A Gaping Gender Gap at UK Banks

Women get 30% to 60% less at leading British financial firms. Here’s why.

In the UK, a new law requiring firms to disclose gender pay gap differences countrywide is shaping up to be an eye-opener. The latest disclosure: Among the big banks, a typical difference in pay is around 32%—and can be as much 60%. 

Under the new law, all firms with more than 250 employees are required to report on their pay gap by early April. That’s drawing attention to differing pay, of course, but for some experts it’s also revealing a bigger issue: “This is all a matter of female representation in the workforce,” says Ben Frost, Korn Ferry’s global product manager for pay. “The companies look bad because their female representation isn’t where it should be.” 

In the top ranks of most firms, women rarely hold anywhere close to half the executive positions, which tend to be better paid than the average employee. In banks, there are some positions that are not top on the hierarchy ladder but are paid highly. Those jobs are typically in the investment banking part of a financial firm, and the people who hold the jobs are overwhelmingly men.

“Thanks to the pay gap reporting, the matter of lack of female representation is back on the agenda,” says Dési Kimmins, head of Leadership Development Solutions EMEA / UK & Ireland for Korn Ferry in London. “Top managers are thinking: What can we do?” she says. In its simplest form, the issue of rectifying the pay gap problem has quickly moved from “nice to have” to “must fix urgently.” Companies that don’t take action will likely suffer reputational risk and a probable loss of talent to competing companies, she says. “Some organizations see the gaping pay gap as an opportunity to fix the way their company does things, and so enhance the employee-value proposition” by making their forms more attractive for women. 

According to Kimmins, middle management may be one of the biggest obstacles to retaining more women and moving them up the ranks. “It is not lack of will, it is because the managers don’t know how,” she says. Two vital skills that are required to get to the very top are the development of company-wide relationships and understanding the politics of an organization, Kimmins says. But most middle managers are providing this kind of guidance. The solution, she says: reskilling them to coach women better.