Last March, Virgin Money’s Jayne-Anne Gadhia published her review into the representation of women in senior managerial positions in financial services. The figures shook the nation. Women only make up 14 per cent of executive committees in the financial services sector, and very little has been done by individual organisations to balance out the disparity. The Ghadia review recommends that financial service firms connect parts of the remuneration packages of their executive teams to gender balance targets. It also recommends that firms set internal targets for gender diversity in their senior management, publish progress reports annually against these targets, and appoint an executive solely responsible for gender, diversity, and inclusion.
“Our research shows that in 2015 women made up only 14 per cent of executive committees in the financial services sector. Too few women get to the top and there is a ‘permafrost’ in the mid-tier where women do not progress or they leave the sector. This is not just about childcare. Women are leaving because the culture isn’t right.” Jayne-Anne Gadhia, CEO of Virgin Money and speaker at the Women in Finance Awards 2017.
In response, the HM Treasury launched the Women in Finance Charter, which is a voluntary pledge for organisations of any size aiming to meet these recommendations. Since its launch, the charter has seen 122 financial organisations in various stages of their diversity journey sign up.
Company culture: diversity first
18 months on from the last review, Gadhia’s team is refreshing the study by asking the wider financial services workforce, both men and women, on their experience with workplace culture.
The key ‘drop-off’ point for most women in finance, and other sectors with similar job requirements, is proven to be the mid-career point. While the number of women in graduate and entry-level roles in finance are nearly the same as men, not as many women make it past the mid-career point to senior management. Many gender parity advocates draw a parallel to this point of stagnation to the child-bearing years, usually from the late 20s to early 40s.
Women continue to play a greater role in caring for children, as well as for sick or elderly relatives, which is why more women work part time and receive low pay with fewer opportunities to progress, bringing gender pay averages down. IFS research from 2016 revealed that the pay gap opens up significantly once women hit their forties, as more return to the workforce full time after their children are grown. Women often find that their male contemporaries are promoted ahead of them, and receive lower bonuses as they struggle to prove they’re just as capable despite the ‘break’. A PwC report reveals that three in five professionals who return to work after raising their children are moved into lower-skilled or lower-paid roles.
But getting working mothers back to work isn’t just a matter of offering shared parental leave or a childcare allowance. It’s about building a work environment and culture where employee performance and growth potential have nothing to do with their personal or family plans, for both men and women.
Getting women into senior levels is not just about financial reward; it’s about attitude change, says Dr Ruth Sacks, business development director and principal lecturer on leadership professional development at Westminster Business School.
“Getting women onto boards is not just about financial reward – it’s about attitude change. Research has clearly demonstrated improved financial performance when there is a more equal gender mix throughout the organisation and in particular on boards. Boards should remember that recruitment is a two way process: it’s not just appointing women to join the existing board but importantly for the board to make membership an attractive career option.”
According to Dr Sacks, once organisations are required to be open about salaries and associated rewards, this should provoke people to question the approach used to decide how rewards are allocated, ensuring the issue is debated widely.
“Reporting on diversity – gender just being one aspect – is key here. Having an executive with responsibility for the company approach, strategy and drive for diversity and inclusion is very important. However, this only works where this individual has visibility and credibility within the organisation and she or he can influence and promote such a policy. Diversity and inclusion can never be the responsibility of one individual, they are an intrinsic part of the way a company operates.”
Linking bonuses to diversity targets may be one way of addressing diversity issues in the financial sector, says Dr Sacks. “I am sure those who are compiling the report are considering other options and it would be fascinating to know what they are. Women are successfully gaining roles as trustees and on many boards in a voluntary capacity. They are increasing their skills and experience, recognising the transferability of their skills and the value they bring. However, there is some but not enough progress in women being appointed to non-executive roles and a disappointing small number of women gaining executive positions. There is still a way to go to achieve equality.”
Share your experiences with your organisation’s work culture in the Virgin Money survey here.