Gender Pay Gap In HSBC UK: An Analytical Report

This note provides guidance for the second assignment.  The assignment takes the form of a Management Report, a form widely used in many organisations and by the CIPD.  It outlines key features of a typical Management Report and considers areas that some students need to pay attention to. 
2.What is a Management Report?

It is a report that analyses a specific issue and, generally, proposes an organisation to pursue a particular course of action or adopt a particular policy.  There are five options for this assignment. The subject areas are:
The Gender Pay Gap
The Minimum/Living Wage
Talent Management 
Employee Engagement
Zero hour Contracts

A good report is an ‘applied’ piece of work (i.e. it has a potential impact on the real world) that blends theory (where applicable), relevant literature and organisational practice.
The assignment develops your research skills, analytical abilities and writing skills as well as developing tools that are the basis of sound professional practice.

UK government has been very much strict on the issues such as gender pay gap in different organisations. New government of Theresa May has made policy changes so as to ensure that least amount of gender pay gap remains in UK companies.  Gender pay gap is understood as the difference in the pay scale or the salaries of male and female staffs working in an organisation at different position. This is calculated by checking the difference in the hourly earnings of the male and female employees irrespective of their roles (Scott, 2018). A decline can be seen in the gender pay gap in UK firms after the pressurisation of the government but the situation is still worst in some of the firms. HSBC one of the biggest British Multinational banking and financial services holding firm has one of the worst gender pay gaps among all the firms in UK. This report highlights the issue related to gender pay gap in HSBC UK. It also showcases different aspects related to the gender pay gap and its implications on HSBC.

Gender pay gap has become one of the severe problems for the companies working in UK and so is the case with HSBC. This bank is world’s 7^th largest bank hence significance of this issue become very much relevant. After the government’s decision of Brexit, they are under certain pressure to strengthen the weak points in the internal agendas hence HSBC is also under huge pressure to fill this gap. According to reports presented by the company, Reuters says that HSBC on an average has paid men 59% above that of women. Second being Virgin Atlantic having 58% gender gap followed by Barclays giving 48% more to male employees. Not only in salaries, HSBC had a median gap of 61% for bonus payments between its female and male staffs. This is the condition when the strength of its female employees more than 54% but the condition remains to be worse as most of them are not into highly paid jobs. Higher paid jobs are taken by male colleagues (Gov.UK, 2018). To be precise the hourly rates suggests that women is earning 40p for even 1 pound earned by a men.

HSBC said that it had enhanced the proportion of senior posts held by women to nearly 27% last year from what was 22% in 2012. Their leadership states that they recognise that more work has to be done in this regards so as to address their gender balance especially at the top most level. Company said that they are confident in their approach for payments and if the payment difference among men and women in parallel roles and might not be explained by performance or experience, it made appropriate adjustments for it (BBC News, 2018). For each pay quartile, the proportion of women is depicted in the graph below:

The bonus payment was also received by 87% of women workers when compared to the 88% of men workers. In that also the mean bonus for women is 84% lower than that of men and the median bonus pay was also 57% lower than that of men.

Aims of the Company

As per the researchers, the condition in the banking sector is so much worse as companies are more focused towards talent management then to check that whether it is creating any discrepancies in salaries of both the genders. Actually very small members of highly paid workers are actually skewing up the mean of the wages. Only 29.4% of HSBC’s board members are women (MacLeavy, 2018). This becomes worse in the case of UK as most of the HSBC highly paid jobs is assigned in UK only. Company also cannot go for higher payments to the female workers just for increasing the salaries as it will directly affect the overall costing of the firm. This is the reason that there is imbalance in the junior roles being assigned to the women workers who works at lower payments. In HSBC, more than 67% of the junior roles present in UK are filled by the women workers (Butler, 2018). This company also stated that the gender pay gap is also such big because banking jobs are highly dependent on the part time jobs and the larger proportion of the these part time jobs is occupied by the female workers. They are earning bonus on the pro rata basis. Company also states that the data is so poor because there is diversity in the banking portfolio as it includes retail and investment banking.

Company has aimed to provide 30% of the roles at the senior level to female staffs by the end of 2020 (MacAskill and James, 2018). They have also aimed to request gender diverse shortlists while hiring new leaders and hence would check the gender balance in the development programmes for its workforce. Their management has said that they have made efforts to make change in the situation but it will take time and requires appropriate focus over the distinct period of time. It is including inclusive hiring essentials course for all hiring managers. Company is planning to hire more gender balanced graduates and also aim to ensure a balanced representation in the talent development programmes creating partnerships with external firms as well as enlarging opportunities for women in the global markets and banking divisions (Cortes and Pan, 2018). This would be done for accessing sponsorship and mentoring support. It includes programmes focused at director level. HSBC is also looking for seeking the ways to enhance its working proposition flexibility. Firm’s gender pay gap will also be addressed by making the balance between the networks by creating a transparency and consistency in the pay especially for junior level workers (Hurn, 2013). According to their Human resource head, they are highly dedicated to build diverse and inclusive workforce that will have reflection of the consumers they serve as well as for the communities they work for. They are also working on their pay strategy so as to attract and motivate employees who is having talent regardless of the age, ethnicity, gender, disability or any other factors unrelated to experience and performance of the employees. Gender balance across businesses and level of seniority has become their priority and they are committed towards it.

Legal Regulations against Gender Pay Gap

For even more than 50 years, UK has a Britain’s equal pay act. Almost all the companies have complied with this act along with HSBC but the discrepancies lies in assigning roles for highly paid jobs. The Equal pay act also suggests prohibiting any less favourable treatment among men and women in terms of pay of the employment (Glazebrook, 2016). The new scheme launched under the May’s government suggests that companies with more than 250 employees will have to report the pay gap will have to reveal the greater prevalence of men in the highly paid jobs and hence will have to take actions to make changes.

The changing nature of the business and the changing demands of the employers from the employees will have a direct impact on the cost and benefits of the company. In the long run, it is seen that in dealing with the issue there will have a specific impact on the cost of the company especially the costing involved in the process of human resource management. Company cannot reduce the number of male employees at the top level significantly as they will also have to manage the gender pay gaps. Increasing the pay scale of the women workers will dissatisfy the male workers working at the same levels (Lips, 2013). The costing will also get affected in terms of the fact that increasing the salaries of the women will also have to increase the salaries of men. At the same time most of the women are working at the lower levels of the organisational structure hence increasing their salaries will have a significant effect on the costing of the company. This is also because in banking firms most of the employees work at the lower levels of the organisational structures.

On the other hand there will be significant benefits from increasing the pay scale for the women workers. They will feel more motivated towards working for the company. At the same time, there is also a chance that women who are working at the lower levels of the organisation can find themselves in a better position to remain in the organisation (Manning and Saidi, 2010). This will improve their productivity which is very much necessary for the company in the highly competitive environment. The reduction in the gender pay gap will attract more female graduated talents to work for the company. It will also help in building the image of the society. This will benefit the firm as women working at different level of the organisation will feel more confident that they can reach to the top of the organisation.

In order to improve the situation, there are certain types of recommendation which can help the company in maintain the balance between the genders at all the pay scales.

Removal of Glass ceiling: It is found that most of the women at the HSBC units face the problems related to glass ceiling. This restricts women to reach at the board levels and they are restricted at certain levels only. This will help in improving the numbers of women workers in the higher paid jobs. Cost involved in this process will not be high as the position will be giving to the internal women employees (Gregory?Smith, Main and O'Reilly III, 2014). Time scale for this recommendation will be approx. 2-3 years. Priorities should always be given towards developing leadership in the women employees.

Change in the recruitment approach: There are many recruitments going on in the organisation at managers level. It will be effective step if the focus will be on the hiring female employees for that position. A long term recruitment plan will have to be conducted checking the availability of the position and the type of staff that will be required at that position (Atkinson, Casarico and Voitchovsky, 2018). The costing will be high and the time scale that will be requirement for it will be 4-5 years. Priority must be given to fresh new talents.

Conclusion

From the above based report it can be concluded that HSBC has a high gender pay gap. Company pays 59% higher to male than to female in terms of mean salaries. Government has made compulsory for the organisations to reveal their gender pay scale gap and have strengthened Equal pay act. Company is planning to have women employees on the 30% of the higher salary positions. If the company closes the gap a higher amount of cost will be required hence increasing the costing of the firm. At the same time it is also beneficial for the firm as it will improve the diversity at the all the levels of the organisational structure. Removing glass ceiling and change in recruitment approach could reduce this gap

References

Atkinson, A.B., Casarico, A. and Voitchovsky, S., 2018. Top incomes and the gender divide. The Journal of Economic Inequality, 16(2), pp.225-256.

BBC News, (2018) HSBC reveals big gender pay gap. [Online] Available at: https://www.bbc.com/news/business-43418771. [Accessed on 16^th December 2018]

Butler, S. (2018) HSBC pay gap reveals men being paid twice as much as women. [Online] Available at: https://www.theguardian.com/business/2018/mar/15/hsbc-pay-gap-reveals-men-being-paid-twice-as-much-as-women. [Accessed on 16^th December 2018]

Cortes, P. and Pan, J., 2018. Occupation and Gender. The Oxford Handbook of Women and the Economy, p.425.

Glazebrook, S., 2016. Gender myths and the legal profession. Canterbury Law Review, 22(2), p.171.

Gov.UK, (2018) Gender pay gap report. [Online] Available at: https://gender-pay-gap.service.gov.uk/Employer/AFV2D97I/2018. [Accessed on 16^th December 2018]

Gregory?Smith, I., Main, B.G. and O'Reilly III, C.A., 2014. Appointments, pay and performance in UK boardrooms by gender. The Economic Journal, 124(574), pp.F109-F128.

Hurn, B.J., 2013. Are cracks now appearing in the boardroom glass ceiling?. Industrial and Commercial Training, 45(4), pp.195-201.

Lips, H.M., 2013. The gender pay gap: Challenging the rationalizations. Perceived equity, discrimination, and the limits of human capital models. Sex Roles, 68(3-4), pp.169-185.

MacAskill, A. and James, W. (2018) HSBC has worst gender pay gap among Britain's largest companies.  [Online] Available at: https://uk.reuters.com/article/uk-britain-gender-pay/hsbc-has-worst-gender-pay-gap-among-britains-largest-companies-idUKKCN1HB2DS. [Accessed on 16^th December 2018]

MacLeavy, J., 2018. Women, equality and the UK's EU referendum: locating the gender politics of Brexit in relation to the neoliberalising state. Space and Polity, 22(2), pp.205-223.

Manning, A. and Saidi, F., 2010. Understanding the gender pay gap: what's competition got to do with it?. ILR Review, 63(4), pp.681-698.

Scott, K. (2018) HSBC Bank reports a mean gender pay gap of 59% for 2017. [Online] Available at: https://www.employeebenefits.co.uk/issues/march-2018/hsbc-gender-pay-gap/. [Accessed on 16^th December 2018]