Our management consultancy columnist, Mick James, this week looks behind the numbers of the latest Chartered Management Institute pay survey.

Equal pay for equal work

Everyone agrees that one of the answers to the skills shortage in consultancy (and possibly a few other problems as well) is to radically increase the profession's ability to retain women, particularly at senior levels.

So everyone must have despaired at figures from the Chartered Management Institute and Remuneration Economics that show that senior women are resigning at a far higher rate than men, but that the pay gap between men and women has actually widened for the first time in many years. At all levels, female managers are earning less than men.

The news has been received with predictable despair by all sections of the media, with the Guardian in particular claiming that at this rate, it will take "80 years" to reach pay parity. Calls for strengthened anti-discrimination legislation have come from all corners.

Sometimes a set of stats like this hits you in the face with such force that you simply have to put your hands up and surrender. Alternatively, you can hit them back a couple of times to see if they're as tough as they're pretending. The release accompanying the survey, and most of the commentators that followed it have made much of the fact that women managers are on average younger than men: as the CMI puts it:

"...despite rapid promotion and a higher incidence of bonus payments, the survey reveals that efforts to redress the pay gap have begun to stall. These findings come, despite women enjoying faster career progression than their male colleagues."

At 37 years old, the average female team leader is 5 years younger than her male counterpart. Aged 40, female 'department heads' are 3 years younger than their male equivalent. The age gap expands in more senior roles as, at an average age of 44, women still achieve director roles quicker than men (age 48).

Let me construct a little scenario of my own here:

Imagine a practice of a consultancy firm which consists of a male director (48), five partners, of whom one, a 44 year old woman is at the top of her grade, and nine managers, of whom four are 40 year old women and also at the top of their grades. Expansion allows the firm to have a round of promotion: the female partner makes director, the four female managers get partnership and another five women are promoted to manager. The firm sits back and waits for the plaudits for its commitment to diversity but instead the next thing it receivers is a stern letter from the equality commission about its widening pay gap. It's easy to see why -- all the women managers are on the bottom of their new grade scales, and it will take several years for this discrepancy to work its way through the system.

I'm not saying this is the full explanation for the CMI's results. But you have to take into account that the survey is also reporting the rather unremarkable fact that younger managers earn less than older ones.

And there are good reasons why women managers should be younger than older ones: it's a bit of a leap to assume that a younger average age means that women are "enjoying faster career progression" than man. That would work, but what would also cause this is a rapid increase in the number of female managers in recent years -- and that's precisely what's happened. Since 1999 the number of women managers in the workforce has more than tripled, to over a third of the total, but that still leaves a lot of aging men in post.

You also have to be very careful with aggregating these kinds of figures to avoid Simpson's paradox. This mathematical quirk gained notoriety when the University of California found itself on the wrong end of a discrimination suit for failing to admit a higher percentage of female than male applicants. Yet when the university investigated it found that each individual department was admitting a higher proportion of women applicants than men. The maths is complex but the result basically stemmed from the fact that women were disproportionately applying to courses that were harder to get.

It's unlikely that the CMI figures are simply an instance of this, but if women are overrepresented in lower paid sectors, then that would drag the average down. And that is in fact the case -- our-ever expanding public sector has made great strides in achieving numerical parity between male and female managers, and pays significantly less than the private sector.

There's also a decapitation effect -- women tend to take themselves out of the workforce as they get older. Discrimination or choice? Probably both. From a resources view we may deplore the loss of talent, but it's not everyone's dream to be a senior management until they drop. For many couples I know the decision of who steps back and does the parenting is a purely pragmatic one based on salary. In a surprising number of cases in my circle that's been the man, but on the CMI figures (and bear in mind a high proportion of the sample will be married to each other) it's nearly always going to be the women.

So is there room for complacency? Almost certainly not -- there is real and significant discrimination out there -- but I think it's a little early to declare that the whole gender equality project has gone into reverse. This year's results are the first for a decade that don't show women increasing their pay faster than men -- and then only by 0.2 of a percentage point.

What we shouldn't do is reach for the statute book: anti-discrimination legislation isn't actually helping anymore: many, smaller employers have privately confided to me that they shy away from precisely those candidates who come equipped with the most rights and means of redress. What I would like to see is a culture -- and quite possibly backed up by legislation -- of greater transparency about pay. Nothing promotes change in an organisation faster than a leak from payroll.

Employees need to be confident that they are getting the right rate for the job, whether they are men or women -- I strongly suspect that if you analysed just male employees, you wouldn't necessarily see much in the way of "equal pay for equal work". It might be culturally uncomfortable to start with, but I've heard nothing but positive feedback from consultancies with open policies on salaries, and I see no reason why the rest of the industry -- if it is serious about diversity -- shouldn't follow suit.

All views expressed in this article are those of Mick James and do not necessarily reflect the views of Top-Consultant.com and Consultant-News.com.

Contact Mick with your views or suggestions at: mick.james@top-consultant.com
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