Gender pay gap: New transparency rules show female managers earn £12K less than male colleagues
- New research reveals the gender pay gap now stands at 26.8% for UK managers - an average £11,606 per year
- The gap increases to £34,144 for director-level positions
- Revelations come six months after Government’s new reporting regulations
- So far, just 72 out of 7,850 eligible employers have fulfilled their obligations
LONDON, 25 September, 2017: New ways of measuring how much men and women are paid under far-reaching Government reporting requirements have revealed that the gender pay gap for the UK’s 3.3m managers is nearly £3,000 bigger than previously understood.
According to analysis of managers’ salaries conducted by the Chartered Management Institute (CMI) and XpertHR, the gender pay gap as calculated under the new regulations stands at 26.8 per cent, with male managers on average out-earning female peers by £11,606 a year. This includes salary and bonuses, as well as perks such as car allowance and commission.
Previous analyses of the pay gap based on managers’ basic salaries had put the gap at 23.1 per cent last year, or £8,964. Even without applying the new calculations, this year’s data show that this basic salary gap is, if anything, slightly worse at 23.6 per cent, or £9,326.
Under the Government’s reporting regulations that came into effect in April 2017, large employers (250+ employees) must now publicly disclose the size of their gender pay gap. To date, just 72 out of the 7,850 UK companies to which the new law applies have fulfilled their obligations.
This is the first time that pay gap data, compiled by XpertHR, has been published taking into account the new rules. This is based on analysis of salary data of 118,385 managers from 423 organisations over the past year.
CMI’s chief executive Ann Francke said:
Too many businesses are like ‘glass pyramids’ with women holding the majority of lower-paid junior roles and far fewer reaching the top. We now see those extra perks of senior management roles are creating a gender pay gap wider than previously understood. The picture is worst at the top, with male CEOs cashing-in bonuses six times larger than female counterparts.
Our data show we need the Government’s gender pay gap reporting regulations more than ever before. Yet, less than one per cent of companies have reported so far. Time for more companies to step up and put plans in place to fix this issue. It’s essential if UK companies are to survive and thrive in the post-Brexit world.
The findings today also reveal that women are far more likely to fill junior management positions than men (66 per cent vs 34 per cent), and men much more likely to occupy senior positions (26 per cent of director-level roles occupied by women, 74 per cent by men). Yet, even for those women who do progress to more senior roles, the pay gap begins to widen considerably: at director-level positions, it rises to £34,144, with men earning an average of £175,673 and women £141,529.
Bonus payments are also exacerbating the problem, with the gender bonus gap across all managers standing at 46.9 per cent. This increases considerably at C-suite level, where the average bonus for a male CEO is £89,230 compared to £14,945 for a woman – an 83 per cent bonus pay gap.
This year’s analysis suggests that while salary and bonuses are picking up for both men and women, the benefits are going disproportionately to men. Male directors picked up a 5.8% increase in pay and bonuses, compared to 3.7% for women (compared to 4.0 and 3.3% respectively last year). For managers, men outpaced women by 3.7 to 3.5% (whereas they took home 3.0 and 3.2% increases the year before). That means a real-terms widening of the gender pay gap for many managers.
XpertHR Content Director Mark Crail said:
We have always known that the gender pay gap appears to widen with seniority. But the results we are publishing today enable us to quantify the gap using a large volume of reliable, checked and verified pay data, drawn directly from employer payroll systems. Some people have tried to explain the gender pay gap away as being the result of different working hours or individual career choices. But when the analysis is based on the pay of more than 100,000 individuals in well over 400 organisations, it is clear that the pay gap is a very real fact of life for UK managers.
Pressure has been building on companies to not only follow the new regulations in disclosing gender pay, but also to publish an action plan detailing the practical steps they are proposing to close the gap.
According to research published last year by management consultants McKinsey, closing the gender pay gap would add up to £150bn a year to the UK economy by 2025. But analysis by CMI show the scale of the challenge: with the economy needing 1.9m new managers by 2024, 1.5m would have to be women in order to achieve balance.
Previous research from CMI in January revealed that four out of five managers had witnessed some form of gender discrimination in the workplace, suggesting a wider cultural shift needs to take place if the gender pay gap is to be closed. To help tackle these issues, CMI last year created CMI Women, a network that aims to achieve gender parity across the UK’s management population by 2024, and to help employers unlock more value in the UK’s workforce to address the productivity gap.
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The Chartered Management Institute (CMI) is the only chartered professional body for management and leaderships, dedicated to improving managers' skills and growing the number of qualified managers.
Our professional management qualifications span GCSE to PhD equivalents, including the unique Chartered Manager award, which increases earning potential and improves workplace performance. We have been registered as an apprentice assessment organisation by the Skills Funding Agency.
CMI has led the way in developing a suite of trailblazing management apprenticeships with a 40-strong group of employers. These start from Level 3 (team leader) and Level 5 (operations manager) through to Chartered Manager Degree Apprenticeship. The Senior Leader Master's Degree Apprenticeship gives employers the option to upskill up to executive and C-suite level. CMI is a Skills Funding Agency-registered apprentice assessment organisation.
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With a member community of more than 157,000 managers and leaders, we promote high standards of ethical practice through our Professional Code of Conduct, and help managers to build their expertise through online networks, regional events and mentoring opportunities.
About CMI Women
CMI has been advocating gender balance since 1969 when it launched the Women in Management initiative.
In 2016, CMI increased its focus on gender diversity and the benefits that it brings to business by relaunching the Women in Management under the new banner of CMI Women.
CMI Women is a network within the Chartered Management Institute CMI - the only chartered professional body in the UK dedicated to promoting the highest standards in management and leadership excellence.
XpertHR is the award-winning employment intelligence service for HR professionals. XpertHR Salary Surveys provide detailed pay data used by employers in reviewing and setting pay levels.
Visit www.xperthr.co.uk/salarysurveys for more information.
The survey can be purchased by calling 020 8652 4653.
About the Managers and Professionals Salary Survey
The National Management Salary Survey, which has been tracking executive pay since 1973, analysed remuneration data for over 118,385 managers and professionals from 425 organisations.
About the gender pay gap analysis:
1. The main dataset
CMI/XpertHR used the February 2017 edition of the Managers and Professionals Salary Survey (formerly: “National Management”) as the data source for this report. The analysis covers 119,707 employees from 432 organisations. All figures in this report have been calculated on the 118,385 employees from 423 organisations where gender information was available.
2. Changes to reported gender pay gap figures 2015-17
In 2015 CMI/XpertHR reported the gender pay gap as “female mean basic salary as a percentage of male mean basic salary”. The following year, 2016, we adopted the gender pay gap calculation that was introduced by the Government’s draft gender pay gap reporting regulations ie, “the percentage difference between male and female basic salary as a percentage of male basic salary” but largely restricted the analysis to basic salary. This year, 2017, CMI/XpertHR used the same calculated as 2016 but expanded its definition of ‘pay’ to more closely follow The Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 that came in to force on 6 April 2017.
3. Calculation of gender pay and bonus gap figures for 2017
The pay (defined as the sum of an employee’s annual full-time equivalent basic salary, car allowance, bonus and commission payments) gender gap was calculated as: gender pay gap = (male mean pay – female mean pay) / male mean pay * 100. The bonus (defined as the sum of an employee’s annual bonus and commission payments) gender gap was calculated on the same lines ie, gender bonus gap = (male bonus – female bonus) / male bonus * 100. This differs from the Government regulations in two main respects. Firstly, the regulations require organisations to derive an hourly pay figure for each employee and use this in their calculations to ensure like-for-like comparisons. XpertHR ensures like-for-like comparisons by collecting annualised full-time amounts. Secondly, the regulations cover a wide range of possible pay elements (more details here). XpertHR’s Managers and Professionals Salary Survey only collects pay components that are both of significant value and in common usage among “white-collar” employees ie, basic salary, car allowance, bonus and commission. Benefits in kind and overtime, expense and termination payments are discounted by both XpertHR and the Government regulations.