A new report from Fox & Partners, the employment and partnership law specialists, reveals that the gender pay gap for FTSE 100 board directors has narrowed in 2022, albeit at a sluggish pace.
Despite the reduction, women still face a substantial pay disparity, with the average pay for female directors at £309,000, representing just 30 percent of the average pay for their male counterparts, who earn an average of £1.04 million.
The research shows that over the past year, the gender pay gap in the FTSE 100 decreased from 74 percent in 2021 to 70 percent in 2022.
This narrowing was primarily driven by a more substantial increase in pay for women directors compared to their male counterparts. The average pay for female board directors rose by 26 in 2022, from £245,525 in 2021 to £308,984, while male director’s average pay increased by 11 percent to £1.04 million in 2022, up from £935,235 in 2021.
Despite these improvements, Catriona Watt, a Partner at Fox & Partners, emphasises that the pay gap persists because the majority of women board directors occupy lower-paid non-executive roles.
A staggering 91 percent of the 426 female directors within FTSE 100 companies serve in non-executive positions, which generally have less day-to-day authority.
What about the earnings gap?
This discrepancy in roles is reflected in the earnings gap, with female executive directors earning more than 20 times the average pay for female non-executive directors. On average, male executive directors earn over 18 times the average pay of male non-executive directors.
The data highlights that male directors continue to receive significantly higher compensation than their female counterparts, both in executive and non-executive roles. Male non-executives are paid 52 percent more than their female counterparts, in part due to a higher share of more senior non-exec roles, such as “Chairman.” Male executives earn 38 percent more than female executives.
Catriona Watt acknowledges the progress but points out the continuing substantial gender pay gap among directors. She stressed that for meaningful change to take place, businesses must invest in programs aimed at preparing women for the most senior executive positions. This includes providing access to projects that enhance their experience, addressing potential gaps, and ensuring transparency in promotion and progression requirements.
DE&I and top leadership
Watt also advises companies to foster a culture of diversity and inclusion, with top leadership promoting this culture. It is essential to review internal policies, including family and flexible working-related policies, to align with the desired corporate culture.
Furthermore, examining available data on gender disparities in businesses is crucial to identifying systemic issues. To support women’s progression to the highest positions in the firm, companies should provide more networking, mentoring, and championing opportunities. Regular reviews of how work is allocated can support this progression.
Watt suggests that appointing a board member responsible for advancing women’s opportunities within the organisation can make gender equity a priority and help identify and address any barriers to progression.
Setting targets for senior leaders to promote female opportunities can incentivise lasting change and help women succeed in the highest positions within the company.
While progress has been made, the gender pay gap among FTSE 100 board directors remains a pressing issue. Addressing the root causes of this disparity and implementing comprehensive strategies for change are essential for achieving true gender equality in the corporate world.
Amelia Brand is the Editor for HRreview, and host of the HR in Review podcast series. With a Master’s degree in Legal and Political Theory, her particular interests within HR include employment law, DE&I, and wellbeing within the workplace. Prior to working with HRreview, Amelia was Sub-Editor of a magazine, and Editor of the Environmental Justice Project at the University College London, writing and overseeing articles into UCL’s weekly newsletter. Her previous academic work has focused on philosophy, politics and law, with a special focus on how artificial intelligence will feature in the future.