26.The Committee took evidence on the various barriers that have contributed to the current lack of gender diversity in financial services, including workplace cultures, unconscious bias, and the impact of maternity leave and childcare.
27.One barrier to creating better gender diversity that was raised during the inquiry was workplace culture. In evidence to the Committee, Jayne-Anne Gadhia, Chief Executive Officer of Virgin Money, cited research conducted for the Women in Finance Charter which found that “overwhelmingly, women said the reason we do not want to get involved in financial services at senior levels is because of the culture.”
28.Jon Terry, a Partner at PricewaterhouseCoopers (PwC), also explained the need to consider differing cultures within organisations:
The culture of organisations is led from the top and is embedded by individuals on the ground who manage their teams. The biggest step forward that could be made in relation to that is […] wider diversity within middle management and senior management roles, because those micro cultures really make up the overall culture of the organisation.
29.When asked if companies have become increasingly aware of the need to change culture, Jon Terry stated that:
[There has been] a lot of work, over the last five years in particular, on re-looking at the culture of the organisation. A big part of that […] is because the regulators focus on it. […] That is underlined by the fact that […] far less work [has been done] outside of banking and the regulators’ focus primarily, so far, has been on the banking sector. What we tend to have seen, however, is the focus on improving culture to be that general question, not through a diversity and inclusion lens.
30.In its written evidence, PricewaterhouseCoopers (PwC) argued that gender imbalances are in themselves a workplace culture that act as a self-reinforcing barrier to women entering financial services:
[There is] a vicious circle in which a more diverse employee population and inclusive culture would contribute to improving the reputation of financial services, but the current relatively poor reputation discourages more diverse people from entering the sector. Our Millennial research has found that the poor reputation of the sector has resulted in women being less interested in entering the sector, and see it as a poor place to progress.
31.Jayne-Anne Gadhia stated that she had seen “alpha-male-ness” in her colleagues’ behaviour and “a very male culture” in some organisations in which she had previously worked. However, when the Committee asked other senior women working in finance about the ‘alpha-male’ culture, Amanda Blanc, Group Chief Executive Officer of AXA UK, stated that:
Ten or 15 years ago—or when I started my career—you would go to industry conferences and there would be lots of scantily clad women, lots of encouragement, lots of drinking and all that sort of stuff. […] If you go to the industry conferences of today, they are professional events where people are talking about business. That behaviour just does not exist anymore. Would there be examples of bad culture? Of course, but there would be examples of bad culture everywhere. Is it systemic within the industry? I do not believe that it is, and certainly not within the insurance industry.
32.The Committee heard in evidence that the bonus culture also prevents women from advancing in financial services. Jayne-Anne Gadhia argued that “in particular in financial services, one of the things that women dislike […] is the bonus culture [where] people have to go and argue how well they have or have not performed.” In general, there is a view that men argue more forcefully for a bigger bonus and “if [firms] do not have strong middle managers who are really managing performance […] [there is] a skew to men being rewarded better than women.”
33.Kate Grussing, Managing Director of Sapphire Partners, and Jon Terry noted that the practice of awarding bonuses is unlikely to disappear in the financial services industry. However, to mitigate the effect of men being rewarded better than women, Jon Terry argued that:
[Firms need to focus more] on what […] deliver[s] value, [and] mov[e] away from [what success looks like] written up in terms of how a man does the job [as] there might be a different way that is equally or even more successful. [Firms] need to re-look at the overall bonus structures in terms of what success looks like.
Anne Richards, Chief Executive Officer of M&G Investments, agreed with this approach, stating that:
We always need to challenge ourselves as companies to make sure that, where variable compensation is a major part of compensation, the criteria by which it is awarded are as objective as we can make them. One of the things that we know is that, if you do not have objective criteria, women tend to be paid disproportionately less than men. The more objective you make the criteria, the more balance you get into it. Again, that is about societal conditioning.
34.Amanda Blanc provided an example of how AXA awards bonuses:
The bonuses at AXA are not a negotiation. They are based upon a very clear set of personal and business objectives, and therefore that are very formulaic, which takes away the need to feel that it is part of a negotiation.
35.Presenteeism was a further barrier to progress identified as part of the Committee’s inquiry. Jayne-Anne Gadhia stated that when women were asked why they did not want to get involved at financial services at senior levels, “what women really said was that there was […] a culture of having to be present in financial services [and instead firms should] look at [employees’] output, not at [employees’] presence.”
36.Michael Henning, Head of Investment at Mason Blake, observed an interaction between presenteeism and the bonus culture, suggesting that “when it comes to the bonus side of things, maybe women do miss out on the larger bonuses if they are working from home and not seen in the office as often.”
37.To mitigate the culture of presenteeism, Amanda Blanc argued that “there needs to be flexibility […] [and] it is incumbent on those in senior teams and senior leadership positions to lead by example.”
38.A report by Oliver Wyman in 2014 argued that unconscious bias in financial institutions can typify male traits as success and effective leadership. The report states that:
The biggest challenge lies in changing the stereotypes, assumptions and biases about what is required for leadership and success that permeate the culture of financial institutions. The senior management of financial firms have always been almost exclusively men and they remain the strongly dominant group. This means that what is in fact a gender-based bias may be perceived by most senior managers to be no more than common-sense meritocracy.
39.Jon Terry stated that unconscious bias impacts what people define as talent and capability. He told the Committee that to overcome unconscious bias, financial firms need to challenge perceptions on capabilities:
The biggest factor is a misunderstanding by financial services firms on what the talent actually is. If I am looking at roles—or someone who looks like me, a late-middle aged white man in a leadership role—and I am the person who is defining that leadership role, I am much more likely to look at capabilities through my own eyes. You need that challenge to look much wider. A woman who does not have exactly those capabilities but has other capabilities could be successful in that role. That is the piece that really needs additional focus from organisations.
40.When asked why there are more women in middle management and senior positions in support functions than corporate leadership positions such as, CEO, CFO and COO roles, Jayne-Anne Gadhia argued that “unconscious bias [means] people do recruit in their own image.”
41.The Committee heard that maternity leave can have a negative impact on women’s careers. Jayne-Anne Gadhia said that:
The issue that does exist—this is true across all businesses—is that women say if they have had time off for maternity, they either find it is more difficult to get back in because business has moved on or because sometimes they have lost confidence because they have been out of circulation for a while.
Furthermore, Jon Terry argued that “a significant majority of women who return [from maternity leave] go into roles that are less remunerative and less senior than roles they have left.” He noted that “some […] organisations, believing that they are being a good employer, put [women returning for maternity leave] in roles that are less stressful and more flexible.” He felt that “those attitudes need to be seriously challenged and changed.”
42.This evidence was corroborated by the personal experiences shared by participants at the Treasury Committee’s Women in Finance event. The summary note concluded that:
It can be the case that managers do not present all career opportunities to women because they are making judgements and assumptions about what opportunities they would be interested in. For example, not asking a woman with a young family whether she would be interested in a role that involved lots of travel.
43.The culture within an organisation (or across a sector) plays a significant role in ensuring there is a focus on diversity right at the start of the recruitment process, in making women comfortable in their workplace and in women’s ultimate success.
44.The bonus culture in the financial services sector remains a deterrent for women and many are disadvantaged by it. The Committee believes it would be best practice to move to a system where performance bonuses are assessed against clearly objective and formulaic criteria. The Committee recommends that all firms in the sector consider this approach.
45.The culture of presenteeism in the financial services sector may deter women from progressing to senior levels. This culture can be changed through greater use of flexible working practices. However, flexible working will not help if the attitude within firms is that flexible working means lower productivity. Therefore, a change in attitude towards measuring success by outcome rather than presence is also required. The Committee encourages firms to promote flexible working to all staff but also understand the attitudes surrounding it.
46.Unconscious bias has frequently been discussed as one of the issues preventing women from progressing within the financial services sector. Notably, unconscious bias can influence what is perceived as success, talent and capability, such that other ways of working are overlooked. This can disadvantage those who are in the minority in organisations, including women and others from diverse backgrounds. Firms should ensure staff at all levels—particularly those middle managers involved in recruitment, promotion and talent spotting who might otherwise be reluctant to take risks in recruitment—understand unconscious bias and are trained to be objective when considering talent and capability. Such staff need to be made aware that they are recruiting for their whole company, and not just for one role.
47.Maternity leave can have a negative impact on women’s confidence and many women who return from maternity leave accept roles that are less financially rewarding or more junior than the roles they held previously. Employers can also make assumptions about how women perceive their careers when they return from maternity leave and may not offer them the same opportunities. This approach is clearly unfair and it is important that employers communicate opportunities to women returning from maternity leave, so that women can make decisions about their careers without impediments. Best practice within the industry includes returners schemes and training opportunities. More firms should make these available to women who are coming back into the workplace.
18 PricewaterhouseCoopers LLP ()
30 Oliver Wyman, , (December 2014), P.12
31 Oliver Wyman, , (December 2014), P.12
38 Treasury Select Committee Women in Finance Engagement Event ()
Published: 13 June 2018