Want to Earn Less at UBS? Have a Baby
(Bloomberg Opinion) -- As he marked International Women’s Day, UBS Group AG Chief Executive Officer Sergio Ermotti posed with colleagues to boast how a more diverse workforce makes for a better place to work. Days later, it emerged the Swiss bank had been imposing long-term cuts to the bonuses of some female employees who had been on maternity leave.
The business world’s embrace of diversity and inclusion has been accompanied by a proliferation of commitments and data. It’s increasingly clear why financial firms in particular are struggling to get the gender balance right at the top of their organizations. Blaming the lack of women in senior roles on the absence of more flexible working arrangements and training increasingly looks like a feeble excuse.
That a number of women working at the Swiss bank saw their bonuses cut after they had children is a stark illustration of what firms need to address if they are serious about creating and maintaining a pipeline of female managers.
Women at the wealth management division saw their bonuses remain depressed for years after they returned from maternity leave, the Financial Times reported on Monday. What’s more, some were still not made good even after a review into the discrepancies by the firm’s head of diversity and inclusion last year, according to the FT. UBS said in a statement it has strengthened its processes to identify and close gaps if it finds any and called on employees who feel their pay was “inappropriately impacted by a parental leave” to contact the human resources department.
Ensuring women earn what they deserve seems an obvious first step if the world’s biggest wealth manager is to achieve the pledge it made in 2015 to boost the proportion of women in management roles to one third. While the data the firm makes public may not tell the full story, progress appears to have been, at best, painfully slow.
Women at the director level or above made up 24 percent of the Swiss bank’s workforce at the end of 2017, the most recent year for which figures are available. That marked an increase of a mere 2 percentage points over the previous two years. With just one woman on its 13-member group executive board, UBS is a laggard in diversity.
But it would be unfair to call out just UBS. HSBC Holdings Plc is among finance firms that have signed up to the 30 Percent Club campaign, which calls for at least that proportion of senior leadership roles to be held by women by 2020. Women account for 23 percent of HSBC’s senior leaders in the U.K., the bank has said.
The industry-wide numbers don’t paint a better picture. Female executive representation in banking and financial services increased to 16 percent in 2017, up from about 13.3 percent in 2013, according to a study by Refinitiv. At the current pace of change, women won’t get to make up 30 percent of financial services executive committees until 2048, according to Marsh & McLennan Cos.
That’s because exit rates of mid-career women in finance are typically higher than for men and more significant than in other industries. In fact, female managers in financial services are as much as 30 percent more likely to leave half-way through their career than in other industries, according to Marsh.
Britain’s compulsory pay gap disclosures reinforced the suspicion that finance has more work to do than other industries, even if the tool is somewhat blunt. At UBS, women on average earned 31 percent less than their male counterparts. The average in the U.K. across all sectors is closer to 18 percent, according to the Office for National Statistics.
If banks are serious about meeting gender diversity targets, it’s time for chairmen and chief executive officers to fix what can be remedied quickly. Losing potential managers they have invested in because of discrimination in pay and promotions hardly seems to be sensible business practice. Trying to put part of the onus on women to speak up suggests UBS has been less than committed to tackling the issue.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.
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