On 22 March 2016, HM Treasury launched the Women in Finance Charter, which links senior executive pay to progress in gender diversity.
A number of employers in the financial services sector have already signed up to the charter, including Barclays, Capital Credit Union, Columbia Threadneedle, HSBC, Lloyds Banking Group, Royal Bank of Scotland, and Virgin Money.
The charter aims to improve gender diversity at senior level in the financial services sector and sets out to help the industry achieve recommendations from the Empowering productivity: harnessing the talents of women in financial services review, undertaken by Jayne-Anne Gadhia, chief executive at Virgin Money.
The charter enables employers to set their own internal targets for improving gender diversity at senior management levels, with the aim of allowing organisations to develop a strategy that fits their business and that provides scope to take into account the current state of play of women in senior roles within their workforce.
Organisations that commit to the charter pledge their intention to link senior executive pay to the delivery of the internal targets set. They will be required to publicly report on their progress in achieving these targets.
One member of the executive team in each participating organisation will be given responsibility, and accountability, for gender diversity and inclusion.
The Treasury intends to publish a list of the organisations that have signed up to the charter three months after its launch.
When it comes to setting effective targets, organisations will need to fully consider the gender issues within the business and the reasons behind these, says Jon Terry, UK financial services people leader and partner at PricewaterhouseCoopers (PWC). “One way of looking at it is through the lifecycle of an employee; for example, how is the organisation doing in terms of recruiting women into the organisation at all levels, how is it making promotion decisions, and pay and bonus decisions, and so on. Not until an organisation understands the shape and health of gender [diversity] can it say what targets it should be setting.”
The charter encourages organisations to take a closer look at gender within their organisation and requires a certain degree of transparency around this, which, though voluntary, has some overlap with the government’s upcoming compulsory gender pay reporting requirements for employers with 250 staff or more.
Terry added: “Signing up to the charter or not is also a reputational issue, and that’s strongly connected with the mandatory gender pay reporting.
“For smaller firms that sign up to the charter, I expect a large number will also voluntarily disclose on gender pay reporting. The big advantage of gender pay reporting is that it forces organisations to address the management of information, and sorting that out allows them greater ability to be able to comply with the charter if they want to.
“This is not only a repetitional issue, however, [diversity] is also part of the employee value proposition. It’s about making the organisation attractive to new recruits and those within the organisation. It’s also a business issue.”