Opportunity cost and the gender pay gap: the market value of decency
Can I tell you a little secret about banking salaries?
They are good, compared to most other jobs, sure. But banking is not a generous industry. Banking salaries may be fundamentally unequal to the rest of the economy but they are also profoundly unequal to each other, as the golden rule is “if I can get away with paying you less, I will”.
Folks outside banks always equate bankers with fat pay checks but that only applies to a lucky few and salary inequality is everywhere within each bank. And that is not a function of usefulness or performance.
Traders get paid multiples of what developers get, even though they are nowhere without their platforms. They get to take home the zeros and yell at the engineer because a three minute outage loses money, but when things run smoothly it’s not the platform that makes the money, it’s the trader.
Fair? No. Fact? You bet.
The staff who rose through the ranks, yes even the trader, is always worse off than the newer joiner, for the same job and irrespective of performance. You can be amazing. If you want to truly hike up your salary you have to leave your organisation. Banking doesn’t reward loyalty.
If you come to banking from a different industry, or move countries to a banking hub, in pursuit of a better life, your “better offer” will be an increment on where you started, not a match for where you are going and definitely not a match for what others in the same organisation get for the same work you are about to do. And you will be happy because you will be, net net, better off. Even though it’s not fair and equal, it’s better. Plus you may never know about the “getting away with it” practice. Until you are hiring yourself.
Oh and women get paid worse than men on average.
Because each job offers you an increment on the previous job and it’s easy to get locked into a lower band. Because women “lose” years and associated increments when they have children. Because employers hold back on promoting women “in case they get pregnant in the next few months”. Because women tend to stay with the same employer longer and suffer the loyalty discount. Because women tend to be over-represented in the caring and creative sides of the banking army, HR and advertising, employee engagement and PR. And those support functions get paid less because that’s the market and that’s the food chain and that’s that.
And yet, if you think this is a gender issue, you couldn’t be more wrong.
The pay gap says nothing about the value of the employee and everything about the integrity of the manager
Inequality in banking pay is a fact that goes way beyond gender.
It is true and it affects us all.
And we have lived with it for a long time.
As a hiring manager I got into a lot of trouble a few years ago for refusing to pay new engineers more than my existing ones, for the same grade and expertise. I got yelled at by HR for being naive. For weeks. My view? Yell away.
I have been yelled at before, for less. This was a matter of personal integrity. This was moronic from a business perspective.
The engineers I was hiring were almost exclusively male and that is not a function of pay by the way, that is a function of women historically staying away from STEM. A huge but separate problem. But the pay gap among the male engineers was as real and the reason for it was “the new guy always gets paid more, that’s just how it is” which is no more compelling than “suck it up”.
Well sod that. We are leading a digital revolution, we are re-imagining the human experience, we are building things that my younger self could only fathom in a Culture Novel and you are telling a digital practitioner that the way it has always been is the way it will always be? I think not.
Disclosing the pay gap: stating the obvious
4 April 2018 is the deadline for banks in the UK to disclose their gender pay gap. Most are dithering, letting others go first, trying to put remedial action in place in a last-ditch attempt to doctor the numbers.
If the Barclays disclosure in mid-February is anything to go by, we are in for a howler.
The pay gap is as wide as 70% in some geographies and for some types of compensation.
Surprised? I shouldn’t be. Women get paid less than men in every industry and every geography. And yet I am. Surprised. And incandescent. Because even as the dirty laundry is getting aired, the industry still tries to make this appear smaller than it is by focusing on who it affects more than on why it exists in the first place. It’s a huge issue for women, they say. Huge, but contained, only affecting women and we are sorry.
No. This is not about women. It’s not even about money. It’s about what hiring and rewarding with integrity does for your business. And you should be sorry. Because it hurts you the most.
We all have to make tough choices when hiring within banks. I know I have and I can’t claim I always got it right. But all those years ago, I got to build a team from scratch, with internal people as well as new hires and I had to make a stark choice on day zero: about would I normalise inequality in my own team? Would loyalty be an impediment to my people? Could I look at my guys in the eye and say “I won’t always succeed, but I will always have your back”.
HR refused to raise existing engineers’ salaries to match what they saw as market averages, so I played the hand I was dealt and hired for potential rather than experience, where I could reward fairly vis a vis both the market and my team.
I pissed a lot of people off and I lost some kick-ass applicants, but I didn’t lose a single guy already on my team.
So when I see the pay gap I see a choice actively made to do what we can get away with, as an industry. This imminent disclosure shows to what extent women have been taken for a ride – and before you say it: shared and compulsory parental leave solves the maternity issue. It takes two to tango and, if nothing else, it would be a lesson in parenting: I don’t care what shape your family has, anyone in loco parentis gets to go on parental leave. Mums, dads, carers. Even Alfred, if you are batman.
There. I fixed it, so now you can focus on the real issue. Which is you and the choice you made by thinking you had no choice. Or, at least, thinking your part in this would not be found out.
Everything comes at a price.
What’s the price you were prepared to pay? Losing good employees to higher pay packages elsewhere? Evidently. Losing the trust of your people when they inevitably discuss pay by the water cooler? Your behaviour says yes even if you say no.
But, as if all this wasn’t enough, the philosophy of hiring and rewarding on the basis of what you can get away with, comes at a much higher price you have been paying without even realising because your choices made you poorer from the get-go than you would have been had you chosen differently. Had you chosen to care.
The art of caring: diversity as a digital essential
Caring is not an abstraction and it brooks no exceptions.
If you only care about guns in schools because you are a parent, refugees because you are Rohinga and the pay gap because you are female, then you don’t care at all. If you only care about issues when they become front page news, then you don’t care at all.
Caring can neither be personal, not can it just exist on the edge of pain where dramatic and traumatic events focus the mind. Caring is an “always on” thing. You need to bring it to work.
You either care, all the time, or you seek what you can get away with each time. There is no middle ground.
It is a moral choice. And it matters because you can’t hide the choice you made even if the salary specifics or your hiring practices remain opaque. This is not about your soul, you understand. This is not motherhood and apple pie, it is about the performance culture you are building, and the market impact you hope to have. The moral discount is ultimately netted where it hurts the most. Your bottom line.
I have no children and I am a huge fan of seeing mothers return to work. And no, not because I may one day be one of them.
I want to see them back at work because it gives my team the message that we, as an organisation, do not lose sight of life outside the office doors. Plus I want them back, because parents are jugglers and if anyone can do 76 things at once, it’s a parent alright: they will do more with less and that is good for my business.
Plus I want parents on my workforce because I am designing digital services for real people and it doesn’t get more real than parents and I am not one, so I need what they know to make my product better.
I am not discussing a parenting-specific services here. I am discussing reducing approvals for fund accounting reporting to a few commands that can be exposed on a smartphone for your stakeholder who is at home with a sick kid. An omnichannel service designed for interruption: that’s another word for “life”.
And life is messy, and diverse and unexpected.
So if your workforce is pliant, monochrome and predictable, doing to others what you did to them in perpetuity, you know what the price of doing what you can get away with is. And you are already paying it.
Back to basics
You know why I need a data scientist in my team?
Because I am not one.
Stay with this. If I am championing human-centred design for services on and off the glass, I need as much of humanity’s diversity in the office as the building can hold. And if I am counting on innovation and creativity to safeguard my market share in a brutally competitive landscape, I want these people to trust each other, rather than resenting the newcomer who got paid so much more for the same seat at the table, and I want them to trust me: in exchange for their best ideas, their time and creative energies I need to know that they know I will do my best by them. It’s a small price to pay as an employer since we are totally getting the better deal here.
The choice has sweeping consequences but it only gets made once. You can’t be this way with some of your organisation and that way with the rest. You are not unfair to women only. Look closely and you will see the pay gap touches everyone. Your diversity blindness doesn’t just affect race and gender. Look closely and you will see big chunks of humanity absent from your organisation. It’s your loss, not theirs. And it’s your choice, or rather the choice that got made when you thought you had no choice, or quietly chose to see what you can get away with. And maybe you got away with spending less, time and time again. But a quick look at the disruption narratives suggests that you didn’t get away with this. The impact on your performance and output has made headlines.
Turns out getting away with it didn’t work.
And the cost saving? Down the drain, as it looks like the opportunity cost of not doing the right thing just shot through the roof.
By Leda Glyptis
Leda Glyptis is FinTech Futures’ new resident thought provocateur – she leads, writes on, lives and breathes transformation and digital disruption.
Leda is a lapsed academic and long-term resident of the banking ecosystem, inhabiting both start-ups and banks over the years. She is a roaming banker and all-weather geek.
All opinions are her own. You can’t have them – but you are welcome to debate and comment!