Women In Financial Services – Bridging the Gap

Creating an inclusive culture

“Diversity is being invited to the party; Inclusion is being asked to dance.”
Vernā Myers, former VP of Inclusion at Netflix.

Studies show that the financial services sector does have an inclusion issue. Compared to the all-industry average, financial services is seriously lagging behind. Whereas 18% of women across all industries have experienced “actual physical harassment”, that figure rises to 28% for financial services. 34% of women across all industries have been subject to “inappropriate language, insults or bullying”. This increases to 43% of women in the financial services sector (Bain). In Britain, financial services is also the industry with the highest gender pay gap (BBC) and the highest rate of sexual discrimination employment tribunals.

This illustrates a disconnect between representation, which is slowly improving, and inclusion. The latter seems to have been decoupled from the former and is not progressing at the same rate. At Mix, very few financial institutions are actively monitoring inclusion when we start working with them. Those that do, measure inclusion through tools like engagement and pulse surveys and are not setting goals and targets for inclusion. In other words, inclusion is not afforded the same weight as representation, for which organisations regularly set targets and launch initiatives to support those goals.

Why is the financial services sector so behind on inclusion?

It’s important to remember that, on a fundamental level, the financial services sector and its products were built by men, for men, and that this has shaped the industry and continued influencing its development to the modern day.

If that sounds hyperbolic to you, consider the case of mortgages. In the UK, it wasn’t until 1975 that discrimination based on sex and marital status was made illegal and women were finally given the unqualified right to open bank accounts and apply for mortgages without a male guarantor. The result? One of the most important and widely utilised financial products in the UK was set up entirely for (and by) men.

We also need to recognise that the financial services sector generates enormous revenues and there is scope for significant profit. In this environment, money speaks, and there is a sense of immunity for individuals who can continue to deliver substantial returns for their employer. The idea that companies will turn a blind eye to inappropriate behaviour from big (traditionally male) performers contributes to a work environment in which women are not included, feel unable to speak up and are subject to harassment and bullying.

Finally, part of the problem is also attitudinal and relates to the intense work environment and lack of flexibility associated with working in the financial services sector.

While not quite as bad as it was two or three decades ago, the culture surrounding financial services emphasises long hours, a degree of commitment rarely seen in other industries, and working practices that often blur the boundary between personal and professional, such as wining and dining clients. Often, these demands conflict with other expectations experienced by women, such as family commitments. Some, particularly those where alcohol is involved, may significantly compromise the safety or perceived safety of women in the workplace.

Making the business case for greater diversity

When it comes to female representation on executive teams, research from McKinsey shows that companies in the top quartile (those with more women on exec teams) are 39% more likely to outperform those in the bottom quartile (those with fewer women on exec teams). So, there is a clear correlation between organisations that prioritise gender diversity in leadership teams and improved financial performance.

There is also a potential connection between greater diversity and strengthened decision-making. Some experts argue greater diversity introduces a wider range of perspectives, reducing groupthink and improving problem-solving and risk management performance. Investor interest in organisations that prioritise DEI and demonstrate proactive DEI action is growing, too (Forbes). This reflects a wider concern with Environmental, Social and Governance (ESG) factors and a recognition that those in a position to pull the levers of capital will play a crucial role in determining the pace of DEI progress over the coming years.

Improving national, industry-wide efforts

The UK took a unique approach to inclusion in the financial services sector when it launched the Women In Finance Charter in 2015. With the 10th anniversary coming up soon, we’ll see exactly what impact it has had over the decade it has been in place. However, as a document, it suffered from precisely the issue discussed in this article. It focused entirely on data and targets on representation, failing to mention or account for inclusion altogether. There were no targets for reduction in sexual harassment claims, for instance. From a big-picture perspective, the charter must evolve to accommodate inclusion and push for inclusion-related measurement and performance targets in the financial services sector.

What can financial services organisations do?

On an organisational level, there are plenty of steps financial services organisations can take to improve diversity and inclusion.

One-to-one coaching

We’re seeing a growing number of businesses in the financial services sector recognise the need to go further than providing one-off training for senior leaders. Instead, they are embracing regular one-to-one diversity and inclusion coaching. This is a fantastic step and shows that some leaders in the industry are willing to take their self-reflection further and examine their practices, behaviours and privileges in a more in-depth and regular way.

In large part, this is an attempt by companies to help leaders take DEI knowledge and internalise it, as well as an effort to move beyond a “business as usual” approach that sees significant numbers of people, often unconsciously, receive DEI training and then immediately slip back into established patterns, routines and hierarchies. Most of all, it’s a recognition that personal attitudes, approaches and leadership styles are exactly that – personal. They can only be altered by fundamental changes in an individual’s thinking. And that is more likely to happen on a one-to-one basis than in a group training room.

Understand the root cause and design a context-dependent response

Key problem areas should be prioritised, clear and quantifiable aspirations established, and senior leaders held accountable not just for DEI initiatives and inputs but their outcomes, too. Practical steps to consider could include:

Gender equity best practices

• Salary transparency – openly sharing pay scales and committing to equal pay is absolutely essential for modern organisations looking to promote greater diversity and inclusion and build confidence among employees.
• Flexible work practices – making flexible work practices an option for all employees, regardless of gender or position, can help break down gendered care roles and support a healthier work-life balance.
• Leadership representation – focusing on the talent pipeline and introducing initiatives that improve employee retention among all groups and promote development for underrepresented groups will, over time, deliver greater representation in leadership roles.
• Inclusive recruitment practices – introducing blind CVs, mixed interview panels and gender-balanced shortlists can compensate for some conscious and unconscious bias in the recruitment process.
• Board and senior leader briefings to inform, equip, challenge and support leaders as they set the direction for their organisation.

Preventing sexual harassment

• Comprehensive policies – ensuring clear and well-defined workplace policies on gendered violence, harassment and bullying eliminates uncertainty around whether rules have been broken and what the relevant response is. This makes it easier to identify and punish damaging actions.
• Zero-tolerance stance – adopting a zero-tolerance approach that guarantees all workers, regardless of position, are held to the same standards is necessary to prevent abuses of power. Similarly, all reports should be investigated to the same degree.
• Clear reporting channels – clear, confidential and easily accessed reporting channels reduce obstacles to reporting and make it more likely that inappropriate behaviour will be identified.
• Third-party reporting platforms – third-party reporting channels are an excellent means of meeting the clear, confidential and accessible reporting criteria.
• Risk assessments – carrying out regular risk assessments to identify environments where lone working, gender imbalances or other environmental factors may result in a greater risk of harassment or bullying can help organisations implement effective protections.
• Comprehensive training on preventing sexual harassment, that protects employees while fostering a healthier, more productive and legally compliant workplace.

Data-driven DEI programs

• Exit interviews – interviewing women leaving the organisation can help you identify problem areas and establish whether inclusion issues impact staff turnover.
• Career tracking – monitoring the progression of employees across various demographic groups provides you with the data to establish whether organisational inequalities are impacting career development.
• Transparency and accountability – committing to DEI transparency and accountability is a means of ensuring your organisation continues progressing and working towards its stated goals.

What next?

As with all business problems, improving EDI in financial services organisations requires a nuanced and tailored approach. There is no one-size-fits-all solution and no set-in-stone framework for success. Businesses must understand the root causes of inequality and identify the main obstacles to inclusion in their organisation. And this requires a significant amount of data and extensive input from those groups and individuals that are under-represented or excluded in the current culture.

At Mix, we work with numerous businesses in the financial services sector to provide training and one-to-one coaching for teams and individuals in leadership roles. Contact us to find out more, or book a free EDI Surgery Drop-in.