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Closing the gap: Opportunities for leadership in empowering women in financial services

Closing the gap: Opportunities for leadership in empowering women in financial services
By Karan Kapoor

Men at banks and insurers still make up most of the management ranks. New data from the survey and interviews with female executives point the way to gender diversity.

If it comes to gender equality, where is the financial services industry standing? To address the issue, this report looks at North American financial-services workers' perspectives, collects feedback from senior female executives (those who are or above the rank of vice president), and discusses best-practice strategies and initiatives that encourage diversity and inclusion.

As part of the effort by ‘Women in the Workplace’ to create the definitive fact-based basis for women's leadership advancement, we surveyed over 14,000 employees at 39 financial services firms and interviewed 12 female senior executives at North American services firms. While the results are focused on North America's work, we think the findings and consequences are globally relevant.

A commitment to gender diversity is asserted by more than 90% of the financial services companies surveyed. This commitment makes clear business sense: better performance for enterprises with greater gender diversity.

Improved female leadership representation will lead to a more rounded view of the clients. It is highly essential in financial services, as more than half of women today manage their family budgets and are responsible for saving and spending in households. Firms that do not concentrate on gender equity will find themselves at a disadvantage in the talent war.

Much more research is needed despite a clear business case for improvement. The study breaks down the overall state of gender disparity in the financial services industry to consider the effects of sub-sector, rates of work, and race. The gender-parity issues that the financial services industry faces are involved, but there are ways to tackle these challenges to improve women's representation at all levels.

Diversity of gender in the financial services sector today

We leveraged perspectives gained from financial-services firms to create a comprehensive fact-base on women's leadership development. In North America, these companies represent three sub-sectors: banking and consumer finance, asset management and wholesale banking, and insurance.

Women and men in financial services start their careers at parity, making up roughly equal portions of entry-level staff, but women only account for 19% of management-level positions higher up the ladder. It is slightly lower for women overall than an average of 22%.

Women's lower recognition does not seem to be driven by unemployment.In fact, women's company-level attrition is equal to or lower than male employment for each financial-service role, except for the highest rankings. Even as they advance through their careers, women at every level are increasingly losing ground to their male counterparts. The largest drop generally begins in their tenure, when women are 24% less likely than their male peers to attain their first promotion, despite requesting promotions at similar rates. Women of colour are typically disadvantaged - they are 34% less likely to make their first promotion in financial services than men.

A slow start: Barriers against women at the entrance stage of financial service

Entry-level women in financial services explain the steep drop in representation of women between entry-level and middle-management roles. Most importantly, women generally do not strive top positions early in their careers, and even if they do, they still lack the resources required to ascend to the top.

Females in entry-level positions in financial services barely see themselves as top executives; only 26% aspire for this target, compared to 40% of their male counterparts and 31% of women at the entry-level in all sectors.

Entry-level women in financial services indicate a lack of participation in these positions, reservations about juggling family and work responsibilities, social competition related to top jobs, and too much politics as the key reasons the career direction of leadership is less attractive. Although entry-level people share some of these worries, they are far less likely to voice anxiety about the work burden. This difference could partly be explained by real differences in the male and female leaders reporting experiences in the workplace.

In comparison, entry-level women are more likely to raise anxiety about career loss than men. It could result from a disparity in trust and represent an apparent discrepancy between the effect of male and female loss. Of entry-level women, 57% report their everyday life as a top executive will be influenced by fear of a high-profile failure, compared to only 42% of their male peers.

Lower competitiveness in entry-level positions is not the primary justification for lower managerial-level participation of women. For this report, most senior-level women interviewed were motivated to excel but state they never deliberately aspired to attain the highest leadership levels. Instead, they genuinely worked tirelessly at every point of their careers to do their best and retained a good sense of their importance for their businesses.

View from above: Secrets to the performance of senior female executives

They are passionate about women's progress in the industry, and their experiences provide insight into how women can step up the ladder at the entry-level. In financial services, the interviewees repeatedly emphasised three basic building blocks of women's success: seeking funding, taking chances, and understanding and sharing one's worth.

Develop powerful sponsorship network

The female senior executives regularly cited funding as a critical element in the performance. Compared with their male colleagues, younger counterparts, and mid-level women in other sectors, this perspective was enhanced by our data and is superior to senior women in financial services. Old women in financial services are even more inclined than their male counterparts to see government savvythat is, learning how to handle office politics, as a significant predictor of performance.

Taking risks too often

The senior women persuaded younger women to take chances in their careers early. Such threats will include engaging with specific business divisions, positions, locations, and even sectors to create a broad base of interactions that can help them in potential leadership roles.

Know your interest, and share it

Several women attributed their performance to hard work and their boss or company with a deep sense of faith in their worth. Others have highlighted the importance of expressing their significance and success to those who matter.

Headwinds at the top: Ongoing problems in financial markets for senior women

Women who achieve the highest rates frequently look back and realise that their ethnicity has impeded their success. Over half of the senior-level women surveyed — those who have achieved or above the vice-president rank — feel they have missed out on opportunities because of their ethnicity, compared to only 10% of their male counterparts. There are many explanations that this inequity persists.

Connection to senior management is still unequal – even at the highest levels

Despite the emphasis they put on funding, senior-level women are much less likely to gain substantive support from senior management than their male counterparts, even as they seek it at the same pace as men do. Only 34% of senior women in financial services say they have sought guidance from a mentor or senior leader on career development, while 44% of their male counterparts say they do.

Senior-level women are also less prone to have daily conversations with their company's work with senior leaders: 41% of women have such experiences at least once a month, while 49% of their male counterparts do. This pattern is higher than the national average in financial services, as 49% of women in all sectors have these experiences.

It is becoming even more challenging to handle family and work

Particularly among women at the highest ranks, the disparity in achievement remains, and half of the senior-level women claim the failure to combine family and work as a big reason for not choosing to seek top executive positions. This result is perhaps not unexpected considering that as women in the workforce grow with seniority, they retain their duties at home in large part.

Senior women are still significantly more inclined to feel that prioritising work-life balance — including participation in sustainability schemes, such as maternity leave and flexible job schedules — will weaken their capacity to excel at work relative to their male counterparts. Perhaps this perception is because they expect the penalty to be more generous. After all, their obligations rise with seniority at work. In the end, they are less likely than senior men to consider the rewards of top leadership as worth the expense.

A guide to gender equality in the job process

Today, with women at the top level of financial services performing less than one in five jobs, reaching gender equality in the industry appears to be an unrealistic target. There is one way to get there, however.

Rebrand the business to make women more appealing

Proving that financial services are a field where women can excel is a vital first step towards achieving equality. This will help increase women's participation at the early job funnel stages — which is especially relevant in sub-sectors such as wealth management, wholesale banking, where women start below parity.

A rebranding of financial services would demand that the members commit to reform, not only by taking steps to make their industries environments where women will flourish but also by expressing their dedication to galvanising the industry as a whole.

Remove prejudice in reviews and promotion

Reducing sexism in evaluations and promotions would improve entry-level women's lagging advancement levels and help mitigate senior-level women's perception that their ethnicity has impeded their success. This belief is not misplaced.As noted earlier, entrance-level women in financial services are 24% less likely to be selected than their male counterparts, compared to 18% of females in general.

The Road to Balance

The goal of reaching financial services convergence is an ambitious one. Yet our interviews with senior female leaders and in-depth analysis show that there is still a path to the top and concrete action that can be taken to pave the way for more women to get there. Progress would take consistent dedication on the part of all financial services executives to push towards equality.