Bridging the gender pay gap
That there is a gender pay gap is in no doubt, but how parity can be achieved is a matter of debate. Myriam Madden, FCMA, CGMA, the president of CIMA in 2015–16, explains how removing gender pay inequality can benefit business and society as a whole.
The gender pay gap should not exist in the early 21st century. Given that women perform just as successfully as men across multiple roles and sectors, there is no reason why men should, on average, earn significantly more for the same roles and responsibilities.
However, according to the World Economic Forum’s 2016 Global Gender Gap Report, women are paid an average of $10,778 – nearly 50% less than the $19,873 the average man earns. More worrying is that progress is slow – at the current rate it will be 70 years before women achieve pay parity with men.
“Neither our daughters nor our granddaughters are likely to earn parity of pay – it’s actually going to be more like our great-granddaughters. When you put it in that context, the rate of progress is appalling,” Madden says.
CIMA’s immediate past president says it is positive that pay inequality is now being taken seriously worldwide. “The loss of talent from the workforce is a global issue. There’s progress in recognising that the gender pay gap is a factor,” Madden says.
She stresses that the gender pay gap varies at different stages of the career cycle. “Typically, in the early years of their careers, the pay gap can be as low as 10% between women and men in similar roles.” But it’s when women take a break from work to have children that pay inequality really kicks in. “The question we have to ask – is there a ‘part-time stigma’? For example, when a woman opts for a period of part-time working, the pay gap widens and it rarely closes over the full course of her career. Couples are then faced with an affordability issue: Can the primary carer afford to go back to work?” This part-time stigma affects men and women.
The issue has been neglected for too long, says Madden, who has built up an executive career in technology and financial services and is now building a portfolio career as a non-executive director.
“This issue is hugely important because the trend is that we may all be working for 40-50 years. Does working part-time for a couple of years have to be a ‘career cul-de-sac’? If the pay gap penalty of working part-time is permanent over the course of a long career, the impact on pension value is hugely significant. But at least there is legislation on paternity leave, which I believe men welcome as much as women,” says Madden, who brought the issue of gender pay to the fore during her CIMA presidency.
Madden spoke at CIMA’s first Women in Financial Leadership conference last year, an event that attracted more than 200 financial professionals and saw high-profile leaders, such as star fund manager Helena Morrissey (who stood down as CEO of Newton Investment Management last year and has now joined insurer L&G as UK head of personal investing), discuss their professional experiences.
“We were interested in talking about the challenges in financial leadership roles, particularly for women. One of the themes, regardless of where women are in their careers, is having the confidence to negotiate pay,” Madden points out. “One of our speakers said women worry about breaking unspoken rules – that it’s not appropriate to ask for a pay rise – whereas men will generally give it a shot. So it’s part of the cultural mix between men and women. Women need to be more confident in terms of their own pay. As management accountants we are skilled at driving organisations to create value. But as individuals we also need to regularly explain how we’re adding value to the organisation. This should lead to a discussion about pay.”
Madden says the work of the Financial Reporting Council (FRC) on how culture and talent are key to companies’ success, along with the review by Sir Philip Hampton proposing that reporting the number of women either at executive or board level should be included in the stewardship code, are progressive. But she believes that the question of whether pay equality should be subject to legislation is still up for debate. “Ultimately the pay gap is the bellwether of how well gender parity is progressing. The scale of the pay gap is the canary in the mine,” she adds.
Madden believes that finance professionals can play a critical role in driving the changes that significantly reduce the gender pay gap. “As skilled management accountants, we know that you largely get what you measure. We should be pressing for greater visibility of talent issues, including the pay gap, in our annual accounts and reports, and our communications with boards, investors, and customers.
“As management accountants we know the value of the right information to inform decision-making and strategy,” she says. “Here, there’s an opportunity for women and men as management accountants to build the case in their organisation for reporting on the gender pay gap and influencing talent strategies.”
CIMA is well positioned to lead the campaigning to close the gender pay gap, Madden says. “As well as demonstrating best practice, CIMA has played a key role on the FRC’s culture project, influencing business leaders, chairmen, and CEOs. In addition, CIMA has been publishing information on its gender pay gap in advance of the mandatory requirement that comes into effect this year. So we’re very much at the forefront of best practice.”
Madden says men are equally vital participants in the work to close the gender pay gap. “Successful organisations need talented men and women, given the volatility and uncertainty facing the business world. How we structure our labour market and flexible work patterns will benefit men, women, and ultimately business,” she asserts.
“It’s about a win-win,” Madden stresses.
“The prosperity of the economy rests on the success of our businesses. If we are doing the right thing for business, ultimately that prosperity flows back to all of us,” she adds.
While Elon Musk has a vision for life on Mars, Madden would rather see the journey to pay parity accelerated. It may not happen in her lifetime, but Madden is determined to set the conditions to make it happen sooner rather than later.
A version of this article was published in the May edition of Financial Management magazine.