The state of gender diversity, or lack of it, in financial services is becoming clearer. But while bigger firms bear the brunt of scrutiny, they are in a much better position to address imbalances. Meanwhile, smaller businesses might feel browbeaten by pressure for change. So is there a way forward that is fair to everyone?
The Equality and Human Rights Commission is taking action against firms with more than 250 employees that failed to report their gender pay gap. As of March, 205 firms had signed up to the Women in Finance Charter. Meanwhile, the Treasury select committee is scrutinising appointments made to positions at organisations such as the Bank of England and the Financial Conduct Authority (FCA).
This is good news as there is strong evidence (from the 2015 McKinsey & Company report ‘Why diversity matters’ for example) a more diverse leadership team leads to better financial performance.
We went to hear the select committee’s chair, Nicky Morgan MP, speak at a Women in Wealth event organised by the Personal Investment Management & Financial Advice Association (Pimfa).
The committee is about to publish its final report on the women in finance inquiry, which was launched in October last year.
Morgan told an audience of women and men (who were applauded for their attendance) key barriers to gender diversity had been identified, including workplace culture and unconscious bias.
‘It’s very easy to recruit in our own image. Those in senior roles need to give more permission and power to those in charge of recruiting to actually recruit someone who looks different,’ Morgan said. She added within the workplace there are many elements of firms’ cultures that can put women off becoming chief executives. She said challenges to the status quo must come both from the bottom and the top.
But what if you are a small firm, like many IFAs? FCA data recently showed 89% of firms have five advisers or fewer.
Those firms do not have to report gender pay gap data. And many find it a challenge to recruit at all. We asked the panel that followed Morgan’s speech how small firms would be affected.
‘I hope the regulation will make sense to all organisations, even small organisations,’ said Morgan.
Anne Murphy, head of Odgers Berndtson’s UK financial services practice, said firms can make recruitment easier for themselves by making sure job criteria appeal to a broad range of backgrounds.
Long way to go
A highly quoted Hewlett-Packard internal report is said to have found men apply for a job when they meet 60% of the requirements, while women apply only if they meet all of them. Murphy said recruiters can be lazy when putting job adverts out, by just tweaking a template.
Murphy reflected on a time she recruited non-executive board members. Was it necessary to include a degree as a requirement? Or was it experience that mattered most?
Perhaps considering what qualities are actually essential to the job could help attract more women applicants without firms having to set out their stall as particularly pro-diversity.
Panellist John Cowan, executive chair of Sesame Bankhall Group, said he was pleased with how far the financial services industry has come in tackling sexism and discrimination in financial services. ‘Overt sexism is at the margins,’ he said.
Maybe so, but just a few months ago FCA executive director of supervision Megan Butler revealed she was called a ‘little lady’, to which Morgan said she was ‘not surprised’. Morgan added a female senior executive she had spoken to said she had left a dinner party early recently because she was so uncomfortable with the tone the conversation had taken.
It may not be happening at your firm or to your staff, and the regulations and recruiting strategies may not apply. But being aware of the issues women still face, and keeping up to speed with an undoubtedly changing society, will stand you in good stead.
A new generation of clients and employees may look for firms with good gender diversity. As Morgan concluded, ‘losing good employees, clients and, potentially, investors may concentrate the mind’.