Where are all the women?

More women than men are employed in financial services, yet women only made up only 14% of executive committees in the sector. Susan Vinnicombe, argues why harnessing the talent of women at senior executive level is simply good business.

Words: Professor Susan Vinnicombe, CBE
Illustration: Mark Airs

One of the few areas where we have seen an increase in women in leadership positions is politics, particularly if you look at Asia where in the past 60 years there has been a dramatic rise in the number of female presidents and prime ministers.

The process of becoming a political leader is entirely different from becoming a leader in banking and financial services: it’s democratic, and therein lies the rub. Democracy is missing in organisations. The key reason we don’t see more women in senior executive positions in corporates and even in the public sector is that there isn’t a democratic, open and transparent process for promotion. It is fraught with bias, which stems from the fact that men have traditionally designed organisations and held the ‘power’ positions.

Women are not consciously being kept down; instead ‘unconscious bias’ runs through organisational structures. The psychologist who came up with the term has done everyone a disservice: I hear so many senior directors say, “We can’t help it, it’s unconscious bias.” But they can help it by understanding that there is a bias and then drilling down to uncover what is going on in their organisation.

The lack of female senior executives is becoming an increasingly urgent issue. When I first began my research more than 30 years ago, the reasoning for under representation was that women weren’t qualified or didn’t have the right skills. Girls are now much more educated than boys in what is a global phenomenon both across the developed world and in emerging economies. They outperform them at every level of education, so it’s not a question of human capital.

This is reflected in recruitment, where many organisations are at parity when hiring at entry and graduate level. In fact, law firms have to fight for an equal number of genders as more women are now entering the profession than men. Women are moving into organisations — the problem is that they are not progressing.

The glass ceiling doesn’t exist
You may have heard of the clichéd glass ceiling, but it doesn’t exist — there isn’t one point in an organisation that women reach and then drop off. What our research shows is that the issue begins very early on and women are less likely than men to be promoted from entry-level to managerial roles — so before childcare responsibilities, which are too easy to blame.

In the workplace, women are treated differently from men in all kinds of ways — some positive, some negative. Too many female professionals don’t receive challenging feedback from their male managers as the latter feel uncomfortable giving it. Women, as well as men, must be given critical and constructive feedback, so they receive the same opportunities. Otherwise when it comes to promotion, managers will conclude that women don’t have the same experience as their male peers.

Facebook’s COO Sheryl Sandberg has been a strong advocate for women ‘leaning in’ — or self-promoting. In her most recent research, one of the biggest findings was that women are negotiating for raises and promotions as often as men — challenging the theory that women don’t ask. They are turned down much more often, partly because women who negotiate are viewed as ‘aggressive’ or ‘bossy’, according to the research. Male senior executives need to stop and reflect that men are not the norm, and take a hard look at the lack of women in their organisation’s leadership roles.

I’m a proponent of having targets at every level in an organisation. In 2011, the Lord Davies Committee [Vinnicombe was a member of the Lord Davies Steering Committee on Women on Boards from 2010–2015] set a target to increase representation of women on FTSE 100 boards to 25% by 2015. The Committee chose targets over quotas as we believed it would have more impact on changing the culture of companies. The UK met the target and it has now been extended to 33% by 2020.

The success in the last decade of addressing female under representation on boards shows that targets can drive improved gender balance. Organisations have a talented pool of men and women at entry level, so they need to ensure that the right number of jobs go to women as they do men proportionally at every level.

Of course, if a woman has taken a year off to raise a child, she won’t have the equivalent years of experience as her male peer. But organisations need to analyse the gender breakdown of promotions and set internal targets, as it simply isn’t done. The HM Treasury and Virgin Money report ‘Empowering Productivity’ also recommends appointing an executive who is accountable for improving gender diversity at all levels of an organisation, with bonuses tied to achieving internal targets.

It’s just good business sense
Aside from the moral and social obligations of women being fairly treated and represented in the workplace, it is simply good business sense: a gender-balanced workforce enhances companies in terms of talent, performance and reputation.

Take the sheer waste of talent. Organisations invest in recruiting talented women at graduate level but they only have 10% of that talent at top level, so they are not fully utilising the skills of all employees. Another important point is reputation. Women are attracted to companies where they can see opportunities for progression. If they don’t see women at the top, it puts them off, and this is particularly relevant in banking.

Women make up a large proportion of financial services’ customers; in the United States alone, women control 50% of private wealth. This is not true in every industry; mining, for example, has been very resistant to gender diversity. However, it’s shocking to think that retailers like Mothercare, which is clearly aimed at expectant mothers, had no women on its board just five years ago. This is an extreme example of an organisation serving a market dominated by female consumers and yet having no female board members. An organisation’s leadership team must surely reflect the market it operates in to better understand its customers.

The final argument is performance. There is research correlating the strong financial performance of companies to female representation on boards; however, I don’t agree with it: for a global company to correlate its performance to three women being on the board is tenuous as there are so many other variables involved.

Yet, there are a whole host of other non-financial measures, which are evidence of better performance in gender diverse companies. Research has shown that women have a more robust sense of corporate governance than men. They also bring different qualities to leadership, and are more likely to monitor, challenge and ask for clarification — not to say this is better than what men do. They tend to be more supportive of CEOs and bring their own networks to their roles, which of course is a big resource at board level. Neither gender makes better or worse leaders; diverse perspectives result in better decision making.

Normalising behaviour
In the last 10 years, many banks have focused on rectifying the lack of female senior executives and invested time and money into diversity initiatives. Lloyds was one of the first to set targets, aiming to have 40% of women in senior management by 2020, which is very ambitious. But ultimately what has been achieved has been disappointing; diversity inevitably falls off the agenda in the times of crisis and unless there is engagement at the very top, nothing will change.

“When more women joined boards and started challenging decisions, it legitimised the behaviour for everyone — illustrating how behaviour can become normalised and culture can change.”

I recently carried out research with two Icelandic doctoral students who both sit on boards. Unlike the UK, the Icelandic government took hold of the country’s three major banks after the crash and sacked their directors. When the government reconstituted the boards, it chose 100% women in one bank, in another it was 80%, and in another 60%, which comes back to my first point about the lack of democracy in corporates. Here, it was the government, not the banks, hiring the most competent people, which ended up being primarily women. My colleagues found that as the boards became more diverse, there was less differentiation between genders. They concluded that when more women joined boards and started challenging decisions, it legitimised the behaviour for everyone — illustrating how behaviour can become normalised and culture can change.

While the number of women on boards in the UK sits at 25%, this has mainly occurred through increasing the number of women in non-executive directorship positions, rather than executive directorships, which again highlights the wider problem of the lack of women in senior managerial positions.

I currently sit on the Advisory Board of the Sir Philip Hampton/Dame Helen Alexander Review on the lack of women in the executive pipeline. It has recommended that companies listed on the FTSE 100 should have at least a third of their executive pipeline positions filled by women by 2020. It’s not about fixing the women: it’s about fixing the organisation, and understanding the vital role of men and women working together for the overall benefit of the organisation.

Professor Susan Vinnicombe, CBE, is Professor of Women and Leadership at Cranfield School of Management. Susan was Founder Director of the Cranfield International Centre for Women Leaders from 1999 to 2016. She has consulted for organisations in more than 20 countries on how best to attract, retain and develop women executives. In 2016, she was made a Companion of the Chartered Institute of Management and honoured by the International Women’s Forum (IWF) Washington as a woman who has “made a difference” in the world. Susan authors the annual Female FTSE Board Report.

Based on an interview with Christina McPherson, Senior Editor at White Light Media

This story is taken from the fourth issue of Poppy. Our print run is strictly limited but, if you are based in the UK and work in financial services, you can request a printed copy via the ReadPoppy.com website.