Female FDs earn £30k less than their male counterparts

Pay gap
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Official figures show that male financial directors earn, on average, almost £30,000 a year more than their female counterparts.

Data from the Office for National Statistics (ONS) shows a startling disparity in pay between male and female financial directors. The gap among FDs is the second largest in the ONS analysis.

By way of explanation, the ONS calculates the pay gap as the difference between average hourly earnings (excluding overtime) of men and women as a proportion of average hourly earnings (excluding overtime) of men’s earnings.

The FD pay gap exists despite a relatively narrow gender pay gap for accountants more generally. At the chartered and qualified accountant level - where the workforce is split equally in terms of gender - the pay gap between males and females sits at 5.1%.

Men working in these roles enjoy an average annual salary of £37,250 compared to the £33,010 that women typically earn. However, among financial managers and directors - where females account for 42% of the workforce - the pay gap widens to 31.6%.

Female FDs earn an average of £42,674 in comparison to the £71,986 salary of their male contemporaries. The difference between the two figures equates to £29,312-a-year.

According to Adrian O’Conner, the founding director of specialist recruiting firm Global Accounting Network, the figures require some perspective - but do raise serious questions.

“The depth and complexity of issues contributing to overarching gender pay gaps should not be underestimated,” O’Conner said. “However, when women are being paid significantly less in the same or similar roles, employers must reflect on current practices to understand why.”

Some facets of the gender pay gap can be explained through a number of inherent cultural trends. O’Conner noted that women are statistically more likely to take career breaks to care for family, which harms earning potential. Men are also proportionally more likely to work full-time than women.

But these don’t explain a cavernous gap like the one between male and female FDs. And salary doesn’t tell the full story. As Alison McGovern noted in the New Statesman, focusing strictly on women’s pay “only tells us how much. It cannot tell us why”.

The why is up for debate. But O’Conner notes one contributing factor: new job offers. When female FDs return from career breaks, the institutional practice of basing new job offers on incremental increases on their previous salary can prevent them from catching up as quickly as they perhaps should – if at all.

“‘How much do you currently earn?’ is a standard interview question, but the practice means that existing pay gaps can persist as individuals move roles,” said O’Conner. “If employers continue to ask current salary the cycle will never be broken and even companies that are non-discriminatory can be unconsciously perpetuating the gap.

“We advise our clients that job offers should be made solely on how a candidate benchmarks and on what their value is to the business, not as a percentage increase on existing pay. Regardless of gender, as any professional steps up the career ladder, their salary should be directly aligned with their ability to do the job.”

Rachel Howe, the finance director of an creative agency called Lab, agreed with O'Conner's take. "Salaries should be based on the value that person brings to the company regardless of any other constraints on that person's time and therefore the number of hours they can commit to."

She added, "Providing psychological safety is key. An FD is there for a reason so knowing that your voice can be heard and that your opinions are taken on board is essential.Companies should create an environment that gives people every opportunity to be successful."

The UK has regulations requiring businesses with a headcount over 250 to report on their gender pay gaps. The Business, Energy and Industrial Strategy (BEIS) Committee is currently considering widening these requirements.

As Samantha Mann reported for AccountingWEB, the committee recommended that the qualifying threshold is reduced to include organisations with 50 employees. It added, there are a growing number of software products and tools available to support employers with pay gap reporting.

About Francois Badenhorst

Francois

I'm AccountingWEB's business editor. Feel free to get in touch with comments, tips, scoops or irreverent banter. 

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11th Oct 2018 09:44

Big 5 personality aspects , one of which is agreeableness , women generally score higher in agreeableness. This translates to on a macro scale more accepting females versus males, I.e. bargaining for salary. Salaries are generally confidential and for this reason, as the profit maximising capitalist model seeks to maximise shareholder wealth, it is not interested in Marxist doctrines of pure equality for all. You see pay scales in the public sector, this creeping Marxism is not good for capitalism.

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11th Oct 2018 10:17

And immediately behind every good FD there is usually an exceptional (often) female financial controller who actually does the day to day finance function management job. The FC role is often filled through internal advancement. The FC (generally) is not seen as FD material as the role is not perceived in the same manner. The FD position is more about being "clubbable" - interacting with the rest of the board, banks, etc., and recruitment tends to be external. Making the leap from practice or another FC role into the FD job requires a lot of good luck. There is nothing about merit in the process, it is all about salesmanship.

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to dmmarler
11th Oct 2018 13:22

So why is there discrimination against men in these senior fc roles, I.e. that their often women?

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to SJH-ADVDIPMA
11th Oct 2018 16:50

I don't think that there is. It is more a question of who has been at that organisation longest and knows most about the systems and people.

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to dmmarler
11th Oct 2018 16:07

What evidence do you have for the following sweeping statement?
"And immediately behind every good FD there is usually an exceptional (often) female financial controller ..."

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to Fastlane
11th Oct 2018 16:52

Years of observation.

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15th Oct 2018 20:58

I’m sure there’s bias in the workplace against talented women progressing to the levels they deserve and seek but not sure of the statistical worth of looking at average gender salaries in a grouping of“finance managers and directors”. I suspect the problem is far more related to there being fewer female directors than their male counterparts and much less due to lower pay for the same role. For me the question is “how can we get more deserving female accountants on the board of directors?”

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