The fintech lender attributes the gap primarily to a relative shortage of women in senior management roles, and has committed to addressing the imbalance.
The company, which is one of the UK’s best-known fintech success stories, attributes the imbalance in average hourly pay to having fewer women than men in senior management roles. At present, 28 per cent of Funding Circle’s senior management are women. By the end of 2020, the firm intends to have increased that number to 40 per cent.
A new UK government policy requires all companies with more than 250 employees to report their gender pay gap, demonstrating the difference in average hourly pay between male and female employees as a proportion of male average pay.
Speaking exclusively to AltFi about its results, Funding Circle co-founder and UK managing director James Meekings described the situation as challenging. “We need to focus on hiring in the best people, but also hiring in good female talent and retaining the best female talent we have as well,” he said.
The platform’s chief strategy officer Lisa Jacobs went further, saying that despite diversity being “hugely important”, Funding Circle would not “promote diversity ahead of just getting the best people into the business”. But both Meekings and Jacobs are of the belief that greater gender diversity can be a huge asset to the business and that it can improve the quality of the team.
Across the business as a whole, 63 per cent of Funding Circle employees are men, to 37 per cent women. At entry level, the numbers are more even, with 52 per cent of employees male and 48 per cent female. By contrast, 72 per cent of Funding Circle’s senior management are men.
Under the new government rules, firms of Funding Circle’s size are required to publish mean and median differences in hourly pay across the firm, in addition to splitting the data into quartiles based on salary size. As noted above, Funding Circle’s mean gender pay gap is +24 per cent, while its median gender pay gap is +36 per cent; each reflect a gender imbalance in the upper echelons of the company.
The lowest-earning two quartiles of Funding Circle employees are populated relatively evenly by men and women. The top quartile, meanwhile, is 83 per cent male, with the second-highest earning quartile 65 per cent male.
Commenting on these results, Meekings and Jacobs were keen to stress that Funding Circle does not have an issue with equal pay, which relates to what women and men are paid for doing similar jobs or work of equal value. The company’s analysis has found that all of its employees are paid equally for doing equivalent jobs. The problem, for Funding Circle, is one of gender distribution across roles.
In explaining this problem, Funding Circle points to low levels of gender diversity within the technology and financial services sectors more broadly. According to a report in the Financial Times, published in 2017, just 25 per cent of senior roles in the financial services sector are held by women.
Meekings described it as an access to talent problem, saying that the pool of talent for senior roles is “not mixed”. Jacobs expanded on this point: “There has been a lot of focus in the last 3-5 years on encouraging women and girls to think about STEM subjects and change that pipeline of talent,” she said. “I do think we are facing this difficulty that was set in motion some 20 years ago.”
In seeking to address its distribution problem, Funding Circle has launched two new initiatives. Firstly, it has established a UK Diversity and Inclusion Leadership Team, which Meekings will lead. The team will be tasked with ensuring that Funding Circle is hitting its targets, focusing on both hiring and fostering talent.
“What’s apparent to me is this needs to be on the senior leadership team’s agenda to deliver. If we don’t think about it and we don’t put action plans in place, nothing’s going to change,” said Meekings.
The second project, led by Jacobs, is entitled “Women @ Funding Circle”, and aims to create a professional environment in which women are able to thrive. “There’s this huge energy across the business about diversity,” said Jacobs. “What the Women @ Funding Circle is trying to do is to harness all that great energy.” She explained that the group will have three areas of gender diversity focus: creating a community, raising awareness, and boosting understanding.
Funding Circle is also signed up to the Women in Finance Charter, which is a commitment to support the progression of women into senior roles in financial services. Nicky Morgan MP recently wrote to firms yet to sign up to the Charter, which included a number of fintechs. It is not required by law that firms sign up to the Charter, but Meekings sees it as an important initiative which “gets to the heart of why most companies have a pay gap”.
“Most of the gender pay gap is driven by the distribution of women between senior and junior roles,” he reiterated. “So we’ve signed up to that [the Women in Finance Charter] and we’ve gone for an ambitious target.”
Asked whether the results of Funding Circle’s gender pay gap report were a concern, Meekings said: “I think where we are at, a 24 per cent pay gap, compares favourably with other financial services business.”
“We weren’t surprised. We work here every day and understand the challenges of having more women in our senior leadership team. So that was not a new insight. But I think what this [the Gender Pay Gap policy] does do is it puts an extra emphasis on it. By making it public it means we all have to work towards it and get behind it.”