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Gender inequality in finance is getting worse

Depending on which report you read, the mood music around gender equality at work is pretty peppy, these days. Certainly, giant strides have been made since the groundbreaking walkouts at the end of the sixties by female employees at the Ford Halewood plant, over the equality of pay with their male counterparts.

Although still not fully representative, this year’s FTSE Women Leaders Review is positive reading. 36% of the Top 50 private and 42% of FTSE 350 company boards are now made up of women. While these figures are moving in the right direction, women still hold only 35% of the most senior executive roles, however.

It does represent progress, though, in all its senses (for context, when the Review started, in 2011, just 9% of FTSE 350 board members were women).

Against a generally positive backdrop, there is one sector that is bucking the trend. Finance.

When men and women are entering the profession in pretty much equal numbers, why is it the higher up the career ladder you go there is a conspicuous absence of women?

Finance’s gender problem

Whilst it is well documented that to develop creative, productive, innovative cultures, difference and diversity is a positive and complementary force in the corporate mix, the top, top jobs remain the prerogative of white middle-aged men who live in the South. In FTSE 100 companies only nine CFOs are women.

In our recent Making the transition from FD to CEO article, we noted that 58% of current FTSE 100 CEOs have a finance background. That the top job in finance is so male dominated might go some way to explaining why only 10% of FTSE 100 CEOs are women.

Whilst things are better further down the food chain – 45% of chartered and certified accountants are women, for example – women are simply not being promoted to more senior roles. They are also earning less. The mean pay gap between men and women in finance is 27.9%, almost twice the national average (14.3%).

As a mean figure, this further highlights a lack of seniority in the roles women occupy (although we should also factor in that, whether through choice or circumstance, a considerably larger number of females than males work part time, with its associated limitations on earning potential).

(Ethnic minorities are entering the finance profession in positively over-representative numbers. Again, those numbers aren’t following through into senior positions.)

A problem compounded by the pandemic

Where other sectors are moving in the right direction, a recent report by LSE has highlighted that, since the pandemic, senior finance’s gender problem has got slightly worse. Of the top one-percent earners in the sector only 19% are now women. It raises concerns that the pandemic, closely followed by the cost-of-living crisis, will have ‘a long-lasting effect on gender parity in the industry’.

In essence, the report implies that whilst most of the sector’s businesses talk a good game about EDI initiatives in their annual reports, the statistical evidence suggests the industry is stagnating, if not going backwards. As seen with the Chancellor’s EDI pronouncements in relation to the NHS, the worry is when times are tough, it is these kinds of initiatives that get axed first.

Even when we are asked to supply 50/50 gender-balanced shortlists for senior finance roles, it is interesting to note, anecdotally, how many times it is the man who gets the nod in the end.

The double-edged sword of flexible working

While the Covid WFH mandate afforded some women greater flexibility to work around childcare, it remains a double-edged sword. Flexible working helps some women – who, for better or worse, are still taking on the bulk of care and chore duties at home. Although making their daily lives easier to manage, others would argue a lack of visibility in the office has stifled their careers.

The growing calls to return to the office are helping those who feel out of sight out of mind, but what does it mean for working mums? By taking a career break or needing to work flexibly, there is no doubt that motherhood is still taking its toll on women’s careers.

How much do you want it?

Biology, psychology, and centuries of gender-role conditioning mean women still carry the bulk of caring responsibilities in most households. Although family life is more complex, these days, traditional views remain. Initiatives, like better parental leave for fathers, still feel like tokenism rather than genuine attempts to level the playing field.

The sad reality is, a break to raise young children sounds the death knell for any aspirations of attaining the summit in their careers, for too many women.

As one woman in our senior finance network commented:

“It is, sadly, a fact. It is women who tend to go part time when they have kids, and it is therefore women who stall on the career ladder. It is difficult to reach the heady heights of CFO with a career break.”

But these are barriers faced by women in other industry sectors, too. Why is the gender gap so wide at the top of finance, in particular?

 Male-domination across the board

Traditionally, senior finance is, and remains, a male-dominated environment. Usually, where there is a will there is a way. Is it lack of will from the senior male majority that is keeping their female counterparts lower down the career ladder or do women in finance suffer from a higher incidence of vertigo?

From high street banks – where women fill mainly administrative and lower management roles – through to PE and VC companies – where only 14% of the ‘cheque-writers’ are female – women are conspicuously under-represented at senior level. When gender-balanced leadership teams deliver 20% higher returns, why is the PE and VC world so slow to close the senior Finance career gap?

This lack of representation is fundamentally bad for the economy and explains regressive statistics like why all-female founder teams only received 2% of total equity investment (by value), over the last decade. The Rose Review suggests that up to £250 billion of new value could be added to the UK economy if women started and scaled new businesses at the same rate as UK men.

The way forward

Women in Banking and Finance (WIBF) calculate that it will take 30 years to reach gender parity in the industry, at the current speed of travel. Its calls for us all to become The Inclusive Individual is a manifesto for change at an individual and cultural level.

FTSE Women Leaders offers eight recommendations for change, including the development of women’s talent pipelines and a focus on retention and recruitment. Potentially the most efficacious is the recommendation to set up mentor and sponsorship programmes. The fact is, we all need advocating role models to support, challenge and promote us as we develop our careers.

Setting public targets and more progressive parental leave and flexible-working policies aside, unless the power-broking male-majority find the will, senior finance will remain a protectionist, 1950’s old-boy network. Change must start at the top. The women senior leaders we’ve been speaking with would argue that the biggest change needed is culturally.

“Despite possessing equivalent qualifications and experience women frequently encounter implicit biases that hinder their advancement to senior positions. There can often be an unspoken pressure to conform to a traditionally masculine style of leadership which can be at odds with more collaborative and empathic approaches favoured by many women. These dynamics can create a challenging environment where women are not supported, often overlooked and have to work harder to gain the same recognition and respect as their male counterparts.”

 Is finance still an old-boy network?

It might not be an old-boy network in its truest sense, but there are many informal all-boy networks in finance to which women are excluded. Whether on the golf course, at the rugby club lunch or beers and a curry after the charity board meeting, there are so many informal, out of office, casual business conversations that take place to which women are simply not privy; conversations that can offer valuable information and insight and help build preferential personal relationships, which offer men an advantage, particularly at a senior level.

In brief

Unrepresentative, unchallenged decision-making by a homogeneous white middle-aged male leadership is stifling growth, innovation and creativity in the UK economy.

More must be done to close the senior level gender gap in the business-critical finance function – at an organisational, cultural and policymaking level. However, until senior leaders allow women access to the club, businesses will continue to miss out on a swathe of talent that will add diversity, difference and complementarity to the voices around the senior decision-making table.

Productive, creative and innovative cultures are the hallmarks of diverse and complementary senior leadership teams. Until the senior male majority gets the roller out and addresses its gender bias, it is hard to see when we will ever play on a truly level playing field.

Emma Hughes

Emma Hughes

Emma has over 20 years’ experience connecting clients with the game-changing Finance talent they need for the next step of the journey.

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