Although it is largely recognized and accepted that having a diverse workforce is good for business, employers have struggled to actual build diverse and inclusive workplaces.
One sector where progress has particularly stalled is financial services. Research by Aviva and Bain & Company shows that the proportion of women in senior management in the UK financial sector has only increased 1% between 2018 and 2020 from 31% to 32%. This is according to a study of 100 companies, CEO interviews, and academic research.
If this rate of progress continues, then it will take until 2050 for gender parity to be reached at senior levels of the financial services sector.
A similar lack of progress was also found in the US financial sector. While women make up 52% at entry levels, this declines to 30% at the vice-president level, 28% at the senior vice-president level, and 27% in the C-Suite. The situation is especially concerning in the asset management portion of the sector, according to McKinsey.
Talking about the stalling progress, Aviva group CEO and UK Women in Finance Champion, Amanda Blanc, commented: “Progress towards gender equality in the financial sector remains frustratingly slow.
“Women, companies, and society cannot afford to wait 30 years when we can achieve this in 10.
“We’ve got to work quicker and harder, for the sake of women, for the sake of society and because a more diverse business is a more productive and innovative one.”
Bain & Company financial services partner Nisham Gosrani continued: “It is vital that we make progress now and deliver a fundamental shift in the representation of women throughout the financial services industry. The sector’s reputation and ability to attract great talent are at stake.”
It’s time to move the needle
Aviva and Bain & Company’s research – the Women in Finance Charter – comes with recommendations for what actions the financial services sector can do to improve gender representation at the most senior levels now, and speed up progress.
Blanc noted: “Our recommendations provide real life examples of best practice and a set of clear actions to guide us all towards lasting gender parity.”
“This blueprint sets out challenges and success stories and provides a practical toolkit for CEOs and their executives to deploy,” added Gosrani.
There are four main tenets of the blueprint – these include recruitment, retention and promotion, culture and behavior, and embedding diversity and inclusion with data to track and monitor progress.
While these actions may be focused on the financial services sector, there are learnings here for employers in all industries who need to make progress around inclusion at work.
Aviva and Bain & Company are clear that it is time for employers to review and restructure their recruitment process to ensure they are free of unconscious bias.
Their research shows that best-in-class organizations will use psychometric testing (only 6% currently do this although this method has over 84% accuracy in identifying high performers) and will de-gender all job adverts. They will also need to implement diverse interview panels.
It is time to rely on skills-based approaches to recruitment, rather than enabling those with contacts and networks to skip the queue.
There is also a need to tap into new pools of talent – currently, only 35% of UK higher education science and tech students are women, so companies need to think outside of the box. Aviva and Bain & Company suggest organizing women-only recruitment events (only 18% currently do this).
Another recommendation is to focus on mid-career return programs to help women to return to work after a career break, usually to start a family.
This is something that is prioritized by Lloyds and Mastercard. Lloyds offers a 16-week program for those who have taken up to 18 months off and helps to reskill them, while Mastercard’s 12-week initiative for anyone who has taken a long career break (the average length is five years).
Reversing women’s exit from financial services
Linked to the need for career returner programs, Avia and Bain & Company are clear that financial services employers need to focus on retention and promotion in order to stop losing top-quality female talent.
The major issues are a lack of pay parity and pay transparency; the UK financial services sector has the worst gender pay gap (25%, compared to 16% for all sectors).
This exodus may go some way to explaining why there has been progress at junior levels around gender representation, but a disappointing improvement at senior levels.
So what should employers do to make their retention and promotion approaches more inclusive?
First, they need to address the bias in the promotion process. 54% of women working in financial services believe diversity is a barrier to career progression, and 68% of companies admitted they do have female representation on all promotion committees.
Also, 82% of companies said they did audit performance reviews for bias. It is time that companies implement sponsorship and mentorship programs for women at work.
Women face unique challenges in the workplace because they take on 60% additional hours of caring and household responsibilities – this has only worsened because of the pandemic. This is not helped by the discrepancy in parental support – on average women get 20 weeks maternity leave, while men only get two weeks of paternity and 62% admit unspoken rule in financial services that they shouldn’t take it.
So employers need to address this and offer paid equal parental leave, as well as generally improve benefits packages. Examples include creating parental-friendly spaces for nursing mothers, providing ante and post-natal care in employer insurance offerings, an on-site creche, and high-touch support before or after parental leave.
In addition, Bain & Company and Aviva are clear that the benefits packages must focus on all life stages, including retirement and menopause. This is something that Aviva itself is very hot on – in 2020 it introduced Peppy to offer online consultations to employees struggling with menopause.
Finally, the report is clear that flexible working needs be accessible to all – but it must be done in a genuine way and not become a barrier to progression.
Proximity bias is a major concern for the hybrid future of work, and it needs to be tackled to stop women (who are more likely to work from home due to caring responsibilities) from falling even further behind with regards to progression at work.
Building an inclusive workplace culture
Aviva and Bain & Company’s research found that the financial services’ culture is one dominated by microaggressions and exclusionary behavior.
28% of female financial sector employees said they have experienced physical harassment (this compares to 16% in other sectors), and 43% have been bullied or experienced inappropriate language while working in financial services.
Why would women want to apply for jobs or promotions in this industry? Clearly, a step change is needed.
The CEO and senior management need to lead by example and role model the right behavior, including championing senior female role models and supporting women’s networks.
In addition, there is an urgent need for zero tolerance for harassment and microaggressions at work. This includes making sure meetings are inclusive – and particularly those at home who are more likely to women are included and listened to.
Another priority is to embed gender parity targets into the key performance indicators of senior management – this is very common in the tech sector, but the financial sector is making slower progress here.
There is no place in financial services, or any sector, for exclusion at work. The time to act is now.