A lot of young women go into financial services, but very few of them become senior executives. Why? Ouida Taaffe looks at the benefits of promoting women and what’s stopping them getting the top jobs.
Half of the population is still largely excluded from real decision-making roles in financial services because there are – according to the recent Oliver Wyman report – ongoing gender biases.
Women rarely hold the roles at major finance firms that generate the most revenue. Those are the roles with the most power.
Globally, just 6% of chief executive officers (CEOs) at major financial services firms are women. But that number hides a skew – the biggest banks in the biggest economies have male CEOs.
Why firms should promote women
But if talent is evenly spread across all population groups – and banks only need a very small number of C-level executives – does it matter whether that person is a man or a woman if they do a good job?
Why should firms try harder to promote women?
When economists analyse productivity, they usually assume that male and female workers – with the same level of education and training – can be substituted one for the other.
Indeed, that is one of the reasons for objecting to male-dominated management.
Society is, however, more complex than economic models allow.
A study by the World Economic Forum looks at some of the reasons for that.
It notes that “women and men complement each other in the production process, creating an additional benefit from increasing women’s employment on growth… in economists’ jargon, the elasticity of substitution between women and men in production is low.”
A diverse workforce is a more productive workforce.
But what about people at the top – and people in finance? Diversity has benefits there too – and the numbers show this.
Investment firms that increase their proportion of female partners have better performance.
Women have always worked, but they have not always had access to professional careers. The 1970s revolutionised that.
In the US, for example, labour force participation for married women aged between 20 and 44, with a child under the age of one, “soared from 0.20 in 1973 to 0.62 in 2000”.
There were a few reasons for this including:
- an increased willingness to employ married women
- more part-time work opportunities
- more female graduates
- increased divorce rates
- the arrival of the pill.
But it remains the case that “The biggest untapped resource in the marketplace is women,” as Sergio P Ermotti, Group CEO of UBS Group AG, put it in the Oliver Wyman report.
A lack of women in tech
Though most firms now accept the value of a diverse workforce, they do not find it easy to change ingrained practices.
Women who have reached executive level in banks, for example, tend to lead corporate functions like HR. Overall, banks and insurance companies do not yet have 20% female executive committee representation, according to Oliver Wyman.
What’s more, as banks really start to grapple with becoming technology companies, it may be even harder to improve those numbers. Relatively few women have the skills and experience to lead technology projects.
Tech companies are dominated by men. At Google, Facebook and Apple, 77% of the people in tech jobs at the end of 2019 were male.
Further, as banks automate, the overall number of women bank employees may fall as many work in branches in customer service.
What to do?
The consultants at Oliver Wyman argue that technology will facilitate new ways of working that make things easier for women. But they also want the industry to facilitate diversity – particularly in senior and technology roles.
How we're promoting diversity in banking and finance through REACH