Non-exec roles for females explains FTSE 100 pay disparity

Female FTSE 100 directors earn on average 73% less than their male counterparts according to new data published by New Street Consulting Group. It serves to underline how the pay gap that still exists between men and women in Britain’s top boardrooms. The research found that the average pay package for a female director in the FTSE 100 is £237,000, compared to more than £875,000 for male directors.

The Guardian reports on this and highlights the main reason for the gap – the fact the majority of female directors at FTSE 100 companies hold non-executive jobs attracting significantly lower salaries. Female non-executive directors at FTSE 100 firms receive an average pay of £104,800, compared with £170,400 for men. The pay gap between executive directors is even more apparent, with women getting an average of £1.5m, in comparison to £2.5m for male peers.

Personnel Today covers this news and quotes Claire Carter, a director at the consultancy who highlights how 91% of female directors in FTSE 100 companies are in non-executive roles which are not only lower paid but they also fail to offer an obvious route to those  higher-earning roles. 

HR Review also covers this and quotes Darren Hockley, Managing Director at consultancy DeltaNet International. He talks about ways businesses can improve diversity and inclusion at board level. He says ‘pay equality responsibility does not just lie with HR; it requires support from everyone in the organisation in order to be addressed’. He says ‘more executives need to step up and become an ally for their female colleagues.’ He is, of course referring to sponsorship, and we agree that is vital.

So, let’s hear more about that, and about this report generally. Kate Dodd is a diversity and inclusion specialist and I put it to her that it’s not just about the low wages, it’s also the low numbers of women in senior roles that’s a concern:

Kate Dodd: “Yes absolutely, and this report, again, is pretty shocking, because what it's showing us is that it's less than 10% of senior roles. So if those three senior roles within the business - the CEO, the CFO and the chair - across all of the FTSE 100, less than 10% of that, so that's 300 opportunities, and less attempt than 10% are being taken by women and, of course, the women that are taking those roles are often non-executive directors. So where we do see executive directors, they tend to be in roles such as HR, diversity, marketing, those roles that don't command those high salaries. So it's not just a case of low pay, but also it's a case of lack of representation overall.”

Joe Glavina: “Last week you talked to this programme about the lack of ethnic diversity at senior level in the FTSE 100. So we have two issues - that one, a lack of ethnic diversity, and this one, female under representation ”

Kate Dodd: “So the challenges are different. So we've been talking a lot recently around ensuring that you've got sufficient representation from minority ethnic groups and often the challenge there is that people say, look, we don't have the pipeline, we don't have sufficient numbers of ethnic minority talent within our business in order to bring them. There are, of course, some businesses that are hugely male dominated, but the pipeline issue tends to be less of an issue for lots of businesses, they do have the female talent, they're just not making it up to those very senior positions. So, the challenges are different. The challenges have also been exacerbated hugely, by the COVID pandemic. We have seen a real disparity, particularly around childcare responsibilities, the lack of school during those lockdown periods, but also the lack of extended informal childcare, as well as formal things like after school club, breakfast club, etcetera which has really impacted on women and is definitely holding back their careers. So, those challenges are there and they are real and, of course, not just for women with children, but for many women within organisations.”

Joe Glavina: “Tell me about sponsorship of women, Kate, because I know you’ve got strong views on that.”

Kate Dodd: “Yes, absolutely. Sponsorship is one of the key things, I think, and if you have to do one thing, I would say look at sponsorship. Sponsorship has to exist within a business and the reason it has to exist is that's how promotions have always happened and they probably always will. It’s only by having a formal sponsorship programme, where you break down the informal sponsorships that are already going on. So you know, sometimes you wonder, gosh, I just wasn't in the right place at the right time, or I didn't know about that vacancy, or I wasn't around to get that opportunity, and the reason for that, of course, is that there isn't somebody there thinking about you, notifying you, giving you a tap on the shoulder and letting you know and the people who are getting notice of those positions are being informally sponsored, i.e. somebody is taking them under their wing and is helping them and bringing them up the ladder, as it were. The only way really to break down that informal sponsorship is to introduce formal sponsorship into your organisation so that people have that as part of their role, to bring on, to mentor. But sponsorship goes beyond mentoring, of course. Mentoring is sharing of thoughts and sharing of opportunities whereas sponsorship is actually having it as part of your job to bring on that person and help them to navigate their own career and coming up through the ranks of a business.”

Joe Glavina: “The Parker Review, which was concerned ethnic diversity of UK boards, talks about the sponsors being the likes of the CEOs – so very senior people. Do you agree there is a role for CEOs here?”

Kate Dodd: “Yes, think it's important that the CEOs are involved in sponsorship, I don't think they should just be the CEOs, I think everyone on the board has got a role to play and, you know, reciprocal mentoring, again, is a really valuable thing and you do need your most senior people involved in this because if you're relying on the next level down or those people who report into the Exec board but aren't sitting on it, or aren’t sitting on the PLC board, then you're not actually getting effective sponsorship because those people are not the ultimate decision makers. So, I do agree that sponsorship has to be a really key part and it should be written into the job descriptions of those people who are in those most senior positions.”

There has also been separate research on how the FTSE 100 is doing in terms of ethnic representation at senior level. A report by recruitment specialists Green Park reveals the number of white men in the ‘top 40’ positions in FTSE 100 companies is on the rise, despite efforts to improve boardroom diversity. Kate Dodd talked about that bin some detail to this programme last week – that’s ‘Lack of ethnic diversity in FTSE 100 top roles, report shows’. That programme is available for viewing now on the Outlaw website.

LINKS

- Link to ‘Business Index Leaders Index 2021 – FTSE 100 – A Review of the Gender and Ethnocultural Diversity Composition of UK’s most Senior Leadership’