Gender Pay Gap within Asset Management
The gender pay gap is a red-hot topic in today’s society (see our earlier article). The UK government announced legislation requiring all companies with over 250 employees to publish their gender pay gaps by April 2018. Therefore, we were all intrigued to see the results. as a result some companies were no doubt worried. A few companies were very comfortable. However, some companies may have looked at ways to obscure the results they published. Isn’t it time for the Dutch Government to do the same?
The gender pay gap in Asset Management
Looking at the statistics and out jumps Asset Management as an area with some major disparities – and therefore a great deal of work needing to be done. The statistics have revealed some significant remuneration differences between the genders. Given the prominence of asset management as an industry – and a tendency for the media to question the justification of salaries and bonuses generally – one must expect these statistics to cause great concern. Yes, there is disparity across the board in all fields of work. However, asset management sets an unwanted benchmark at present.
Perhaps we all expected this would be the case, but to see findings on paper really caused a level of consternation. The average pay gap UK national average is 9.7% in contrast to 22.2% for financial services. Yet the stats for asset management see a significant increase, with a whopping 28.5% being the average gender pay gap. This is on base salary alone. The figure for gender pay gap on bonuses in asset management is 55.4%. An eye watering figure. A full list of figures produced by The Financial Times can be found here.
Women in Asset Management
Now this is not to suggest that companies are paying men more for doing the same role as a woman. But that the lack of women in these well-paid positions is far too low. Asset management is an industry that does have a heavy gender imbalance at the higher levels. This undoubtedly leads to the figures produced. Yet the numbers are there in black and white. There is a clear lack of female talent in executive positions in asset management. We touched on this topic in a previous blog post Women in Asset Management.
Focusing on the gender pay gap
With this emphasis on the gender pay gap, it is now up to asset managers to tackle the problem and swiftly drive a diversity agenda within their businesses. It is down to the main boards to make this a priority. If it is not, some asset managers may start to see business flows decline. The buy side – pension fund boards, charities and other large investing institutions – are likely to make this a factor in their manager and fund selection processes. Asset management as an industry needs to focus on talent acquisition and retention. Ensuring salaries are aligned for both men and women is just the start if the industry is to truly tackle the gender pay gap.
Some asset managers have already made headway. Investec, who have over $141bn of assets, have set themselves a target of having women in at least 30% of senior leadership roles by 2023. State Street Global Advisors, who have over $2.8tn have targeted 36% female representation at senior vice-president level by 2023. Such a clearly defined objective here is important. Without putting such a target down in black and white it is difficult for a business to crystallise a journey plan.
Team Lift Outs
Team lift outs are one way asset managers can promote diversity. The demand to explore a new geographic or functional area could be a way of an organisation expanding its diversity. Team lift outs are ideal for this. With this in mind, a need for a female only or heavily female influenced team is increasing. Such a move would promote an increase of women in roles of seniority and at the same time have a positive impact on that organisation. Team lift outs and their positives and negatives is another topic we recently covered, Team Lift Outs.
Diversity Talent Acquisitions and Retention Strategies
For diversity and equality to be achieved, asset managers need to retain their diverse talent. Similarly asset managers need to cultivate diverse talent pools externally. We work with our clients to understand their needs and formulate non-discriminatory role profiles, while building diverse talent pools from which our clients can draw. The key areas of focus include increasing the proportion of women and broadening ethnic diversity on long-lists and allowing asset managers to hire the best irrespective of gender, race or ethnicity.
It is evident that asset management businesses need to change. Organisations which fail to accept the need for change could find their business flows impacted at quite an early stage. The gender pay gap is an area that needs massive emphasis, even more so in asset management. This male dominated industry will have to change over the coming years. As a result let’s hope that this new legislation, properly accepted and embraced, allied with press coverage and investor requirements, helps to catalyse a change of culture.
Finally for access to the government database on all gender pay gap data please visit here.
To have a conversation with us about how we can help you hire the best most diverse talent please call our UK colleague Paul Battye on +44 207 887 4534 or email firstname.lastname@example.org or our Dutch colleague Wilma Rossieau on +31 (0) 20 462 30 60 or email email@example.com