by Dominie Moss
For Shakespeare, dressing women as men meant he could give them more important roles. But do women today have to wear metaphorical trousers in order to take on the important roles in the Financial Services industry?
It would certainly seem that way – according to Jayne-Anne Gadhia’s recent report entitled Women in Finance, too few women get to the top and there is a “permafrost” in the mid-tier where women either stop progressing or leave the sector. She attributes this not just to childcare, but also to the culture not being right.
In her report – commissioned by HM Treasury and published in March – she states that, arguably, this gender imbalance in the top jobs was a contributory factor in the financial crisis. The review that has been produced is an in-depth and up to date look at what has been going on in Financial Services. It is backed up by case studies and by data from New Financial, a think tank and forum that puts forward a positive case for the role that capital markets play in driving economic growth and prosperity.
The report’s research shows that in 2015 women made up only 14% of Executive Committees in the Financial Services sector and that as a result of these disappointing results, a sector specific review was crucial. Despite industry-wide discussions attempting to improve on these figures for well over a decade, very little has changed.
And so the key recommendation from the report is a voluntary Women in Finance Charter to which firms will be asked to sign up. It will be owned by HM Treasury who will monitor participation and progress in this area. In signing up, firms will commit to setting their own targets against which they will report publicly, they will appoint an Executive Committee member who will be accountable for improving gender diversity across their firm and, controversially, remuneration will be tied to achieving these targets.
As well as feeling pressure from the government, big investors such as Aviva, Columbia Threadneedle and L&G are flexing their muscles and putting their weight behind driving greater diversity. In 2014, LGIM wrote to 26 firms in the FTSE 250 that still had all male boards1. They asked to meet with the Chairs to discuss diversity at Board level. The response was mixed with significant consequences for those that failed to respond appropriately. As a result, in the 2015 AGM season, LGIM voted against four company Board Chairs for not responding, not having any women on their board and for their lack of a robust diversity policy.
The economic case for greater diversity is well established too. In McKinsey’s report last year, “Diversity Matters”, they showed that companies in the top quartile for gender diversity are 15% more likely to have financial returns above their respective national industry and in the United Kingdom a 10% increase in gender diversity on the Senior-Executive team corresponds to 3.5% increase in operating profit.
Will a combination of public accountability, pressure from investors and shareholders and the potential for increased profitability lead to change?
Let’s hope so, otherwise the industry may well find that the government enforces a more prescriptive approach in a time and manner not of its own choosing.