Andrew Cocks: Cultural bias underpins the Gender Pay Gap in UK financial services

Cultural bias underpins Gender Pay Gap in the Finacial Services

Gender pay gap (GPG) reporting data shows a 27.2 per cent disparity in favour of men in the UK financial services sector, significantly higher than the national average of 18.2 per cent. The situation in relation to bonuses is even worse, with bonuses for women working in UK banks 5 2per cent less than their male colleagues. These disparities are largely caused by the fact that male employees are more likely to climb the career ladder to senior positions and roles which command higher salaries than women.

A survey of 1,000 people working in UK financial services conducted by Conflux and Questback just weeks after the publication of the gender pay data, showed that 69 per cent of female staff still believed their employer was doing ‘a great job’ of providing equality of opportunity based on gender. Similarly, 72 per cent of men and 68 per cent of women believed that people succeeded on merit with 90 per cent of senior managers sharing this belief. This suggests that those with the most power to drive change are the least likely to acknowledge that there is a problem.

How can it be that in the face such compelling evidence to the contrary, all groups remain so unquestioning of the meritocratic nature of their organisations?

The apparent gulf between perception and reality clearly points towards the underlying cause of the GPG – culture. Culture is an expression of shared beliefs and assumptions influencing decisions made in relation to ourselves and to others. The impact of culture, while profound, is largely subliminal and unconscious. This in turn points to a clear prerequisite for effectively addressing pay disparity, namely exposing cultural assumptions and bringing them into collective consciousness.

Lack of awareness is not just a barrier to closing the gap, but a major cause of the gap itself. It highlights what Emilio Castilla, Professor at the MIT Sloan School of Management identifies as the ‘paradox of meritocracy’. Confidence in the meritocratic nature of their business can lead those responsible for talent management decisions to believe their decisions are more impartial than they actually are. This allows them to unconsciously give themselves permission to act on their biases, with less self-scrutiny. In short, the belief in the meritocratic nature of the company can lead to increased bias which actually decreases meritocracy.

Demystifying culture

Our research also uncovered a cultural truth. All employee groups reported believing that their organisations valued and rewarded traits the respondents themselves defined as masculine such as assertiveness and competitiveness, ahead of those they defined as more feminine, such as empathy and compassion. The research found an extremely strong and almost perfectly linear relationship between perceived value and masculinity across a range of 20 common leadership traits.

If positions of power are dominated by men, the traits they display quickly come to define what leadership looks like. Both the decisions made about people and by people in relation to progression and reward can be profoundly affected.

For example, women may be less likely to feel suited to or aspire to senior positions. The survey reveals women were nearly twice as likely as men (15 per cent vs 8 per cent) to self-exclude from promotion opportunities on the grounds that they did not feel sufficiently qualified. Despite this, unsuccessful male applicants for senior positions were significantly more likely than unsuccessful female applicants to feel that they were treated unfairly.

Making the change

While many financial organisations have developed a detailed understanding of the structural data which underpins pay disparity, they lack understanding of the cultural factors which have created and continue to reinforce it. Firms’ supporting statements to GPG reporting show a common pattern of responses including setting quotas and undertaking generic management training. While quotas can be a means of incentivising change and measuring progress, they do nothing in themselves to affect the necessary improvement. A key part of the response must include systematic data gathering to measure company culture through the prevailing attitudes and assumptions. A range of targeted interventions can then be put in place to challenge the assumptions that drive behaviour and to create an ongoing cycle of improvement.

Combining structural population data – for example (what per cent of candidates for senior management positions are female?) – with cultural insights (do women feel confident of fitting in with senior management culture?), help to challenge some of the more comfortable assumptions about fairness and meritocracy. These insights need to be coupled with ongoing scrutiny of talent procedures and decisions.

Practical steps such as reviewing job adverts, competency frameworks and performance management criteria for gender neutral language certainly help. Scrutiny must also apply to the individuals who are responsible for talent management and reward decisions. The research found that fewer than 20 per cent of unsuccessful candidates for promotion received constructive feedback. Candidates who are not being given a clear understanding of what they need to do to progress will clearly be less likely to try again and will look for outside opportunities.

The imperative for action

As well as being unfair, the gender pay gap can have a significant negative impact on business competitiveness. Customers, staff and investors all want to engage with organisations that are open and meritocratic. Leadership decisions that are based on a diverse range of experiences, skills, opinions and backgrounds are likely to be more considered and potentially more innovative.

If the next round of GPG reporting in April 2019 shows organisations’ failure to substantially close the gap, leadership will inevitably be calling for more urgent steps to be taken. This responsibility will, rightly or wrongly, in large part fall upon the Human Resources function. Without a thorough understanding of the cultural elements at play, the task of permanently closing the gap will be next to impossible, as will the task of raising awareness across the entire organisation to develop a shared responsibility for action.

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About Andrew Cocks

Andrew Cocks is an Assessment Psychologist at Conflux and Associate Consultant with Questback, the employee and customer feedback platform. Andrew has over 20 years of experience in the field of employee engagement, culture and change. Andrew led the European Employee Engagement practice at Watson Wyatt before moving to HSBC where he was Group Head of Engagement and Employer Brand. Questback provides a complete feedback system that helps companies transform employee, customer, and market research programmes. Used by thousands of companies, including one-third of the Forbes list, Questback is the smarter, faster way to manage feedback.

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