The gender pay gap is wider in finance than most other industries. When looking at the root of the problem, you can start to develop initiatives to combat it.
Research shows that the closing of the gender pay gap is occurring more slowly in the finance sector than in many others. However, businesses in the finance industry can take a proactive approach using proactive strategies and technology to narrow the gap and remain committed to gender pay equality.
A Look at the Finance Sector Gender Pay Gap
Although women make up 56% of all American workers in the finance sector, the industry sees the second largest gender wage gap, according to the ADP Research Institute's® State of the Workforce Report: Pay, Promotions and Retention. The average hourly wage for male workers is $40, while the average rate for female workers is only $27 per hour. As a whole, the industry has an average wage of just under $33 per hour. Turnover rates for both women and men in the finance sector are equal at 2.2% per month.
Men in this sector also have a slight advantage over women in receiving promotions and are more likely to have larger pay increases as they move up the career ladder. For instance, research shows that the average time for a first promotion from a non-manager position into management is 6.6 years for men and 7.4 years for women.
It's an International Problem
The gender pay gap is also evident outside the United States. Major financial services firms in Britain have made limited progress toward closing the pay gap between men and women, according to a recent Reuters report. In fact, pay disparities have been reduced by just over half a percentage point in 2018. Employer surveys from last year show the overall mean hourly gender pay gap was 14.3%, but that widened to 30% for the financial sector according to an Investment Association (IA) study.
One factor that contributed to the larger pay gap was the fact that many senior level positions were filled by men. Conversely, only 11% of IA survey respondents had a woman in a CEO or chairperson role.
These discouraging figures are occurring despite financial sector initiatives intended to help close the gender pay gap. These initiatives include a commitment to hiring more women in senior roles and promoting flexible work arrangements. The issue of the pay gap is especially important in Britain, where the government has required businesses to submit pay gap figures since 2018.
U.S. businesses also need to abide by government regulations geared toward reducing the wage gap, such as Equal Employment Opportunity (EEO) laws. For instance, the EEO-1 report, an annual compliance survey mandated by the U.S. Equal Employment Opportunity Commission, requires that organizational employment data be categorized by race/ethnicity, gender and job category. This reporting helps with analysis of employment patterns around such issues as female and minority representation within businesses. Multinational employers that employ U.S. citizens outside the United States are also subject to EEO laws.
How Can Finance Organizations Close the Gender Pay Gap?
The IA report sets out a series of initiatives that the finance sector is undertaking to help close the gender wage gap. These initiatives are centered on three specific approaches: attraction and recruitment, retention, and advancement. The industry is paying particular attention to early career support options, including female recruitment days, gender-focused insight days and scholarships for further education.
Many finance firms are also building gender diversity policies into their recruitment processes. For instance, recruiters may be required to use gender-balanced longlists and shortlists or name-blind CVs and resumes. Others are enforcing a minimum number of women on interview panels and providing training around unconscious bias. Enhanced parental leave policies and mentoring programs for high-potential women are among industry initiatives aimed at retaining and advancing female workers.
Using technology is another way for finance organizations to narrow the gender pay gap. The right tools can reveal actionable insights related to salary and demonstrate your commitment to equal pay for equal work. Pay Equity Explorer, for instance, lets you easily analyze and compare compensation rates within your organization against those of similar positions in other organizations. The solution can also help to identify potential pay equity gaps, which can be particularly useful with regard to EEO compliance.
By combining meaningful HR initiatives with the right technology, your organization can take a powerful stance on the issue of narrowing the gender wage gap.