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The Struggle to Achieve Gender Equality in Business and Finance

Despite the growing presence of women in financial businesses, pay gaps between men and women in the industry persist. A recent study examined the differences between female and male earnings in investor relations.

Exhibit A: Investor's relations
The study, IR Magazine Global Practice Report 2012, found that while the number of women and men who work in investor relations is about the same, women consistently earn less than men on all wage scales and management levels. Seventy-five percent of male investor relations department heads earn more than $150,000 per year. Only 68 percent of women occupying the same role earn as much. The pay gap was larger for higher wage earners. About 25 percent of the male department heads earned $250,000 each year, compared to only 13 percent of female ones. As for manager level employees in investor relations, the pay gap was even more significant.

"Because there are so many strong and able women in IR roles around the world, it's easy to assume it's a field free of discrimination or unequal treatment," said IR Magazine founding editor Janet Dignan. "Indeed, for those of us who thought this was the case, the new research findings are something of a wake-up call."

Outside of investor relations, Wall Street generally doesn't welcome gender equality when it comes to remuneration, especially in decision making roles. According to CFO magazine,  women CFOs earn roughly $250,000 less than their male counterparts.

Mind the gap, it matters
It's no secret that diversity on all occupational levels, from administrative staff to decision-making executives, as well as in all aspects of financial business - from treasury management to benefits administration - is beneficial for companies. In an article for Forbes, Temin and Co. CEO Davia Temin explains women improve an organization's decision-making processes and shareholder value in addition to lowering risk-taking.

Earnings differences begin right after college
Many believe that fewer women study finance in college, and therefore don't receive the qualifications necessary for the salary that men who majored in economics or business make every year.

The stereotype is wrong and misleading. There is little difference between the number of men and women who choose to study business, according to a recent study by the American Association of Women (AAW).

"Graduating to a Pay Gap" acknowledges that degrees don't dictate jobs, and that many women and men have different occupations within business and finance. Different jobs means different salaries. The researchers write, however, that occupational differences don't explain why women in business after one year of college make only 84 percent of their male colleagues' earnings.

Cause and Solution
Unfortunately, there is no clear explanation for the pay gap. Discrimination still plays a huge role, and begins with the hiring process, according to the AAW. Hiring managers may associate a position with a gender and consciously or subconsciously select a candidate based on this bias.

While it's unfair to assume that the financial sector is sexist, companies should be mindful of their business' demographic makeup. Because organizations run by a diverse executive team do better, financial businesses should consider how promotional decisions are made.

How can the financial sector repair its inequality woes?