The average female executive earns an average of £423,390 less throughout their career compared to a male worker with an identical career path, according to research by the Chartered Management Institute (CMI).
The 2012 National management salary survey, which took data from 38,843 employees working in executive positions in UK organisations, found that the current gap between male and female pay at management level is £10,060 a year.
The research found that the average male in an executive role earned a basic salary of £40,325 over the 12 months to August 2012, compared to £30,265 for a female in the same type of role.
Although female junior executives earn marginally more (£363 a year) than males at junior levels for the second year running (£21,491 compared to £21,128), the gender pay gap remains substantial at the opposite end of the executive career ladder, with female directors earning an average basic salary of £127,257, £14,689 less than the male director average of £141,946.
The 2012 survey also found that the gender pay gap extends to annual reward. Among the 91 participating organisations that provided data on the payment of bonuses, women received less than half of that awarded to men in monetary terms. The average bonus for a male executive was £7,496, compared to £3,726 for a female executive.
As women and men progress in their careers, 50% of males at director level receive bonuses compared to 36% of females. The average bonus paid to a male director was £7,000 more than that awarded to a female director.
Ann Francke, chief executive at the CMI, said: “A lot of organisations have been focused on getting more women on boards, but we’ve still got a lot to do on equal pay and equal representation in top executive roles.
“Women make up almost three out of four at the bottom of the ladder but only one out of four at the top. This lack of a strong talent pipeline has to change, and fast.
“Allowing these types of gender inequalities to continue is precisely the kind of bad management that we need to stamp out. Organisations are missing out on the full range of management potential at a time when we need to be doing everything we can to boost economic growth.”
Baroness Prosser, deputy chair of the Equality and Human Rights Commission, added: “The gender pay and opportunities gaps are intrinsically linked.
“The opportunities’ gap leads to the lack of advance for women through the executive pipeline and this, in turn, provides for the gender pay gap.
“The onus is squarely on employers to redress the balance, but female executives should also look to make the most of the practical support available to them, whether from the Equality and Human Rights Commission or through professional bodies like the CMI and the Women in Management Networks.”
It is nonsense that women, who make up half of our workforce and play a vital role in the economy, are often overlooked and paid less than their male counterparts. More women than men go to university in the UK and tend to outlive them, yet men still call the shots in the workplace. While there is evidence that the full-time gender pay gap has narrowed over the years, it’s still not at a level that we should be proud of. In addition the part-time gender pay gap is still shockingly big.
With women starting to take an increasingly dominant role in the world of work, both government and business need to pull together and put policies in place that support women at work, and remove barriers to equal pay, recruitment and promotion.
The size of the lifetime earnings gap between men and women is disturbing and suggests that women are going backwards versus their male counterparts. If the career path is identical, then it is hard to see why the differential would exist, let alone how it could be justified.
Employers must really ask themselves whether they are being absolutely unbiased in the pay decisions they make. They need to consider whether they are fairly evaluating the different and diverse skill sets, not just of men and women in their companies, but of all of their employees.
Companies and managers need to fully recognise the different and complementary skills it takes to be successful in business and properly assess and evaluate these skills. This means some managers will need to move away from simply looking for the skills they recognise in themselves and are therefore more comfortable rewarding.
It is time for businesses to really challenge and question these accepted norms, and create new ways of assessing and rewarding success, which align to the demands of a 21st century workforce.
This report makes for depressing reading. Pay inequality clearly should not be an issue in a 21st century business, but it is alive and well in many companies and needs to be stamped out. Companies must examine their pay structures, look for any disparities and address them.
The report also highlights that women are not as confident asking for promotions and negotiating pay rises as men so they are losing out. Again, companies need to examine their employment data and check that women aren’t missing out on pay rises simply because they aren’t as demanding as men when it comes to pay.
What is also needed is the tackling of some of the deeper issues at stake, such as the lack of confidence among women that is prevalent in the research. One solution could be to introduce interventions such as coaching in subjects including networking, effective communication skills and self-confidence. Another would be to ensure there are successful senior-level female role models within the business who can provide inspiration and even support. Companies must also check women aren’t being penalised for taking maternity breaks, and support women post-maternity so they not only get their careers back on track, but continue to progress towards the promotions they desire and reach their full career and earning potential.
We are working with a number of companies including Citi, Deloitte and Ernst & Young, which have implemented specialist coaching programmes for women taking maternity and also for senior women to ensure they progress through the ranks and reach their full potential. These companies have been rewarded by high retention rates for women and are being recognised as employers of choice as a result.
Ultimately, change will only come when gender equality in the workplace is a genuine business goal, which is supported throughout the business. We hope that companies will sit up and take notice of this report and address any imbalances within their organisations.