By Astrid Jäkel and Ted Moynihan
Our global survey of financial services employees shows that women enter the financial services industry with the same ambition level as men, retain this ambition for the first years of their career, and usually also have similar ambition later in their careers.
However in mid-career, a significant gap opens between men and women in their willingness to make sacrifices in their private lives and in their career ambition levels.
It is at this point in their career that women vote with their feet. Internal labor market data from our sister company Mercer shows that the exit rates of women in financial services in the mid-part of their careers are not only higher than those of their male colleagues, but also significantly higher than in other industries. Female managers, senior managers and executives in financial services are 20 percent to 30 percent more likely toleave their employer than their peers in other industries.
Female representation is growing on financial services boards (20 percent in 2016) and executive committees (16 percent in 2016), but progress is slow. At current rates of growth, financial services globally will not reach even 30 percent female executive committee representation until 2048.
Our analysis of 381 financial services institutions in 32 countries shows two concerning patterns: First, female representation on executive committees is growing much slower than on boards. Second, the growth observed comes only from some countries.
In many countries, there is little, no, or even negative growth in female representation on executive committees. Without doubt, there has been significant effort and investment in attracting more women to financial services and in developing more of them into leaders. Many organizations have initiated recruiting, networking, sponsorship and training programs targeted at women.
Many of the visible processes have been improved for equal opportunity. So why has the industry not been more successful in progressing towards gender balance at
the top?
Our statistical data, survey responses and interviews suggest that many women face a mid-career conflict. At this point, the costs of a career, especially the sacrifices in their personal lives, seem too great in relation to the uncertain benefits of pressing on. Women face a less attractive career trade-off than men – a difference to which the following factors contribute:
- Insufficiently flexible working options and stigma for using them
- Insufficient support for family responsibilities, for both women and for men
- Shortcomings with regard to predictable, transparent and equitable promotion processes and equal pay
- Persistent sources of low inclusion in culture affecting women such as invisible unconscious biases and traditional assumptions.
Placing more women in senior roles has been a priority in many countries for the past decade. Targets have been set and initiatives launched in financial services, along with other industries where women are under-represented at the top. Yet progress remains slow.
The problem is not that the financial services industry does not recognize the benefits of diversity. Many of those we interviewed, women and men, acknowledge them. Gender balance is an important aspect of diversity. It provides access to the full talent pool, better decision making by bringing together different perspectives, better service to customers by better representing them, and a stronger economy, thanks to greater and more effective participation in the workforce by women.
What is slowing the progress of gender balance in financial services? Partly, it is that well-intentioned organizations have not found the right recipe for advancing women and the right way of combining the various ingredients, such as flexible working arrangements, sponsorship, and cultural change.
Partly, the problem is that diversity is too often seen as part of corporate social responsibility or fairness in the workplace, rather than as a commercial imperative. The appreciation of diversity’s value exhibited by our interviewees does not yet pervade the industry.
Moving financial services firms towards gender balance will require a mix of bolder structural solutions and more profound underlying cultural change. Our key recommendations:
Bolder structural solutions: Set an executive committee talent pipeline strategy. Develop bolder structural solutions by providing more flexible working options at all levels, and finding ways to remove the stigma associated with using them.
Encourage men and women to take parental leave and develop better returnship programs. Address the promotion and pay gap, understanding that this is likely to be driven by invisible cultural factors.
More profound underlying cultural change: Build an inclusive culture that recognizes and promotes the value of diversity along all dimensions, is free from unconscious bias and therefore supports gender balance. This means putting practice ahead of theory, supporting men to support women and seeking enlightened leadership.
Astrid Jäkel is a partner and Ted Moynihan is a managing partner with the global management consulting firm Oliver Wyman, a unit of Marsh & McLennan. This is an excerpt from the firm’s “Women in Financial Services 2016” report. Jäkel is principal author.
