Jayne-Anne Gadhia, CEO of Virgin Money, published her report on how to get more women into senior roles in financial services. What has she recommended?
Background to the report
Financial services employs many women, but the percentage of those who make it to executive committee or board level is low. In fact, financial services is one of the worst sectors when it comes to gender diversity at a senior level.
SAVVY TIP: A company’s board will include a range of directors but its executive committee will only include the senior leaders who have the authority to make important decisions about a company’s strategy and operations.
- Over two million people work in the financial services sector in the UK.
- The report’s survey of 200 financial firms found that women only make up 14% of those on executive committees in the financial services sector.
- The report found that there is a large difference within the financial services sector in the number of women at both board (where the percentage of women ranges from 7% -31%) and executive committee level (where the percentage of women ranges from 10% – 24%). The report says that this shows that certain parts of financial services have a bigger problem with a lack of women than others.
- 25% of companies in the report’s sample of 200 have no women at all on their executive committee.
- more than 60% have between 0 and 15% of women on their executive committee.
- nearly 17% of the 200 companies in the sample have no women on their board.
The business case for more women at senior level
The report quotes a number of reports and statistics that show that a diverse workforce performs better than one that has no or few women, including:
- Credit Suisse, which reported that the average return on equity of companies with at least one woman on the board between 2006 and 2012 was 16%; four percentage points higher than those companies with women on the board.
- McKinsey’s research which showed that companies with top quartile representation of women in executive committees generally perform better than companies with no women at the top, by some estimates with a 47% average return on equity.
- McKinsey’s research showing companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above average financial returns than the average companies in the data set (that is, bottom quartile companies are lagging rather than merely not leading).
What does the report recommend?
The report made a number of recommendations, including:
- A senior executive (at board level) should be given explicit responsibility for progress on ‘gender balance’ issues. The report says that the executive should be from a business-facing role rather than a support function (such as HR, communications, marketing and legal).
- The business should set targets for the number of women who should have roles at a senior level.
- The business should publish progress against these targets on its website.
- Part of the variable pay that senior executives receive (i.e. bonuses) should be linked to how well the company does against its own targets to increase the number of women recruited/ working at senior levels.
SAVVY TIP: These recommendations are voluntary, but they make part of a charter that the Treasury will ask firms to sign up to. The report says that HM Treasury expects most firms to sign up to the charter. If large sections of the industry don’t sign up to it, the Treasury may consider whether it needs to force firms to act.
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