater in numbers against this backdrop, is overdue.
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