Financial services still has a gender problem

Women in the industry are paid less than their male counterparts and remain underrepresented in leadership roles.

The financial industry continues to be plagued by a critical gender divide, including a pay gap between men and women that is significantly larger than the Australian average.

"The industry’s perceptions of gender equity in the workplace do not match the reality."
Russell Thomas, F Fin, CEO and Managing Director of Finsia

According to a new study, women in the industry are paid less relative to their male counterparts and remain underrepresented in leadership roles, despite making up 50 per cent of employees at graduate level.

The study, entitled The significance of the gender divide in financial services, was prepared by the Financial Services Institute of Australasia (Finsia).

Finisia surveys its members and the wider finance community every two years about how gender equity issues in the workplace are perceived.

This year, 1298 finance professionals in Australia and New Zealand responded to the online survey — a record number, reflecting the increasing attention being given to diversity and inclusion issues.

There are many measures of diversity and inclusion in the workplace but chief among these are remuneration and leadership. The disparities in these measures are the starting point of the gender divide.

The financial and insurance services industry has a wider gender pay gap — a measure of the difference between the average of all male and all female earnings — than the Australian average (30 per cent versus 18.2 per cent as at August 2014).

It also has proportionally lower representation of female CEOs (4.6 per cent versus 13.5 per cent for all industries) but moderately higher numbers of women in management roles (36.2 per cent versus 35.4 per cent for all industries).

The gender pay gap in New Zealand is smaller at 9.9 per cent (2014 statistics). Analysis from the Human Rights Commission in its last census of women’s participation shows there are five female CEOs among NZX100 companies.

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However, there is a deeper gender divide in the industry. Despite the fact base outlined above, the industry’s perceptions of gender equity in the workplace do not match the reality.

When asked if their employer is transparent about its remuneration systems and parity of pay between genders, 51 per cent of men agree transparency and parity reigns, while 64.9 per cent of women disagree.

On the question of whether the pay gap in financial services is grossly exaggerated, 45.7 per cent of men agree or strongly agree that it is. By contrast, 52.6 per cent of women disagree or strongly disagree with this statement.

Why this is significant

The research raises significant questions about the industry’s awareness of the issues. It shows there is an opportunity to build understanding in the industry to promote informed debate about which strategies will be most beneficial to move the dial on women’s representation in leadership.

So why do men and women perceive the nature and extent of the gender divide in financial services differently, despite publicly reported information about the representation of women in leadership and the gender pay gap?

One reason is public reporting of information about gender equity in the workplace is relatively recent.

In Australia and New Zealand, listed entities led the charge through amendments to their listing rules in 2010 and 2012 respectively requiring companies to report gender composition at management and board level.

As of this year, Australian organisations employing more than 100 personnel are required to report to the Workplace Gender Equality Agency (WGEA) on a range of gender equality indicators, including gender composition of the workforce and equal remuneration between women and men.

Alarmingly, many employers are not arming themselves with the basic tools to assess the extent of the gender equity issues they seek to address. On Finsia’s reading, the gold standard of these is the gender pay gap analysis.

Coinciding with the release of Finsia’s research was analysis from the WGEA revealing only 26.3 per cent of organisations have measured gaps in remuneration based on gender. Encouragingly, in the finance and insurance services sector this figure is 51.2 per cent.

Measuring, tracking and recording detailed information about remuneration decisions, promotions and uptake of flexible work arrangements by both men and women is vital.

Public reporting of this information means organisations and industries can be compared — this informs public debate about workplaces and policy responses to address inequality and improve diversity.

The diversity dividend

The power of transparent reporting is revealed by an interview Finsia conducted with Origin Energy chair Gordon Cairns earlier this year.

Gordon was asked to comment on the moment when the benefits of workplace diversity resonated with him on an intellectual and emotional level.

“It struck me that we were recruiting from only 50 per cent of the gene pool, so we were actually limiting our ability to compete,” he said. “That for me was the turning point.”

This comment shows the power that facts play in expressing the dimensions of the gender divide in financial services and the thinking that is required to redress the balance.

Russell Thomas is CEO and Managing Director of Finsia.

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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