In conference rooms across the City of London and Edinburgh in recent weeks, hordes of ashen-faced women have sat through presentations detailing how much more their companies pay their male colleagues over them. The fund management industry’s gender pay gap was long-suspected to be wide. But the disclosures, mandated by the UK government for companies with more than 250 domestic staff, have shown the extent of the disparity.
Even for an industry that has always had a heavy gender imbalance, the revelations have caused consternation. “It’s a difficult environment here with little buy-in from the top on dealing with this,” said a woman in a senior position at an asset manager with a particularly large gap. Bev Shah, chief executive of City Hive, a network for women in asset management, said no one should be surprised by the big gaps: “You just have to walk around the investment floor and open your eyes to know what the numbers will look like.”
The average pay gap across asset management groups is 28.5 per cent, while the bonus gap is 55.4 per cent. This compares with a national average pay gap of 9.7 per cent and financial services pay gap of 22.2 per cent. At the most extreme, Wellington Management, the $1tn US fund company with just under 300 staff in the UK, reported a pay gap of 44.7 per cent and a bonus gap of 84.6 per cent. This means women receive £55.30 for every £100 earned by male colleagues, while for those receiving a bonus, women take home just £15.40 for every £100 paid to men.
Though the data do not indicate that companies are paying men and women differently for doing the same job, the disparity is more a sign of companies having more higher-paid male workers than female. Many of the managers with the largest gaps attribute the difference to a lack of women in senior positions. With companies forced to report gender pay figures every year, the emphasis now turns to what they will do to narrow gaps over the long term.
Wellington said it was confident it pays men and women equally for work of equal value. It added: “Diversity of talent and thought are central to delivering high quality service and investment outcomes for our clients. As a result, we remain steadfastly committed to achieving greater levels of diversity and gender balance.” John Streur, chief executive of Calvert Research and Management, a $10bn group that specialises in responsible investment, said Wellington’s bonus disparity showed how men hold most of the high-paid portfolio jobs positions at the company. “There is no case for having these roles dominated by men,” he said.
Calvert is a subsidiary of Eaton Vance, the $450bn US manager, neither of which employ more than 250 workers in the UK and so are not required to publish the data. Mr Streur said he intended to publish his company’s pay data voluntarily. Investec, which manages $141bn of assets, reported the second biggest pay gap at 43.4 per cent, although its bonus gap of 57.8 per cent is more comparable with other managers.
The company said the pay gap was due to it historically having a high proportion of men in senior roles — though it added that it has several initiatives to address this imbalance. It has set a target of having 30 per cent of women in senior leadership roles by 2023 and changed recruitment processes to ensure shortlists and interview panels are balanced. It has also introduced diversity training and improved leave benefits.
Pimco, the $1.75tn bond manager, reported a pay gap of 39 per cent and bonus gap of 81 per cent — the second largest among those reporting. Much of the disparity is understood to be due to the company having fewer women in portfolio management roles. Pimco pointed to its involvement in several industry initiatives to promote gender diversity. Another manager with a large bonus gap, T Rowe Price with 72.9 per cent, said the disparity was partly due to it being an independent asset manager and not subject to bonus cap restrictions that insurer or bank-affiliated groups fall under. “As a firm with a higher concentration of more highly compensated roles in the UK . . . there was always a possibility we would be towards the higher end of the range,” said Robert Higginbotham, head of global investment management services.
Share this graphic At the other end of the scale, a handful of managers reported numbers that were below the wider financial services average and much closer to the national average. State Street Global Advisors, the $2.8tn US manager, reported a pay gap of 11.8 per cent and a bonus gap of 24 per cent. The wider State Street banking group first set goals of improving gender diversity in 2012 and has continued to raise its targets. It aims to have women representing 36 per cent of staff at senior vice-president level and above by 2023. BlueBay Asset Management, the $60bn fixed income specialist, reported the smallest pay gap of 8.8 per cent, with a bonus gap of 38 per cent.
James Brace, the company’s general counsel and head of diversity, said the narrower pay gap was due to less disparity among senior employees’ salaries. “We believe we are an employer of choice and paying people fairly, being inclusive and creating a diverse work environment supports this objective,” he said. Another manager that appeared at the more favourable end of the scale was Baillie Gifford, the Edinburgh-based company with £180bn under management. It reported a pay gap of 17.9 per cent and a bonus gap of 25.5 per cent.
However, its numbers were skewed because its analysis did not include the company’s 43 partners, who are predominately men. Under the rules, partners who are deemed as self-employed do not need to be included in the report, though several accounting firms that operate under such structures included partners’ pay in their analyses. All eyes will be on how the industry responds to the first year of reporting and whether initiatives will pay off. But Ms Shah warned that there are no easy fixes and said she would worry if they narrow too quickly. “Promoting and hiring just because of gender is detrimental — no matter what the job, it should always go to the best candidate on merit,” she said.
“There are many studies that show a business case for more women in the workplace and improvements to the bottom line. This is a happy outcome but should not be the reason for evening up the scale. Gender equality is a good enough reason.”
Article click here