Why it pays for women to go solo

Research by Eden McCallum and LBS finds that the gender pay gap virtually disappears for female consultants when they go freelance

Almost 50 years after the Equal Pay Act (1970) was passed in the UK, some organisations seem to have been unable or unwilling to change.

While persistent gender pay gaps may to some extent be explained by the fact that a large majority of lower paid roles are filled by women – care work, cleaning and catering jobs, for example – even at the other end of the income scale gaps can still be found.

What is encouraging employers, sometimes highly regarded “blue chip” names, to maintain these gender pay gaps, which are not only clearly unfair but quite possibly illegal as well? Why has progress on this issue been so slow?

Some new evidence uncovered by the Eden McCallum/London Business School (LBS) Future of Consulting survey helps explain what may be going on.

Eden McCallum is the now almost 20-year-old consulting firm which has pioneered a network model of operating. It has a small permanent staff and access to a network of over 1,500 experienced management consultants, most of whom have spent many years working for top consulting firms such as McKinsey, the Boston Consulting Group, Bain & Co and Accenture, and who now prefer to work as freelance or independent consultants.

This is the second year that Eden McCallum, together with LBS, has asked its associates and other consultants about their attitudes to work and their experience of life as independents. And one finding is particularly striking: the gender pay gap for women consultants disappears rapidly when they put their former existence as employees behind them and set out on the path to the independent life.

This year’s survey shows that, while there was an almost 30% gap between what male and female consultants were paid as full time equivalents at their previous employers, once both men and women are working as independent consultants their day rates show just a 3% gap .

Indeed, it is almost as if some women consultants had a sense that this sort of shift might be possible. Going independent was a deliberate choice for 60% of them, according to the survey, while only 46% of male consultants had actively chosen the independent route.

Take Filiz Derici, a Swiss-based consultant who has been independent now for five years having worked previously for both BCG and McKinsey. Going independent has turned out to have been a very positive choice. Derici’s income is higher now than it was as an employee, and she can reach that level of earnings working several months fewer a year.

“Once both men and women are working as independent consultants their day rates show just a 3% gap in pay”

But the main reason for going independent was not financial, she says. Rather it was a lifestyle choice.

“I have two small children and I have found a better balance between doing the work that I love and having a family life,” she explains. The freedom of the independent life also appeals. “In between projects I don’t have to do anything for ‘the office’,” she adds.

Career management inside a firm can clearly almost be a full time job in itself. Not having to worry about that can free up more time to focus on the needs of clients and their projects. Derici’s work has covered a range of sectors, including healthcare, financial services, consumer products and retail.

Dena McCallum, co-founding partner of Eden McCallum, has been reflecting on what her survey’s findings reveal about life for women consultants in the large traditional firms compared with going down the independent route. Something seems to be holding women back inside the traditional firms.

“The people making the big decisions in these firms are mostly male and mostly the ‘workaholic’ type,” she says. “You prove your commitment in these firms by being prepared to travel and work anywhere at any time, putting your personal life on hold.”

These are the highly demanding and rigid standards which everyone has to live up to. “It’s almost subconscious,” she adds. “But those women and men who want to make different choices about maintaining their personal lives may be under-appreciated and under-promoted – so they leave.”

What is interesting about the closing of the pay gap for independents is that the market appears to be valuing the contribution of individuals more accurately than their previous employer did. True worth is only revealed once people are working free from the constraints they used to have to operate under.

Eden McCallum clients recognise the commitment and expertise their consultants bring to their work. It is the independent model which allows them to focus completely on the work in hand without being distracted by some of the usual, internal management issues which inevitably arise in the traditional firm. The firm’s cost base is significantly lower too.

The culture and operational style of the traditional firms seems fixed and unchanging. “It’s not that they are not trying to change,” McCallum says. There have after all been initiatives and attempts to recognise the need for greater workplace diversity. It’s just that while the dominant ethos remains in place the prospects for those who want to work a bit more flexibly are not so good. They move on, and the culture remains the same.

“The market appears to be valuing the contribution of individuals more accurately than their previous employer did.”

This is something which, incidentally, younger consultants are quick to notice too. Some of them, male as well as female, are also choosing to leave the traditional firms to start their own ventures or to go independent. As many as 67% of under 40s make a deliberate choice to go independent as compared with 46% of over 40s.

Julian Birkinshaw, Professor of Strategy and Entrepreneurship; Academic Director of the Institute of Innovation and Entrepreneurship and Deputy Dean (Executive Education) at LBS, says there is evidence more professionals are having the courage to go and work outside the big firms. This offers greater freedom; it means not having to go to unnecessary meetings, and allows people to focus on the delivery of what it is they are really good at.

But, he adds, this will not be an attractive option for everyone. “Career advancement may be a smoother process inside a larger firm – these transitions can be handled more easily, when a boss tries you out in a new role,” he says. “The freedom of the freelance life can be attractive, but you also want to avoid ending up in a cul-de-sac.”

The flip side is also true: the flexibility of the independent’s life can be exploited to build a varied career which suits the individual well. Chris Tchen is one of Eden McCallum’s most experienced consultants, having spent 12 years working on projects for the firm after having worked in consulting for two decades previously. He has pursued a mixed portfolio of work which has also allowed time for work in the charitable sector and the chance to develop a renewable energy business of his own.

He describes a highly flexible and adaptable way of working, with teams forming quickly, comprised of consultants who are used to working in this way. “People roll straight in,” he says, “there is no ‘political’ angle. They are used to working this way. Your track record is your work,” he adds – busy, competent people will be in demand, sometimes having to juggle two or more ongoing projects at the same time.

So men as well as women can benefit from this less rigid, more flexible approach to work. It can be much more efficient. And independence pays, literally. Women consultants are more likely to be meeting their target for numbers of work days and income expectations compared with when they were full-time employees.

The survey also revealed that, while women are as satisfied overall as men, they rate many “factors of satisfaction” more highly than men. These include flexibility, the level of intellectual challenge involved in the work, work-life balance, time for other interests, personal development, and financial security.

Women consultants also seem to feel that they are doing better work than when they were employees, particularly in terms of the efficiency they experience and the satisfaction they get out of it. Women primarily define success by being energised, which is more important to them than money. Income remains a key factor for men, however.

“Busy, competent people will be in demand, sometimes having to juggle two or more ongoing projects at the same time.”

Women are the obvious beneficiaries of this more enlightened, flexible way of working. But it is not an exclusively female phenomenon. Eden McCallum does not regard women as having a monopoly on wanting to have more choice over how they work.

But it does seem to be true that being independent provides opportunities for women to work on their terms, that they would struggle to find inside traditional firms. There are elements of the Eden McCallum culture, the firm says, “that we doubtless owe to being female-founded and run by a leadership team with more female partners than male.”

Two things need to happen, then, for the culture of old established firms to change. First, more women need to be promoted and given a chance to work in the way they want to. And second, a few of the older chaps probably need to consider getting out of the way.

Click here for the original article (published in London Business School Review)