Female directors earn almost three-quarters less than their male counterparts on average, new research has revealed.
A report by New Street Consulting Group, which studied the remuneration of nearly 950 directors in 2020, including more than 700 non-executive board members, found that female FTSE 100 directors currently earned £237,000 per year on average.
This was nearly three-quarters (73 per cent) less than the average pay for male FTSE 100 directors who received £875,900 per year.
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This gender pay gap was significantly worse than that of the overall population, with women receiving 15.5 per cent less pay than men in the wider job market, according to New Street’s analysis of the Office for National Statistics (ONS) data from April 2020.
The report also found that more than nine in 10 (91 per cent) female directors at FTSE 100 companies hold non-executive rather than executive roles which, it suggests, tend to have a much lower remuneration than executive roles.
Claire Carter, a director at New Street Consulting Group, said most businesses wanted to see an end to the “old boys’ club that exists at the top”.
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The key to doing that, she said, will be ensuring women have more executive responsibilities and are trained and prepared properly for taking on that responsibility.
“Allocating them with the right assignments and projects is essential to that process,” she added.
The pay gap between female and male executive directors was even more apparent, with female executive directors receiving an average pay of £1.5m per year, in comparison to £2.5m per year for their male counterparts.
Analysis also showed that male executives were paid a median of £1.9m, while their female counterparts were paid £1.3m.
Meanwhile, female non-executive directors at FTSE 100 firms were shown to receive average pay of £104,800, compared to £170,400 for men.
Commenting on the research, Dr Scarlett Brown, corporate governance lead at the CIPD, said there was still a long way to go to get women into executive roles.
“HR has a critical role to play in making this change happen – and highlighting aspects of an organisation’s systems, culture and processes that are preventing women reaching the top leadership positions,” she explained.
This could be done, Brown said, by analysing the wealth of workforce data they have access to and scrutinising their people management practices across the whole of the employee lifecycle.
“HR also needs to ensure line managers are trained on these approaches to support fair and inclusive career progression,” she added.
Charlotte Woodworth, gender equality director at Business in the Community, told People Management that “research has shown that having more women in senior executive roles increases a company’s stock prices, so what are these leadership boards waiting for?”.
Boards should approve more women into senior executive roles and understand that female leadership deserves to be paid fairly, Woodworth said, advising that “ignoring that talent will have a direct financial bearing on their company, and these immensely talented women will simply go elsewhere”.
Darren Hockley, managing director of DeltaNet International, echoed that more needed to be done for women on company boards, but warned that unconscious bias remains.
“HR must work more closely with executive teams to address equal and fair pay to stamp out social injustice,” he said, explaining that pay equality responsibility does not just lie with HR; it requires support from everyone in the organisation in order to be addressed.
Hockley added: “More executives need to step up and become an ally for their female colleagues. If they are aware of injustice, then they need to speak up and support their female colleagues to get paid what they deserve.”