Women’s Wages in the City

Says Andrew:

Prompted by this article by Gil Corkendale on the inequality of wages for women in the City of London, I believe that it continues to be nonsense that women are being paid less than men. The current economic climate exacerbates my concern that inequalities will continue to exist—the need for cost reduction is so high that women will continue to be casualties like anyone else. There’s clearly a lack of diversity being shown in imaginative remuneration packages for women, and other minority groups are suffering the same fate.

But why have women continuously been paid less than men? It’s easy to say it’s legacy, history, and the way it’s always been. But I’m beginning to detect a qualitative difference, rather than a quantitative difference, in the type of work being done that’s influencing the discrepancy between men’s and women’s wages. For job roles with a discretionary component (i.e. jobs that aren’t manual or repetitive, structured labor), how long and how hard one works influences how much money he or she is paid.

In our studies of top teams and boards, Nada and I have found that people with ‘hard-edged’ qualities (like excellent negotiating skills, pure resilience to survive, drive to get the contract/task/objective/deal achieved, willingness to make sacrifices to accomplish goals) have an advantage over people who lack these qualities in certain types of discretionary jobs.

The error of salary comparison studies in the past has been to compare across job title–jobs with the same title can be quite unique at different firms. If we began to examine that extra cutting edge for discretionary leadership, that extra stamina for discretionary action, we might find that males or females in these roles who perform well keep their jobs, and those who don’t aren’t paid less–they’re made redundant. Hence there is a reason for differences of remuneration.

An additional issue is that the pipeline of women going into senior-level jobs narrows considerably once women get to lower-middle or middle-middle level management–a whole lot drop out. It’s unclear whether this is due to family reasons or sociopolitical reasons, but there are just fewer women available for the senior level, and from there even fewer get to top jobs.

Says Nada:

Traditional networks and perceptions have to be taken into account—at top level of the financial sector, the networks that predominate are still WASP/male, and wheeler-dealers are traditionally male. Women have only been making deals (where the money is) in the past 20 years; traditionally they were just lower-level clerks. Women compete, but without access to the high-level networks, even when they get to the same level—Managing Director for example—a man in the job probably brings in more money than a woman.

Historically, women might not have had the wheeling and dealing expertise that men have had, but their lack of network access doesn’t mean that they lack networking skill. They simply don’t have quality networks to plug in to.

While men are traditionally motivated by a high salary in choosing a career, women aren’t only motivated by a high salary—they might also consider their work-life balance, the social benefit the job provides or the intrinsic pleasure the job gives them. It’s a certain kind of female who is attracted to high paying banking-type jobs. One way to ‘equalize’ the banking profession would be to institute salary caps. This could equalize pay and might see women into the tops of institutions, but it also might discourage some males with desirable, applicable skills from going into banking.

For our book Elephant Hunters, Andrew and I spoke to many women working in banking. We found that they tended to be single and without children. They didn’t take maternity leave, and many had regrets. When they did have children, they had supportive partners or parents who could take care of the children. Of course there are exceptions—women who seem able to do it—but for many women, by the time they reach the mid-manager level, they decide to leave the industry, whether to have children or to change their career path.