By: Irina Kvirikadze – Senior Manager Data Integrity
The gender pay gap, i.e. the disparity in pay between people of different genders, rightly counts among the leading topics in today’s business world, even more so in Western European countries. In this context, the consulting industry is usually expected to be at the forefront of efforts to ensure greater equality. But what does the data actually say?
In this article we take a closer look at the consulting industry in Western Europe, and explore the issues with and implications of gender-based pay in more detail.
What the data says
According to Eurostat, gender pay equity in European countries varies significantly. When examining some of the major Western European countries, the unadjusted pay gap level in France is over 15%, in Germany almost 18%, and in Italy only 5%. According to the government’s 2022 Equality Act publication, in the United Kingdom the median pay gap is close to 10%. According to the same report, the gap is much higher in the private sector (which would include the consulting industry).
Overall, the consulting industry is notable for its high salaries and competitive work environment. Moreover, consulting firms working in North American and in Western European countries are often regarded as leading advocates for gender equality and greater diversity. Most of these firms have already implemented numerous initiatives in favour of equal pay across the industry.
Nevertheless, according to Vencon Research survey data, which includes both the largest full-service firms across Europe, as well as Europe’s significant boutique firms, women with the same level of education, experience or responsibilities, continue to face salary pay gaps when compared to their male counterparts. Furthermore, there are notable differences between countries in terms of the prevalence of a gender-based pay gap. For instance (as shown in table 1 below) France shows a pay-gap of 18%, the UK of 23% and Germany of 27%. Italy shows the smallest gap of the four countries but remains significant at 9%.
Furthermore, pay gap inequalities appear to be even more significant when comparing the managerial levels and less prominent at non-managerial positions, meaning, as one moves up the consulting career path, the pay gap begins to widen.
In France, for example (as shown in table 2 below), the pay gap at non-managerial levels is 5%, whereas at higher rank positions it is 30%. A similar situation can be found in other countries too, with the UK showing a pay-gap of 12% at non-managerial levels and 33% at higher rank positions, and Germany having the highest pay gap discrepancy at non-managerial as well as at senior consulting levels, 14% and 39% respectively.
Italy again has the lowest pay gap out of the four countries, in managerial positions men earn more than women by 23%. In non-managerial positions however, it seems women earn more than their male counterparts. This ‘negative’ pay gap may be driven by the fact that we have found that women in consulting in Italy tend to have a longer tenure in non-senior roles than their male counterparts.
What are some of the drivers of this issue?
There have been a number of studies that examine underlying factors that contribute to the gender pay gap. As previously mentioned, one reason may be that despite the introduction of antidiscrimination policies, gender biases may still be ‘unconsciously’ applied, meaning women may be overlooked for leadership roles, remaining relegated to lower ranking positions and thus do not have the same access to the more lucrative senior roles with better advancement opportunities.
Male versus female representation at senior career levels
Vencon Research’s survey data seems to support the notion that women may be staying longer in certain positions. In fact, male consultants typically reach partner level faster than their female counterparts, who tend to take more time off due to family related reasons and may return to work as part-time employees. This, on the other hand, decelerates their promotion to management levels and may also negatively impact their earning capability.
As shown in table 3 below, the number of female professionals in all four countries in this comparison starts to decrease as one moves to the more senior or managerial levels. This on the other hand, highlights the fact that a significant gender imbalance at the higher-ranking positions remains and that female consultants at senior levels are still underrepresented.
Addressing this issue is also essential as studies show that diverse teams achieve greater success. Moreover, in comparison to their male colleagues at the same level, female leaders seem to achieve a greater level of “employee well-being”, which in turn increases retention rates and employee satisfaction.
What can consulting firms do to address the gender pay gap?
There are several steps consulting firms can implement in order to narrow or ideally close the gender pay gap in particular at managerial levels.
The first step is to regularly audit and identify within the firm any pay disparities between male and female colleagues. This will help to ensure fair pay as well as increase transparency around salaries.
In order to support women to balance work and family responsibilities, companies can implement more flexible work arrangements such as flexible schedules, instead of a clock-in-clock-out system and offer remote work options. This can help retain talented female employees and on the other hand, ensure that they are not penalised for taking time off for family related reasons.
Furthermore, it is clear that this complex issue requires a multifaceted approach not only from businesses, but society as a whole. However, firms can and should do more to address gender-based unconscious biases in the workplace, through training and educational programmes, raise awareness and promote a more inclusive work culture. Being pro-active in this matter will help managers recognise and correct their own biases and allow them to make promotion or hiring decisions that do not overlook women for leadership positions. It will also help to increase the number of female consultants at managerial positions and thus reduce the gender-based representation disbalance.
Management consulting firms in Western European countries are at the forefront of efforts to promote gender equality measures, however, they still face significant problems in closing the gender pay gap. There are notable differences among countries, but the general trend is the same, at the non-managerial positions pay disparity between men and women is narrower (or even negative) and female consultants are more represented, while at managerial positions the salary gap is significantly wider and women remain underrepresented.
In conclusion, much work remains to be done to ensure that women are paid fairly and equitably and that they are not only relegated to lower ranking positions. By continuing to implement equal-pay initiatives, such as pay audits, flexible or remote work arrangements and unconscious bias training, consulting companies can help close gender pay disparities, balance gender representation at managerial levels and create a more inclusive work place for all employees.