Driving gender equality in FS– why wait and see isn't an option
15 December 2016
On Monday, the think tank New Financial released its first analysis of how the first signatories to HM Treasury's Women in Finance Charter have complied with the requirements of the Charter. This analysis is based on information that firms have publicly released their confidential submissions to Treasury. Our overview of the Charter requirements can be found here.
If, like us, you spend a lot of time discussing this topic with financial services firms, the findings will come as no surprise. They tell us that, in senior roles, there are, on average, fewer women than men (27%) and that this issue is more pronounced in banking and asset management than in insurance. More positively, they also tell us that there is a real energy and ambition amongst signatories to change, with many setting challenging targets to improve this number (with an average target of 35%).
Of course, beneath these statistics there are a lot of variations. The numbers only capture those firms who signed up to the Charter in July, creating an inevitable bias towards those actively focused on the issue of women in leadership. Reflecting the welcome pragmatism and flexibility from HM Treasury, there are also a range of approaches to defining "senior management" and the time horizons of targets.
We are, however, particularly encouraged to see the range of activity that companies have been pursuing. This is reflected in the targets published, which often look beyond just "hitting a number" to think about areas like pipeline, talent identification and unconscious bias. This broader focus makes it clear that signatories are looking for ways to drive sustainable change over the longer term.
In this context, we suspect many firms will be concerned about the gender pay legislation, finalised only last week. This requires the public disclosure of the average "gap" in pay between men and women by firms with over 250 employees. The New Financial statistics confirm what we already know about the industry - there are significantly fewer women than men in senior roles. As a result, the gender pay gap will inevitably be large (across the sector we are expecting a gap of around 40%).
This provides a challenge for financial services firms focused on driving gender equality. There is a real risk that a large “gap” could make a firm a less attractive employer to talented women. Firms who have acknowledged their challenges on this issue and set ambitious targets could find their message lost (along with potential female talent) amongst the "noise" of the gender pay disclosures. There is no easy answer to this, but what is clear is that firms who are actively discussing their plans to promote diversity and inclusion are at an advantage - they have already demonstrated their commitment to this issue. Aligning this, and other diversity activity, with gender pay reporting, will inevitably help firms give a broader view to employees and the public of their past challenges and future ambitions.