There is not a lot to celebrate when it comes to diversity in financial services. But things can change
If you are a female in finance, this month’s International Women’s Day may have felt bittersweet. Yes, 300 organisations have signed up to the government’s Women in Finance Charter. Yes, several female chief executives have been appointed at investment firms. Yes, there is a proliferation of diversity and inclusion events, initiatives and policies aimed at improving the number of women (as a colleague put it to me not so very long ago, “you women have never had it so good” – thanks).
But just how good are things really? Notwithstanding the talk, the investment industry is especially challenged. We have the largest gender pay gap, with last year’s first mandatory reports showing an average salary gap of around 30 per cent, compared with less than 14 per cent for all UK companies. And as investment companies publish their second gender pay reports ahead of the April deadline, those gaps are expected to widen.
A stark report by New Financial, entitled Diversity in Portfolio Management, reveals that women manage just 4 per cent of money in the UK, compared with 85 per cent by men (we share responsibility for the rest). And most damning of all, I am deluged with reports of bias and sexism, and widespread evidence that the everyday experiences of many women in the sector remain discouraging.
Where is it all going wrong? And what could we do to make next year’s International Women’s Day a true day of celebration – even for those in finance? Firstly, we need to acknowledge the state we are in. The investment industry is starting from a low base when it comes to diversity of all sorts, not just women.
New Financial found only 12 black portfolio managers based in London, while nearly two thirds of the industry’s leaders went to private schools. A simple initial step would be to commit to no more diversity award ceremonies for ourselves until things look very different. Second, there is a very incomplete understanding of the problem. There is, though, a real commitment to finding solutions – especially among chief executives.
The members of the Diversity Project (a cross-company initiative aimed at improving diversity across the investment and savings industry) advisory council are determined to see a breakthrough and are frustrated at the slow rate of progress. But the main reason I speak up about “real” experiences as a woman in the industry – at personal risk – is because I know many of those at the top really can’t see it for themselves.
There may be many layers between them and the women they really want to see flourish. The truth is, those women’s day-to-day experiences might shock the chief executives, if only they knew.
I would encourage any industry leader to volunteer for mentoring, however busy you are. If you are worried that a woman in your own organisation may not be candid, sign up to the 30% Club (a campaign initially aimed at improved gender balance on UK boards) cross-company mentoring scheme.
Currently in its sixth year, nearly 2,500 people are involved from over 100 organisations. More than half of the mentors are men. Their feedback? That the experience opens their eyes to the issues women in their own companies must be facing.
And third, look – with clinical detachment – at the impact of your existing diversity and inclusion initiatives.
If something is not working (or worse, is counter-productive), abandon it. The evidence suggests, for example, that mandatory basic (e.g. simplistic computer-based) unconscious bias training creates more problems than it solves (see Why Diversity Programs Fail by Frank Dobbin and Alexandra Kalev).
There is no shame in admitting our efforts have been off-target; it is called learning from mistakes.
The 30% Club was borne out of my own failure to translate a women’s network into higher female promotion rates.
I suddenly realised that women talking to women about women’s issues was never going to get us very far. So the 30% Club deliberately, consciously involved men – those with the power to change things.
And they did. We progressed from 12.5 to 30.9 per cent of women on FTSE 100 boards and there are now just two all-male boards in the whole FTSE 350, down from 153.
At present, many of the investment industry’s diversity initiatives are off-target. That same New Financial report into the (lack of) diversity in portfolio management lists the top five actions that organisations are currently undertaking, alongside the top five barriers reported by diverse talent. Only one of the actions actually addresses any of the barriers (recruitment approaches). It is time to change the rest.
Finally, let’s acknowledge that the topic of diversity generates much eye-rolling. Diversity fatigue is actually a thing – before we have even got much diversity. Let’s talk about talent, about results, about performance, about future-proofing our businesses. Let’s put in place (fully, not half-hearted efforts) smart, agile working practices. Let’s talk at schools and universities up and down the country about what it is we actually do, and let’s listen to what is being experienced by women in our industry. I want to celebrate real progress some day.
Dame Helena Morrissey is head of personal investing at Legal & General. She founded the 30% Club and is chair of the Diversity Project