How bonuses impact LSE’s gender pay gap

LEFT: The average difference in bonus pay has been rising since 2017, with the average difference in bonus pay in 2021 being more than three times higher than the average difference in 2020.

Since LSE does not account for bonuses in the gender pay gap, the gender pay gap is actually 6.83 percent worse than what is officially published – or in real terms, instead of men earning £7,727.45 more, they actually earn £11,491.15 more than women. It is important to note that although The Beaver used the average bonus amount in its calculations, naturally, not every academic receives the same bonus, if at all.

LSE awards a variety of bonuses, the most common of which are ‘performance supplements.’ These accounted for 51 percent of all bonuses awarded in 2021. According to an LSE spokesperson, performance supplements are a recognition that “an academic may be on a career trajectory which makes them highly attractive to other employers.” The term ‘performance supplements’ is misleading, however, as they do not reflect the actual performance of academics.

When asked to clarify the terms and their differences, an LSE spokesperson defined market supplements as applying to “certain disciplines, fields or specialist areas there are recruitment and retention difficulties that need to be addressed by the application of attraction and retention premia.”

“If you’re somebody who only cares about income,” said Dr Grace Lordan, the Director of the Inclusion Initiative, “as soon as you enter the LSE, you’re thinking ‘well, what’s the next way that I can buck my income? And that is either to threaten to leave or to actually leave.’” To be rewarded through LSE’s bonus pay structure, it seems, academics must prioritise their external career prospects over their contributions to the school.

If performance supplements were used as a genuine reward for internal contribution, they could significantly reduce the bonus pay gap. As Dr Lordan has explained, the School would be able to “increase the bonus pool that’s been distributed equally among men and women at the moment, and allow those rewards to be bigger.”

Furthermore, The Beaver’s efforts to seek clarification from the LSE Human Relations department, which is responsible for the drafting of the Pay Gap Reports, have not been straightforward. An LSE spokesperson provided a brief statement of the LSE’s posi - tion, which was prefaced with the declaration that “unfortunately, no one at the School is available for interview.”

This statement only repeated many of the statements found in the Pay Gap Reports. Its emphasis on the fact that LSE’s median salary gap is “lower than the UK national average” ignores the fact that the School’s mean salary pay gap is three times higher than the UK average if bonuses are taken into account.

Rejecting any suggestion that a reliance market pressures for determining supplements is responsible for increasing the bonus pay gap, the School insists that progress will only be made in addressing the bonus pay gap “with more women in senior positions across LSE, specifically in academic disciplines that attract a higher market rate and have a greater prevalence of supplements.”

It appears that LSE is hesitant to take a proactive approach towards addressing the bonus pay gap. In the 2021 Pay Gap Report’s concluding section concerning its “ongoing actions,” no mention is made of retention pay, despite it clearly being the factor with the most obviously negative impact on pay inequality.

Based on the statement from an LSE spokesperson, it appears the School does not consider the current system of bonus pay to be flawed, despite the fact that the implementation of performance supplements has coincided with a significant impact in the bonus pay gap.

At a time when members of the University and College Union (UCU) are taking action against the current state of pay, working conditions, and pension cuts, the issue of the gender pay gap at LSE is more pertinent than ever. As the job market for academics grows increasingly stagnant, LSE seems to be provided with a rare opportunity to focus its bonus system on fairly rewarding the contributions of academics to the community, rather than the efforts of academics to leave it.

RIGHT: Despite the overall gender pay gap decreasing on average since 2017, discrepancies in bonus pay have consistently been accounting for a larger proportion of the gender pay gap at LSE. Read the full article online, and listen to the second companion episode of the