Released On 2nd Jul 2016
Across the City: Gender Diversity
How is gender diversity improving in City professions and what are employers doing to encourage this? Helen Beedham at Cityparents assesses what progress is being made.
First, why does this question matter?
Fact: gender diversity is good for business and good for the economy. Here’s why:
Taking a bird’s eye view, The Women And Work Commission found in 2013 that unleashing women’s full employment potential could be worth up to £23 billion a year to the Exchequer. More recently, the Government identified better gender diversity as a key lever in improving long-term productivity growth in the UK.
At an individual business level, companies with gender diverse workforces are proven to be more successful than those with less diverse workforces. The McKinsey report ‘Diversity Matters’ (February 2015) found that companies in the top quartile for gender diversity were 15% more likely to outperform financially those in the bottom quartile. Every 10% jump at senior management level produced an EBIT increase of 3.5%.
The reasons for this have been well-explored and documented in recent months: companies which consciously seek to be more diverse in gender terms tend to do better at attracting and retaining talented individuals. They are also better at understanding the needs of their customers – unsurprising when you consider that the UK population is split roughly 50:50 in gender terms, and that women drive 70-80% of all consumer purchasing, through a combination of their buying power and influence. More gender-balanced teams and organisations typically demonstrate better decision making and risk management, as they are more likely to scrutinise, challenge and think creatively and less likely to succumb to ‘group think’. Remember Christine Largarde’s now infamous quip about the banking sector collapse ‘If Lehman Brothers had been Lehman Sisters, today's economic crisis clearly would look quite different”?
What is gender diversity like across City professions?
In broad terms, men and women are entering City professions in equal numbers, but women are less likely to gain a senior position and more likely to exit the workplace earlier than men. Shining the spotlight on different ‘City’ industries in turn:
Female lawyers comprise 60% of trainees but just 24% of partners at the average commercial law firm in the UK, dropping to 19% across top 20 firms (The Law Society, 2014) This pattern is mirrored at the Bar: equal numbers of male and female members are called, but at 15 or more years of call practising members are 76% male and 24% female. At Q.C. level, 85% are male. (Bar Council’s “Momentum Measures” report, July 2015)
An MCA survey in early 2016 of over 400 female former management consultants confirmed that a huge pool of talented women leave at a critical point in their careers, on average after 8 years. The top three reasons? Working “away from home at the drop of a hat”, long hours and limited opportunities for flexible working. Despite these barriers, 42% said they could be persuaded to return in exchange for greater flexibility, working in a supportive team, and being rewarded on output.
“Financial Services is at the centre of driving productivity in the UK, but it’s also a sector where the problem of gender diversity is particularly marked – especially in senior management” commented Harriett Baldwin, Economic Secretary to the Treasury. Currently, women represent 52.5% of the workforce across all FTSE 100 banks (‘Diversity in Banking’, BBA, November 2015). Thanks to industry efforts, fuelled in large part by the work of The 30% Club, female representation on the boards of FTSE 100 banks now stands at 24.3%, close to the 2011 Davies Review’s recommendation of a minimum of 25% across all FTSE 100 companies. Attention is now turning to the gender balance at executive and senior management level, which is lower across FTSE 100 banks at 21%. This drops to just 1 in 7 (14%) across a sample of 200 UK financial services companies (‘Women in UK financial services’, New Financial, June 2016).
What do we hear from women - and men - working in the City?
From our annual survey of our 9,250+ members, we know that career progression for women, particularly mothers, remains a significant issue across traditional ‘City’ professions. 72% of working mothers in our 2016 survey state that maintaining career trajectory is a major challenge, second only to achieving a satisfactory work/life balance (84%). When asked what one thing their employers could do to better support them, 43% of Citymothers want them to “put more effort into supporting working parents’ career progression”, compared to 27% of Cityfathers. Unsurprisingly, our research shows that career progression per se is less of an issue for Cityfathers.
Our findings confirm that parents in the City genuinely want to continue to work and progress their careers, but crucially, without sacrificing a meaningful home life. Almost 3 out of 10 of parents (28% of Citymothers and 29% of Cityfathers) say their current work/life balance is less than satisfactory, and only 5% of all participants (including professionals without children) rate it as ‘ideal’.
On a positive note, when we asked our Citymothers members in 2015 whether they would like to continue working if finances weren't a consideration, a majority of 54% said they would, compared to 17% answering no (the remainder were unsure). However, most verbatim comments repeated a desire to switch to a different role or career that affords greater flexibility and a better work/life balance, which sounds a note of warning to City employers.
What’s driving progress towards a better gender balance in the City?
The picture is improving thanks to effort on a number of levels:
A recent EU Directive on Non-Financial Reporting will require ‘public interest’ companies with 500+ employees to publish annually the gender breakdown of their workforces from 1st January 2017. The Department of Business, Innovation & Skills is currently summarising the outcomes of recent consultation on how to implement this Directive in the UK, and we will have to wait to hear how the recent referendum vote in favour of Brexit will affect impending legislation such as this.
Aside from these regulations, the Government has set out a framework called ‘Think Act Report’ to help companies think about gender equality in their workforces - particularly in relation to recruitment, retention, promotion and pay - and to report their practices and progress. You can see the list of companies who have signed up here.
The Government has also pledged to close the gender pay gap ‘within a generation’. The UK currently has the eighth highest gender pay gap with a gap of £5,732, or 24%, in average full-time annual salaries between women and men. This effectively means women earn £300,000 less than men over their working life. New regulations will require every firm with over 250 employees to publish the difference in average pay between their male and female employees.
Jayne-Anne Gadhia, CEO of Virgin Money, recently led a Treasury review into the representation of women in senior managerial roles in the financial services industry. As a result of this review, in March this year the Treasury published a Voluntary ‘Women in Finance Charter’ to help bring about gender balance across all levels in financial services. Companies are invited to sign up to the Charter and the Treasury is due to publish shortly a list of signatories to date. Two of Cityparents’ corporate members, Royal Bank of Scotland and Columbia Threadneedle Investments, were among the first companies to sign up at launch.
Wider City networks such as Cityparents, the City Women Network and We Are The City all aim to support the female talent pipeline across a number of ‘City’ professions through networking at events, access to mentoring and coaching schemes, participation in talent programmes and online information and support.
Action by leading City employers
A number of City firms met last month at our Cityparents Policy Works forum to discuss ways in which they are addressing gender imbalances in their organisations.
Columbia Threadneedle Investments shared their efforts and progress in encouraging greater diversity across the company and their early participation in the ‘Women in Finance’ Charter. They and other firms are tackling gender imbalances by: securing the commitment of Executive teams to strengthening diversity; engaging colleagues in dialogue to uncover and address barriers to female progression; assessing recruitment and promotion practices to minimise unconscious gender bias; delivering diversity awareness training; and updating HR and workplace policies to better support working parent and carer employees.
Leadership teams seem to be taking this issue seriously in increasing numbers. But delegation to HR or internal networks is no substitute for the issue being actively pushed by executives as a business priority. At the current rate of progress, it is likely to take several years (if not another generation) before the statistics show a marked improvement across all levels of seniority. However, recent industry-wide collaborations suggest a possible increase in momentum in the next 1-3 years. And as soon as the front-runners can demonstrate the commercial benefits they have gained from greater gender balance, others will surely follow hot on their heels….