How Britain is encouraging banks to hire more women executives
As of Monday, 72 firms have signed the Women in Finance Charter, pledging to focus on increasing the number of women in executive positions in the finance sector... and denying senior executives bonuses when firms fail in their goals.
Britain’s finance sector is taking strides to boost women leadership.
On Monday, Her Majesty’s Treasury announced that 72 firms have signed the Women in Finance charter, an initiative by the British government to increase female leadership within the finance sector. The charter comes five months after the publication of a government-sponsored report by Jayne-Anne Ghadia, chief executive officer of Virgin Money, detailing the lack of gender diversity in the upper echelons of the finance sector.
Ms. Ghadia’s report, “Empowering Productivity: Harnessing the Talents of Women in Financial Services,” commissioned by HM Treasury approximately one year ago, is part a plan to improve the productivity of Britain’s economy. Over 500,000 people are employed in the financial services sector, which makes up 8-10 percent of Britain’s economy. George Osborne, Chancellor of the Exchequer, stated in a July 2015 report that, “The financial services sector is well placed to lead the way on issues that matter across the economy,” including gender diversity in leadership positions.
According to the World Economic Forum, Britain is ranked 18th out of 145 on the Gender Gap Index, with women making about two-thirds of what men make in similar positions.
Ghadia’s review found that women made up only 23 percent of boards and only 14 percent of executive committees in the finance industry. Of the women who are on executive committees, the majority fulfill corporate or support positions, such as HR, communications, marketing, or policy and public affairs.
The report also found that more women than men start in the finance industry, but many leave after rising to the middle-management level, with most executive positions going to men.
The Women in Finance charter hopes to encourage companies to change that. By signing the charter, firms agree to make one senior executive accountable for diversity within the firm’s leadership. Firms also agree to set targets for gender diversity, make these targets available to the public, and link pay of the senior executive team to the success of the firm in reaching these targets.
Firms that have signed on to the charter include Barclays, MasterCard, Morgan Stanley International, Deutsche Bank, and Credit Suisse. “Strengthening female representation at the executive and mid-tier level is a strategic priority for the firm and we look forward to working with other signatories to share insights and best practice,” Robert Rooney, CEO of Morgan Stanley International, said in a statement.
The Women in Finance Charter isn’t the first time in recent years that Britain has taken steps to end gender discrimination in the workplace. By 2018, British companies who employ over 250 people will be required to publish information regarding gender gaps in salaries and bonuses. Companies will also be required to make public the number of men and women in each pay range, which will make it easier to distinguish the number of females in leadership positions in each company.
Still, some argue that the British government’s actions don't necessarily equate to progress. Carolyn Fairbairn, the director general of the Confederation of British Industry, told CNN Money in February, "League tables should not be used to name and shame firms, as data will only be able to present a partial picture, particularly given factors such as the mix of part-time and full working and sectoral differences.”
The Women in Finance Charter is a voluntary attempt of one of Britain’s leading economic sectors to encourage female leadership. Time will tell if the industry will lead the way in gender equality within the workplace.