The pervading shortfall in equality in finance-related industries at the senior management level threatens the future of these sectors. Yetunde Hofmann, global change, inclusion and diversity expert, looks at four critical areas to address to drive improvement beyond the rhetoric
The business case for gender and racial equality – and diversity in general across industry regardless of background – is clear. Having a diverse team at all levels of the business and particularly at the top enables creativity, innovation, breakthrough and commercial success.
By its very nature, the finance industry, and related industries, should in turn be role models and trailblazers in terms of achieving equality in all of its guises, from the most junior members of staff to the CEO. This is particularly important at the top.
In reality, while there has been some progress to date, particularly on the boards of the FTSE 100 finance companies, the pace of change across the industry is still slow. The World Economic Forum, in partnership with the Financial Times, produced a report on the state of equality in finance-related industries that illustrated that in order for there to be a 50/50 split in gender at senior management levels by 2024 there would need to be 480,000 more women in UK management than the figures predicted there will be by then. The future, therefore, does not seem bright. There are several reasons why the industry is currently, and may remain, behind on equality at the top.
1. Discrimination still prevails
Discrimination, and in particular race discrimination, still prevails within the finance industry, as is reported in this recent article for the Guardian, which states that two out of every three black and ethnic minority member of staff in the finance industry experiences discrimination on the basis of race. In the wake of the murder of George Floyd in May 2020 many organisations, a large number of which were from the finance industry, came out to state the actions they would take to combat discrimination and promote equality. Sadly, today, four out of 10 employees still experience a lack of commitment to the establishment of an inclusive workplace from their employers.
2. Lack of visible role models
When a talented employee is in the earlier stages of their career in an organisation, one of the key elements of motivation is to see people who look like them and/or represent what they also stand for in positions of power and influence. In spite of the launch of the UK’s Women in Finance Charter and the many signatories to it, women hold fewer than 25% of today’s leadership roles in the finance industry. Some reports and articles, such as this one from STEM Women, state that the figure is even less than that. When you then include the additional dimension of race, the statistics are worse still. Ethnic minorities make up less than 20% of employees in the UK’s banking and finance industry, according to government statistics, and at the most senior of levels the data is even more stark. In 2020 out of the 650 senior investment bankers in the UK, only three were black, as reported in this Financial News article. When there are very few or no role models in positions that matter to ambitious and talented individuals in the earlier stages of their careers, the message sent is that ‘this is not a position for you!’
3. Inadequate accountability
Gender pay gap reporting is slow in its prevalence across the industry and ethnicity pay gap reporting is very much behind. As recently as 2019, 90% of the industry in the UK still had not started the reporting of its ethnicity pay gaps. Although the UK HR association, the CIPD has requested that the government mandate ethnicity pay gap reporting for all FTSE 100 companies by 2023, there is little strong evidence that there will be consequences if they do not comply. On top of that, according to the Financial Times, the number of companies participating in gender diversity reporting has declined.
On the issue of disability, through the creation of the valuable 500, a number of organisations from the finance industry have signed up to enabling equality, which is a laudable initiative. Once again, it would be great to see accompanying methods and measures of accountability that will ensure effective implementation and ultimate achievement.
4. The pace of progression
As far back as 2016 it was reported in the Harvard Business Review that the pace of career advancement of women in the finance industry is slow. Today, the landscape is no different. A recent article by the Financial Times states that the gender pay gap has widened in industry generally, despite the push towards it. This is an indication of higher rates of attrition as well as the slow pace of progression. Women in the industry also report feeling that their career progression is blocked by male managers. For finance industry talent who are from ethnic minority backgrounds, the pace of progression is slower still and made more challenging. Two thirds of those with minority backgrounds report experiencing discrimination in the workplace. Demonstrating the confidence to go for promotion regardless of gender or race increases when you know you are valued, welcome and belong. It comes if there is belief in the presence of fairness and equal opportunity in the organisation, which currently the evidence available does not present.
What does all this mean for the finance industry? The light at the end of the tunnel is the fact that with every problem or issue there is a resolution and a way to turn things around. What it requires is a decidedness and a commitment by leaders in positions of power and pivotal decision-making roles to genuinely drive change. This means change beyond the rhetoric. It means a willingness to step up and be role models in the industry. The keys to change lie not in the hands of government or research bodies. They lie in the hands of organisations and at the forefront of business is the finance industry.
Yetunde Hofmann is a board-level executive leadership coach and mentor, global change, inclusion and diversity expert, author of Beyond Engagement and founder of SOLARIS – a pioneering new leadership development programme for black women.