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30% female board membership not high enough

The gender pay gap won’t be eliminated with 30% female boardroom representation, there should be equal representation, argues LSCA Business Board member Nishma Tate.

April 2018

Already this year we have celebrated 100 years of the Representation of People Act 1918 (on 6 February 1918 the law allowing women to vote for the first time was passed) followed by International Women’s Day on 8 March. Now people eagerly await the gender pay gap reporting, some of which has already been published.

By 4 April, all businesses with over 250 employees will have to report the gender pay gap within their companies. The calculation is simple, the average earning of men and women taken as a percentage of the men’s earning. Data for a number of accountancy firms are already published on the government portal.

Of the reports published, there is a common reason for the male/female pay gap: the percentage of females versus males in the top paid jobs, as opposed to men being paid more to do the same job as females (pay equality).

Accountancy firms have been under particular pressure to report numbers including partner data, which is excluded from the calculations as they are seen as owners as opposed to employees. However, many have now published data including partner data.

The data highlights the lack of female leadership/partner representation. For example, the gap published by EY including partner salaries is 19.5% (median), 38.1% (mean), while excluding partner salaries is 14.8 % (median) 19.7% (mean). Similarly, Deloitte numbers including partner salaries is 15.2% (median), 43.2% (mean) and excluding 15.3% (median), 18.2% (mean).

The reporting will only add value if companies use it to identify where, when and why the divide occurs, and what can be done to help individuals maintain their career path. This goes beyond flexible working. It requires a change in attitude and a solution-driven approach that works for employees while also addressing the business needs of growth and profitability.

There have been diversity initiatives at large corporations for many years, but are they really moving the needle year on year? All Big Four show a drop in the proportion of females in the top quartile of their pay bands with Deloitte and KPMG at 33%, PwC at 39% and EY in between the two.

This leads to the next point: to close the gender pay gap, the ambition should be to have equal representation on our boards which is currently around a quarter for the FTSE 350 board positions and not the 30% target by 2020.

Nishma Tate is member of the LSCA Business Board

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