In a surprisingly transparent move on Wednesday, Citigroup revealed that female employees globally earn 29% less than their male counterparts, while U.S. minorities earn 7% less than non-minority employees.
Citigroup is the first U.S. bank to publish unadjusted pay gap figures, which the financial institution defined in a press release as “the difference in median total compensation when we don’t adjust for factors such as job function, level and geography.”
When adjusted to account for these factors, however, the bank said that women globally are paid 99% of what men are paid on average and there is no statistically significant difference between the earnings of U.S. minorities and non-minorities at Citi.
Yet women also remain underrepresented in the bank’s top ranks, Citi’s analysis found. Though women account for just over half of Citigroup’s workforce, they make up just 37% of senior positions between the assistant vice president level and the managing director level.
Still, Citigroup’s wage gap and gender imbalance is far from unique within the traditionally male-dominated banking sector. Women account for just 19% of C-suite positions in financial services, slightly lower than the 22% average for U.S. women overall, according to a McKinsey study.
This lack of upward mobility creates a self-perpetuating cycle, in which women find it difficult to advance because there are are fewer women in executive positions who can help them climb the ranks.
Citigroup disclosed its compensation data following pressure from activist shareholder Arjuna Capital, which filed a shareholder proposal asking the bank to report on its global median pay gap.
“This new level of transparency provides investors with baseline metrics to understand broad pay equity at the company,” said Arjuna managing partner Natasha Lamb, adding that investors view pay gap disclosures as “benchmarks to improved diversity in representation, and the performance benefits that diversity affords.”
Citigroup’s pay gap revelation reflects a growing push from investors for more diversity in companies’ leadership. Last year, BlackRock, the world’s largest asset manager, urged companies in which it invests to place at least two female directors on their boards.
Large investors like Vanguard and State Street Global Advisors have also led the charge for more diverse leadership among their respective portfolio companies.
“This is not simply just a good thing to do or corporate responsibility,” Lamb told Bloomberg last year, after Citigroup pledged to increase compensation for women and minorities in an effort to bridge pay gaps. “There really is a profit motive here as well in order to attract and retain top talent.”
Countless studies have quantified the benefits of diverse leadership and an inclusive workforce, highlighting increased innovation, strong financial performance and lower employee turnover.
For its part, Citigroup pledged to increase representation of women and U.S. minorities in higher-level roles. The company aims by the end of 2021 to hit 40% female representation globally at the assistant vice president through managing director levels and 8% for black U.S. employees.
Citigroup also said it is committed to narrowing the wage gap for both groups, admitting that the company has substantial work to do.
“This reiterates the importance of our goals to increase representation of women and U.S. minorities in senior and higher-paying roles at Citi,” Sara Wechter, Citigroup’s head of human resources, said in a release. “That is how we will reduce the difference in our raw pay gap numbers over time.”
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