Targets Work: Progress On Gender Balance At The Top In UK Financial Services
The financial services industry was possibly always going to be the best sector in which to place a competitive challenge of hitting set targets. When it came to improving gender balance in senior management though, the targets were inevitably going to have to be ambitious, and the industry was initially shocked at the idea of having them. But three years since the UK Government launched the HM Treasury Women in Finance Charter, 87% of 123 signatories in the industry have either met their targets, or are on track to meet them.
A report launched today by the think tank New Financial monitoring progress of signatories against their commitments, finds that 72% of more than 330 signatories have increased the proportion of women in senior management in this brief period of time. The signatories cover more than 800,000 employees across the sector. New Financial analysis suggests that if they can maintain their current rate of increase, these signatories are on track to meet their 38% average target in three years.
The report, produced by New Financial in collaboration with HM Treasury, is supported by Virgin Money (now owned by Clydesdale Bank plc or CYBG) and the City of London Corporation. At The Guildhall at its official launch today, an array of notable names across business, government and regulation will be speaking on the importance of this imperative.
Yasmine Chinwala, co-author of the report and partner at New Financial, said: “When the Charter launched in March 2016, the idea of targets was quite shocking for the financial services industry. The Review shows that in just three years targets are now widely accepted as a crucial method for increasing female representation.”
“We must continue to measure and report success, congratulate achievements and highlight opportunities. Because transparency and focus are key to making a real difference” said Dame Jayne-Anne Gadhia, Government Women in Finance Champion. This difference, she suggested, would “improve business results, enhance productivity and drive fairness in business around the country.”
Considering how poorly women have been treated to date in business in the UK and everywhere else, and how they continue to be treated in many sectors of industry, by contrast there is today a huge ask of them in pursuit of business success - which makes them an extremely valuable commodity.
“Improving all forms of diversity across Financial Services, including gender diversity, is essential for industry’s success” said David Duffy, CEO of CYBG, which owns Virgin Money, and supported the research.
Women represent just over half of the UK’s financial services workers, yet there is only 23% female representation on boards, noted Catherine McGuinness, Policy Chair at the City of London Corporation, which hosted the launch event.
There are many reasons to applaud today’s findings, but there is much scope for cautious consideration and also for scepticism. Some 45% of the 123 signatories analysed in this review have met or exceeded their targets for female representation in senior management, and a further 42% that have targets with future deadlines say they are on track to meet them. While there might be nothing like competition to spur business on, history suggests that novelty on targets fades, and targets also need to be closely monitored, questioned, reviewed and stretched.
A quarter (25%) of the signatories to the Women in Finance Charter have set a goal of parity on gender seniority. Two-thirds have set targets at 33% or above and HM Treasury would like to see all targets move to this level in order to align Charter targets with the Hampton Alexander Review.
Top actions driving the change reported by signatories appear simple: ensuring there are female candidates on longlists/shortlists for senior roles, providing unconscious bias training and promoting flexible working. But that seems almost too simple, and there are red flags on transparency - nearly half (46%) had not published an online update on their progress against their targets by the required deadline and less than a third (29%) met all reporting criteria, suggests the analysis by New Financial.
It points out that about 2,500 women will need to join senior management across the 123 signatories in order for them all to meet their targets, which is equivalent, it says, to 12% based on the number of senior female managers today. That is what it calls “an achievable number”. So targets do work - and the UK government is hoping that the precedent set here in the financial services industry will be followed in other sectors.
Because when it comes to women being in high demand for ‘diversity’, it is not just about gender. We are facing a brave new world of demand in which the soft-skills in which women tend naturally to excel are potentially worth a fortune. The Fourth Industrial Revolution, including as it does technological transformation and harnessing the potential of automation and Artificial Intelligence (AI) is, by widespread consensus, going to make the human skills of empathy and emotional intelligence amounting to cognitive diversity ever more valuable, particularly because it is hard to teach them.
More than a decade after the financial crisis, the argument made by Christine Lagarde, the managing director of the International Monetary Fund (IMF) on the need for reform to include more women in leadership in finance is beginning to resonate.
As women begin to wake up to their own value, they need to look to the industries and sectors in which they operate, and continue to demand more.
If the financial services industry can show such progress in three years towards a goal now deemed of urgent importance, then the entire FTSE 350 also needs to pay attention. There is a dearth of women in the historically male role of Chairman, which is itself evolving amid changing demands on business, and boardrooms.
For more on that, see my latest fortnightly Governance Watch column for a boardroom consultancy, just out.