U.K. Accounting Firms Bar All-Male Shortlists to Improve Diversity

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By Michael Kapoor

The U.K. branches of KPMG LLP and PricewaterhouseCoopers LLP have barred male-only employment shortlists in a bid to narrow a gender pay gap well above the national average.

U.K. government regulations required all companies with more than 250 employees to report the differences between male and female employees’ pay by April 2018, two years after it mandated the same disclosure by larger companies.

Big Four accounting firms included the earnings of equity partners in their sums for the first time, revealing a big pay difference that the firms are scrambling to address through measures such as the mandatory inclusion of women in employment shortlists.

“Diversity in our recruitment processes is something we’ve been focused on for some time and as part of this, we are ensuring we have no all-male shortlists and more diverse interviewing panels,” Laura Hinton, PwC’s chief people officer, told Bloomberg Tax.

A Gaping Gap

PwC’s gender pay gap is 43.8 percent, meaning men make 43.8 percent more than women. This includes the amounts paid to partners, who had previously been excluded from the reporting because they counted as owners rather than employees.

The mean pay gap—including partners’ salaries—for other Big Four firms are: KPMG, 42 percent; Deloitte LLP, 43.2 percent; and Ernst and Young Ltd., 38.1 percent.

The national average pay gap across all companies in the U.K. was 18.4 percent in 2017, which is approximately the same level as that for the top 20 U.K. accounting firms excluding partners. The difference in pay for salaried (nonpartner) staff within the Big Four is 18.5 percent.

A KPMG spokesman said that the gap occurs because few women make partner.

The spokesman told Bloomberg Tax that there is an equal split between men and women among graduate school entrants but once they reach the upper echelon levels, the gap expands.

“We’re at 50/50 gender split at that level because we totally changed the recruitment process from application to hiring,” he told Bloomberg Tax. “The next focus for us is at experienced hire level.”

Stuck at the Bottom

Some 18 percent of KPMG partners and 19 percent of PwC’s are women and the disparity between the number of female and male staff grows with seniority, sources told Bloomberg Tax.

At KPMG, about 28 percent of directors—the rung below partner—are female, rising to 42 percent who are senior managers, which is one rung below that, sources told Bloomberg Tax.

KPMG has a target for 25 percent of its partners to be women in 2018, up from 16 percent in 2016, sources told Bloomberg Tax.

Action Items

Both KPMG and PwC have launched strategies to bring more women into senior roles, including allowing experienced women to return to auditing from outside roles or after taking time off for children, and allowing partners to work family-friendly, part-time, or flexible hours—even taking time off for the school holidays.

“Since we started looking at our gender pay gap data in 2014 we have known that our main challenge is a lack of females in senior positions,” Hinton said in a blog published in May 2018. “Despite this still being true how we address it has changed.”

To contact the reporter on this story: Michael Kapoor in London at mkapoor@correspondent.bloomberglaw.com

To contact the editor responsible for this story: S. Ali Sartipzadeh at asartipzadeh@bloombergtax.com

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