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