Whatever the reasons for the gender gap in CEO pay, it needs to change

It’s the eternal pink and blue divide.

It’s the eternal pink and blue divide. The corporate gender pay gap in the UK and for that matter across the globe has been heavily debated and there are myriad opinions around why men get more hefty pay packages than women and, more importantly, why men hold most of the top jobs in the industry.

The divide has come into focus again with results of a new salary research by the Chartered Management Institute (CMI) revealing that men actually earn £141,500 more in bonuses than women doing the same role over the course of a working life.

According to the CMI research of 43,000 managers, male executives, on an average, get double the amount of bonus in comparison to women, with extra payments standing at £6,442 in 2012 compared with £3,029. Women directors' average bonus is £36,270, while men receive £63,700, and at more senior levels, the pay gap for both basic and bonuses increase, according to CMI.

There is no doubt that there are more male executives holding top jobs with fat salaries than there are women doing the same in the UK. Only last month a proposal by the Conservative Women's Forum, a group of female MPs investigating why too few women rise to the top of Britain's companies, said stats on the number of women firms employ at each level, the number of employees promoted by gender and the average pay gap at each rank, should be made public if "Britain is ever to get to the bottom of its "women's problem" in business".

However the problems aggravating the pay gap between the sexes are, at one level, rudimentary and age old. Societal biases and just a leak in the women talent pool are the real problems here, as they have been for decades.

A recent Harvard study of workplace ambitions showed fewer women aspire to top jobs than men. According to CMI, at junior levels, women actually earn £989 more than men on average and make up 64.3 per cent of the proportion of staff. But by middle management they fall behind both in terms of salary and representation, receiving £1,760 less than men and filling less than 44.3 per cent of the roles.

Childcare and family life – both of which women have been critisised for prioritising over their work lives – are basic realities that do exist and even may push the mentality that men will be more dedicated to the professional demands of a company in comparison to women who have a home to run. Also the maternity leave periods often become gaps in women’s career roadmaps. 

Things have gotten better over the years though. A Pew Research Center study released in June revealed that 23 per cent of women earn more than their husbands, up from 4 per cent who did in 1960. According to a survey carried out by Southampton University recently, the few female chief executives at FTSE 350 companies are paid on average £1.8m, compared to £1.3m for men, and the close links between performance and pay at public companies suggested that women bosses were delivering better results. The study also found that female chief executive pay had gone up by 9.3pc per year on average over the last five years, compared to 5.1 per cent for men.

Golablly, we have the likes of Indra Nooyi, Chairman and CEO, PepsiCo, Marissa Mayer, CEO, Yahoo, Ginni Rometty, President and CEO, IBM, Anne Sweeney, Co-Chair, Disney Media Networks, and President , Disney/ABC Television Group, Safra Catz, President and CFO, Oracle, Ursula Burns, Chairman and CEO, Xerox, to name some heavyweights who are turning the tide.

However the fact that when Beyonce sings "all the honeys makin’ money…throw your hands up at me" we can actually pick out names from a women-power-list of those who can wave back is the worrying bit. When it comes to men, that’s not a practical thought.

In the UK particularly, although women who run public companies may earn more than their male counterparts, they definitely represent a minority. Women only account for 5.6 per cent of executive directorships, despite the government target of 25 per cent. In fact Boardwatch UK recorded the first fall in the percentage of women on company boards, earlier in the year, since the figures were first complied in 1999.

As long as there are biases and "dirty old men" at share holder meetings telling the likes of Marissa Mayer that they are attractive instead of anything related to the job they do, or there are stereotypes that women will always prioritise family life over their jobs, women gaining positions of real power on the corporate ladder is going to be slow. The ladies need to be more proactive themselves about where their career trajectory is going, how their salaries and job descriptions compare to their male counterparts and they must speak up when it comes to getting a bonus or promotion if there is a valid case for it. They have to be the change they want to see. That maybe a cliché but there’s a reason why cliché’s are true.

On the other hand perceptions too need to change. A female or male boss is irrelevant when he or she is the best person to do the job and that’s how companies must approach their employees, alongside also actively working towards bridging a lopsided gender employment scale. Even after that, we may not end up with identical labour market outcomes for men and women. It will be of crucial importance then how the labour market rewards different types of work. 

Just recently, Bank of England Governor Mark Carney admitted to a “striking lack of top female economists” and pledged to create a pool of candidates for its rate-setting committee who will eventually become good enough to be the first female governor in the Bank’s 300-year history. He said the Bank has to “grow” top female economists all the way through the ranks. That attitude will go a long way in terms of awareness and equality. I’m with Carney.

I'm with Carney. Photograph: Getty Images

Meghna Mukerjee is a reporter at Retail Banker International

Photo: Getty
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The three big mistakes the government has made in its Brexit talks

Nicola Sturgeon fears that the UK has no negotiating position at all. It's worse than she thinks. 

It’s fair to say that the first meeting of the government’s Brexit ministers and the leaders of the devolved legislatures did not go well.

Scotland’s Nicola Sturgeon told reporters outside that it had all been “deeply frustrating”, and that it was impossible for her to undermine the United Kingdom’s negotiating position as “I can’t undermine something that doesn’t exist, and at the moment it doesn’t seem to me like there is a UK negotiating strategy”.

To which cynical observers might say: she would, wouldn’t she? It’s in Sturgeon’s interest to paint the Westminster government as clueless and operating in a way that puts Scotland’s interests at risk. Maybe so, but Carwyn Jones, her Welsh opposite number, tends to strike a more conciliatory figure at these events – he’s praised both George Osborne and David Cameron in the past.

So it’s hard not to be alarmed at his statement to the press that there is still “huge uncertainty” about what the British government’s negotiating position. Even Arlene Foster, the first minister in Northern Ireland, whose party, the DUP, is seen as an increasingly reliable ally for the Conservative government, could only really volunteer that “we’re in a negotiation and we will be in a negotiation and it will be complex”.

All of which makes Jeremy Corbyn’s one-liner in the Commons today that the government is pursuing neither hard Brexit nor soft Brexit but “chaotic Brexit” ring true.

It all adds to a growing suspicion that the government’s negotiating strategy might be, as Jacqui Smith once quipped of Ed Miliband’s policy review, something of “a pregnant panda – it's been a very long time in the making and no one's quite sure if there's anything in there anyway”.

That’s not the case – but the reality is not much more comforting. The government has long believed, as Philip Hammond put when being grilled by the House of Lords on the issue:

"There's an intrinsic tension here between democratic accountability of the government and effective negotiation with a third party. Our paramount objective must be to get a good deal for Britain. I am afraid will not be achieved by spelling out our negotiating strategy."

That was echoed by Theresa May in response to Corbyn’s claim that the government has no plan for Brexit:

 “We have a plan, which is not to give out details of the negotiation as they are being negotiated”

Are Hammond and May right? Well, sort of. There is an innate tension between democratic accountability and a good deal, of course. The more is known about what the government’s red lines in negotiations, the higher the price they will have to pay to protect. That’s why, sensibly, Hammond, both as Foreign Secretary during the dying days of David Cameron’s government, and now as Chancellor, has attempted to head off public commitments about the shape of the Brexit deal.

But – and it’s a big but – the government has already shown a great deal of its hand. May made three big reveals about the government’s Brexit strategy it in her conference speech: firstly, she started the clock ticking on when Britain will definitely leave the European Union, by saying she will activate Article 50 no later than 31 March 2017. Secondly, she said that Brexit meant that Britain would control its own borders. And thirdly, she said that Brexit meant that Britain would no longer be subject to the judgements of the European Court of Justice.

The first reveal means that there is no chance that any of 27 remaining nations of the European Union will break ranks and begin informal talks before Article 50 is triggered.

The second reveal makes it clear that Britain will leave the single market, because none of the four freedoms – of goods, services, capital or people – can be negotiated away, not least because of the fear of political contagion within the EU27, as an exit deal which allowed the United Kingdom to maintain the three other freedoms while giving up the fourth would cause increased pressure from Eurosceptics in western Europe.

And the third reveal makes it equally clear that Britain will leave the customs union as there is no way you can be part of a union if you do not wish to accept its legal arbiter.

So the government has already revealed its big priorities and has therefore jacked up the price, meaning that the arguments about not revealing the government’s hand is not as strong as it ideally would be.

The other problem, though, is this: Theresa May’s Brexit objectives cannot be met without a hard Brexit, with the only question the scale of the initial shock. As I’ve written before, there is a sense that the government might be able to “pay to play”, ie, in exchange for continuing to send money to Brussels and to member states, the United Kingdom could maintain a decent standard of access to the single market.

My impression is that the mood in Brussels now makes this very tricky. The tone coming out of Conservative party conference has left goodwill in short supply, meaning that a “pay to play” deal is unlikely. But the other problem is that, by leaving so much of its objectives in the dark, Theresa May is not really laying the groundwork for a situation where she can return to Britain with an exit deal where Britain pays large sums to the European Union for a worse deal than the one it has now. (By the way, that is very much the best case scenario for what she might come back with.) Silence may make for good negotiations in Brussels – but in terms of the negotiation that may follow swiftly after in Westminster, it has entirely the opposite effect. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.