There have long been concerns about the lack of women in senior roles across financial services. Many have suggested that the excessive risk taking and mistreatment of customers during the pre-2007 boom reflected the overwhelming masculinity of the industry.
However, that is not the whole story. The financial crisis had many causes, and a lack of diversity has many consequences. But one thing is clear: financial services continues to lose out in the competition for talent.
That is one of the central findings of our Women in Financial Services 2014 report. Based on an analysis of more than 150 financial institutions worldwide, a survey of more than 1,000 current and prospective employees across five countries, and interviews with senior leaders from across the sector, the findings paint a picture of an industry that continues to struggle to improve representation at the highest levels.
Women still remain underrepresented in financial services leadership
Women hold just 13% of executive committee positions and only 4% of CEO roles at the firms we analyzed. More than a third of executive committees remain entirely male. While women are well represented in many parts of the industry, they continue to be underrepresented in the positions that shape strategy, culture, and decision making.
This matters because diversity is about more than fairness. A growing body of research suggests that diverse leadership teams make better decisions are less scared to challenge assumptions, and bring a wider range of perspectives to complex problems. In an industry that has spent much of the past decade coming to grips with a culture and conduct that paints a less than favorable picture, those benefits are difficult to ignore.
While representation in the financial services industry has improved over the past decade, progress has been uneven across senior leadership roles. Women have made the greatest gains in support and compliance functions that focus on soft skills and emotional intelligence, but remain far less visible in the positions that lead up the career ladder to CEO level. More than a quarter of executive committee-level heads of audit, legal, compliance, or marketing are women, and heads of HR are more likely to be women than men. By contrast, only 4% of CEOs are women, and there are comparatively few female leaders running business units or holding senior profit-and-loss responsibilities.
Financial services has the thickest glass ceiling of any sector
One finding from our research immediately jumped out: financial services performs worse than any other sector when it comes to women’s progression from middle management into senior leadership. Women are almost as likely as men to progress from junior to middle-management positions, but their chances of reaching senior leadership are less than half those of their male colleagues. The industry’s glass ceiling appears to be set in stone.
The reasons are often subtle: while overt discrimination has declined, many of the assumptions that shape hiring, promotion, leadership assessment, and career development continue to disadvantage women. Expectations around long working hours, traditional career paths, and leadership styles can create barriers that are difficult to identify and even harder to address.
Why the financial services industry must attract and develop more women leaders
Women can only get to the top floor when they are actually in the building, but the industry is struggling to attract future talent. Female students often view financial services as political, aggressive, and arrogant. Senior women working within the industry describe a very different reality, highlighting professional development opportunities, intellectually challenging work, and diverse career paths. Bridging that gap between perception and reality will be essential if firms want to attract the next generation of leaders.
That generation will also have different ideas about leadership. In the past, successful leaders in the financial services industry were often associated with “masculine” traits such as aggression and dominance. But today, both men and women increasingly rank trustworthiness as one of the most important qualities for future leaders, along with adaptability and collaboration. As the range of traits viewed as important for successful leadership has broadened, so too must the talent pool. To do this, firms need to challenge unconscious bias, create more opportunities for women to gain profit-and-loss experience, support flexible working, strengthen sponsorship, help experienced professionals return to the workforce, and hold leaders accountable for results.
Originally published in 2014.
