Female representation among senior management in the financial services industry has stagnated with little progress made in 2021, according to the annual review of the Women in Finance Charter.
The government’s Women in Finance champion has called the latest figures a “stark warning” and a “cause for concern” while the review authors said the industry needed to “heed the alarm”.
It is the first time that female representation at the top has remained unchanged since the charter was launched in 2016, with the latest annual review showing it remained flat at 33%.
Women in Finance champion and Aviva group chief executive officer Amanda Blanc warned that if action wasn’t taken the industry could spend all its time “trying to plug leaks”.
“We are stagnating. The percentage of females at the top has remained flat for the first time,” Blanc (pictured) said.
“This is likely down to firms not taking diversity and inclusion (D&I) into account when they redesign their organisations, but whatever the underlying cause, it should act as a stark warning to all of us.
“We have lots to celebrate, yes, but there is also cause for concern, a concern that we need to use to redouble our efforts.
“We must embed D&I into everything we do because the lack of progress this year shows that if we don’t, we will spend all our time trying to plug leaks.
“We have to crack this – so let’s accept this warning and redouble our efforts to ensure that ours is the generation that finally made this glaring inequality a historical anomaly,” she added.
Blanc did offer some positive sentiments, noting that charter signatories had upped their game around data with a huge increase in the number of companies collecting diversity data.
And she applauded signatories for being much more ambitious about their targets with more firms are focusing on their talent pipeline rather than recruitment practices alone.
But the annual review revealed that a third of signatories to the charter reported a drop in the headline rate of female representation in senior management.
This was a big increase on the previous year’s data when 27% of signatories reported a decrease, and the 70 firms in 2021 was the highest number of signatories reporting a drop since the charter’s launch.
There was some encouragement as almost two-thirds of signatories (60%) increased their proportion of women at this level.
Six of the nine sectors increased their average level of female representation in 2021 compared to seven in 2020, and the increase of one or two percentage points was similar to previous years’ data.
However, there was a drop in the average level of women in the fintech group, which marks the first time a sector has moved backwards.
Reasons for slowdown
Three factors were put forward as being behind this industry-wide slowdown:
- the impact of two years of Covid-19;
- 40% of signatories had a target of 33% or lower, and signatories tend to focus on reaching their target rather than exceeding it;
- and moving from 33% towards parity is far harder than moving from 25% to 33%.
Overall, across the 209 signatories in 2021, levels of female representation ranged from as low as 11% all the way up to 70% with the global and investment banking industry having the lowest average at 26% and the lowest average target of 31%.
More than a third of the 209 signatories had met or exceeded their targets by the end of the year, but they had an average target of 35%, lower than the overall average of 37%.
There was also evidence that once firms fall behind their target they do not catch-up – 76 organisations had a 2021 deadline of which 31 missed their target and most had already fallen behind prior to 2021.
Signatories were asked if they had reviewed the actions they were taking to achieve their targets to ensure they were inclusive to women across all diversity strands.
While 83% answered yes, most of the responses outlined general actions beyond female representation, rather than how they were testing the inclusivity of their charter actions.
Most signatories were taking a siloed approach to diversity strands, and commonly extended or replicated existing programmes, which were often put in place to deliver charter targets, to under-represented groups.
‘Heed the alarm’
New Financial partner Yasmine Chinwala and senior adviser Jennifer Barrow, who were lead authors of the review, concluded that progress was mixed in 2021 and put 10 points forward for the industry to consider.
“On the upside more signatories met their targets, raised their ambition on targets and expanded their focus on diversity data; but on the downside year-on-year progress stalled at 33% female representation in senior management,” they said.
The 10 discussion points raised included:
- Step up in challenging circumstances: The industry will require diverse perspectives more than ever, in order to innovate and respond to those in need, and to increase productivity of the workforce as a whole.
- Heed the alarm: This slowdown needs to be a clarion call for action –to redouble efforts on data, accountability and building a sustainable pipeline – because as this Annual Review shows, once companies fall behind it is difficult to catch up.
- Prepare for a steep climb: While it has not been easy to shift female representation from the low 20s to 33% today, moving from 33% to parity means taking on the toughest challenges – such as cultural change, misrecognition and misevaluation of merit, and defaulting to like-for-like experience rather than skills when hiring. These areas are complicated, resource intensive and will require sustained effort and leadership.
Economic secretary to the Treasury, John Glen said: “Diverse representation and gender equality in the financial services sector is good for business, good for investors and reduces barriers to growth and enterprise.
“I welcome this year’s progress, but settings targets is just one part of the process – I am today calling on firms double-down on their to commitments and continue to deliver greater gender-equality in the workplace.”