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Upscale Partners / Insights  / The Gender Pay Gap in UK Tech

The Gender Pay Gap in UK Tech

 

The gender pay gap hasn’t disappeared.  According to the latest data, it’s not even shrinking.

 

The Fawcett Society – a charity that campaigns to end pay disparity – reports that the gender pay gap has increased by over 1% in the last year.  This disappointing statistic lends context to the findings of our recent Tech Leaders Salary Survey – examining executive pay in UK-based startups and scaleups.

 

When we analysed the data, we found that male members of the C-suite were being paid 15% more than their female counterparts, with an average basic salary of £134,500 vs £114,500, respectively.

 

Sadly, this wasn’t a big surprise, but we did question whether some mitigating factor might be exacerbating the gap.  For example, we know all too well that women are playing catch-up when it comes to representation in leadership roles – so perhaps men were commanding a higher price tag for a longer track record?  We ran the figures again, this time comparing like-for-like in terms of senior leadership experience, but the inequality remained stark:

 

 

Last month, Sifted reported that over half of UK scaleups had a gender pay gap worse than the national average (15.5%) in 2020.  The article also highlighted that, in the top pay quartile, none of the scaleups were close to recording parity between men and women.

 

It’s clear that we’re a long way from equality – but what do the solutions look like, specifically for businesses navigating the funding lifecycle?  The typical venture company must build its team with constrained budgets, watchful investors, and a degree of agility.  As such, setting explicit salary bands can hamstring startups, especially in the earlier stages.

 

But there is a lot that the entrepreneurial community can do to improve pay transparency across the UK tech sector as a whole.  It’s a murky area and it doesn’t help that, culturally, money is still a taboo subject.  When people don’t talk about compensation, it’s women who pay the price because there are so few benchmarks to reference when negotiating their own packages and they’re often working from a lower starting point.  There is a real need for resources that make salary data more visible and accessible, so that women can see the industry standards for their equivalents in comparable companies.

 

Perhaps investors have a role to play here.  Many VC firms undertake regular salary benchmarking across their portfolios, so they have the ability to see if any female executives are being underpaid in relation to their male peers – and can bring awareness and change where this occurs.  In most cases, a hiring company will make an offer based on the candidate’s current/most recent salary and, as a result, perpetuate the gender pay gap – often unknowingly.

 

For business leaders and investors alike, there is an emphasis on keeping costs down and an understandable tendency to avoid “over-spending” on talent wherever possible.  But pay inequality will persist if compensation continues to be negotiated based on an individual’s historic earnings, rather than the value of the role and the actual budget set aside for it.

 

Scaleups operate differently to established corporates – the hiring budgets are often smaller but they also have the flexibility to offer potentially lucrative equity in the business, so there is nuance beyond basic salary benchmarks.  However, it’s worth noting that share options are less of a priority for women, according to our survey.  Almost a third of male respondents ranked share options as the most important part of their package, whereas only 13% of females said the same.  Instead, women more emphatically prioritised basic salary – with over three quarters putting this element first.

 

One of the arguments against salary transparency in startups is that compensation can so easily be skewed by things like share options, or founders paying themselves negligible amounts – so the headline figures can be misleading, unreliable, or even unattractive.  There is some truth in that, if you’re looking at companies in isolation and without context, but wider reporting that spans broader cross-sections of the UK tech sector can provide meaningful data that will help move the needle on gender pay equality.  It is long overdue.

 

For more insights on executive compensation, our C-Suite Salary Report is free to download here