Gender Pay Gap Report 2018

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2 Achieving a diverse and inclusive workforce at At HCUK, we re firmly committed to ensuring that all of our people have the opportunity to fulfil their potential and welcomed the introduction of mandatory gender pay gap reporting last year. Providing a platform to formally measure where we stand in the market and reporting on the impact of initiatives to close the gender pay gap, is a positive move to eliminate barriers to greater gender balance and build a more diverse workforce culture across our company, which is vital to our continued success and growth. Our report last year using data collected as at 5 April 2017 identified a mean pay gap of 33.5% and a median pay gap of 34.1% driven by the structure of our workforce. Due to the predominance of men in senior positions this also impacted the mean bonus gap, which subsequently was significantly higher at 59.9%, with a median of 26.7%. Like many organisations in the financial services sector, where there tends to be a higher concentration of males in the upper quartile salary bands, this is something we also see at HCUK. Redressing this imbalance is important in the development of our culture, however we also recognise that the initiatives we are introducing are not quick fixes and will need time to have a meaningful and lasting impact on the structure of our business in the long term. This is evidenced in the latest gender pay gap report which reflects our position at 5 April 2018, which illustrates some marginal increases in the metrics over the last 12 months with a wider gap than last year. Whilst this is disappointing and shows we still have a long way to go to fully address our gender pay gap, some of the steps we have taken are showing early indications of progress particularly at mid-management level and we believe these will have significant impact to redress the overall trend in time. We remain confident that our gender gap is driven by the demographics of our workforce, which has historically seen a higher proportion of men in senior roles and more women in lower grades, rather than being an equal pay issue. We are confident that the programme of initiatives will start to have an impact over the medium term. I confirm that our data has been calculated according to the requirements of the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 Robert Gordon Chief Executive Officer All rights reserved.

3 Analysing our gender pay gap data The data for our report was collected for the year ending 5 April 2018 (seven days after we published the 2017/18 report). During this period, we ve recorded a slight increase in our gender pay gap, however this is overwhelmingly impacted by the demographics of the company, notably as a result to changes to the number of men and women at each level of HCUK s job grading structure over the last 12 months. In 2018/19, we responded to the challenge with a number of initiatives to address our gender pay gap which are detailed in this year s report and we expect to see progress in our 2019 report. Pay HCUK has a mean gender pay gap in hourly pay of 35% compared to 33.5% last year. HCUK has a median gender pay gap in hourly pay of 39.9% compared to 34.1% last year. Mean Pay Gap Median Pay Gap 33.5% 35% 34.1% 39.9% Over the course of the year we have seen a small increase in both the number of men in more senior positions and an increase in hourly pay at senior grade roles. Although the number of roles is minimal, this factor is sufficient to contribute to the pay gap increase. Over the last twelve months we have seen an increase in the number of new job roles created at lower salary grades to meet the operational needs of the business which have attracted and been filled by a higher proportion of women than men. However, following the raft of initiatives we implemented last year, including mentoring circles aimed at mid-management female employees, we are starting to see early signs of progress in the pipeline addressing the predominance of men in senior positions. We have seen an increase in the number of females in the upper middle quartile up from 50.4% to 51.3%. Top Quartile 28% 72% Upper Middle Quartile 51.3% 48.7% Lower Middle Quartile 59.5% 40.5% Lower Quartile 76.5% 23.5% Male/Female split by quartile All rights reserved.

4 Bonus The continued predominance of men in senior positions and part time females also impacts our comparison figures for bonus payments. Although the bonus percentage is consistent across all grades and genders, employees on higher salaries will receive a larger bonus, which in turn increases the gap. The calculations indicate a difference in mean bonus payments of 61.1% and a difference in median bonus payments of 40%. The proportion of females who received a bonus is 77.3%, and the proportion of males that received a bonus is 72.9%. Males/Females receiving a bonus Difference between men and women across the group 77.3% Females 72.9% Males Mean Bonus Gap Median Bonus Gap 59.9% 61.1% 26.7% 40% Our plans to address our gender pay gap At HCUK, we are striving to make this a great place to work for all our colleagues and continue to take proactive steps towards addressing our gender pay gap. This is driven by a determination to achieve an even stronger diversity and inclusion culture aligned to our founding values of Harmony, Sincerity and Pioneering Spirit. The demographics within the business remain the single biggest factor as to why a pay gap at HCUK exists and our commitment to reduce the gender pay gap is unwavering, however to make lasting change will take time. We recognise that we need to do more to improve our policies and actively encourage female talent to gain the experiences necessary to move into senior roles. We are continuing to make improvements supporting female progression through enhanced recruitment practices, remuneration benchmarking, agile and flexible working and mentoring programmes. Diversity and inclusion focussed recruitment practices To encourage diversity and inclusion throughout the talent acquisition process leading to more females in leadership roles, we are reviewing our talent pipelines and enhancing our internal and external recruitment and selection practices, including investing in new recruitment tools that help us become more gender agnostic in our adverts and recruitment selection processes. Remuneration benchmarking Our commitment to prevent anomalies in salary between men and women will see HCUK conduct a detailed company-wide benchmarking exercise in 2019 across the entire pay structure to ensure every role is benchmarked appropriately and that our colleagues are not only paid appropriately in relation to their peers, but also to the wider market. We will also be publishing our HCUK Fair Pay Principles to ensure all future pay and progression decisions continue to be made in line with our commitment to equality. Enhanced parental leave and working policies This year we will be launching substantially enhanced policies to provide greater flexible and agile working opportunities across the business. This will ensure all our staff have the support they need to balance their personal circumstances wherever possible with their career to achieve the right work-life balance All rights reserved.

5 In last year s report we highlighted that we were making progressive changes to our maternity and paternity policies; these are now live and came into effect from 1 April 2018 and provide greater support to new parents. Under the new policies, all female HCUK employees have access to enhanced maternity pay and benefits, equating to 12 weeks at full pay followed by eight weeks at half pay. Maternity Champions, comprising of experienced mothers from across the business are available to offer advice and guidance to new mums both during pregnancy, maternity leave and supporting returning female talent after their baby arrives. Reverse mentoring and return to work mentoring Over the past three years, our Mentoring Circles program has seen groups of mentees mentored by more experienced colleagues. Over 70% of participants who secured a promotion or role change since joining the programme credit the initiative as having a positive impact on their career progression. Following on from the success of the series of six-month programmes over the last three years, we launched a reverse mentoring programme in 2018 where two of our male Executive Committee Members are each mentored by junior female colleagues. We have also introduced a return to work mentoring circle for returning talent as we recognise that the decision to have children can sometimes contribute to a slower career progression for women. Awards We continue to actively encourage and recognise outstanding achievements by women in business. HCUK won the Outstanding Support for Returners accolade at this year s Women in Credit Awards and we are also sponsoring the Women in Business Awards again in Our next steps We are already working to bring greater gender balance to our business. To rigorously monitor and disclose our progress, and to demonstrate our commitment, HCUK will publish our 2019 gender pay gap report in the summer this year, well ahead of the deadline. We have decided to opt to report as early as possible so at the end of each year we can monitor progress in a timely way and focus our activity as we embark on our five year plan to reduce our Gender Pay Gap. At this time, we will also communicate a Gender Pay target as agreed with the Remuneration Committee All rights reserved.