The long road to gender equality
The finance industry continues to struggle with the disconnect between talk and action on diversity. Is it time for the activists to shake things up?
Gender diversity once again made it onto the agenda of the World Economic Forum in Davos. Yet looking at the Forum’s own diversity statistics, one would be forgiven for being puzzled. Only 20% of the 3,000 delegates that attended last month were women. It has been that way for years.
This disconnect between the talk about diversity and the reality reverberates throughout the financial industry. Despite the endless female networking events, research papers on diversity and the fanfare around gender lens investment products, the progress being made in hiring for diversity is minimal.
European banks offer some particularly shocking statistics, if they offer any stats at all. Only 38% of UBS’s workforce is female and only 35% at Credit Suisse. Deutsche Bank is a more respectable 42%. HSBC reports having more than 50%, as do nearly all the large US banks – JPMorgan, Citi, Bank of America Merrill Lynch and Wells Fargo. The exception is Goldman Sachs, where the figure is just 37%.
At senior levels, it is even worse – although some banks still do not break out the numbers to allow full insight. At the 10 largest US and European banks, the average female representation among senior management seems to be around 20% (so there is the WEF attendance explained).
As the annual CSR reports hit the printers it will be interesting to see how much progress these banks have made the last year. I am not holding my breath.
When I started in the financial industry more than 20 years ago, there was an insurance brokers in London where, regardless of age or rank, every woman was called “a Doris” and the director would encourage me to perch on his lap during team meetings when seating was limited.
There are plenty more of these stories that my American peers baulk at, claiming such things would never have happened in the US, but I am doubtful. Shortly after moving to New York in 2006, after a meeting with a senior executive at a formerly large investment bank about risk management, he felt it important to comment that I would have no trouble dating in my new city. With such concerns on his mind, it was not a huge surprise a year later when the bank collapsed.
While I have to believe much of this behaviour has died out, or is dying out, the point is that, despite several pats on the back about the amount of resources now given to foster and promote a more equitable and respectful work environment, the journey towards gender diversity in the financial industry has been painfully slow.
This is shown in both hiring and remuneration.
Somewhat surprisingly given the recent presidential pick, the US looks positively progressive in comparison with Europe when it comes to the latter. A 2016 Glassdoor study estimates that men are paid 6.4% more than women in the US financial industry. Yet a 2014 study by the UK government indicated a 24% to 40% pay gap at its country’s banks. Eurostat data from 2013 showed Germany to have a gender pay gap of 30% in the financial sector and Swiss data suggests a gap of around 20%.
Hiding behind aggregated stats makes it too easy for institutions to continue to drag their feet on inequality, but that looks like it is about to change. In December three shareholder activist groups filed proposals to Goldman Sachs, Citi, BNY Mellon, American Express, BAML, Wells Fargo, and JPMorgan to disclose their pay gap.
It will force the hand of European banks to follow suit. Armed with these figures (which I suspect to be worse in the US than Glassdoor suggests), we can expect to see change come and come quickly. For one, female investors are growing in number. In the decade ahead, women are going to be responsible for two-thirds of all financial decision-making and they will not do it quietly – as several million of them marching in unison globally on January 21 tells us.
Second, a generational wealth shift is occurring. Millennials are far less tolerant of inequity than the Generation X-ers like myself, who are prepared just to grit their teeth and pray it will be better when ‘the baby boomers’ no longer run the world. They won’t work for, or invest in, institutions that do not play fairly.
So, while I may be sceptical that this year’s CSR reports will show great upticks in female employee numbers and feel certain that any gender pay-gap disclosures will only underscore what we already suspect, I believe we are reaching a tipping point and we will start to move at a speed more appropriate for the 21st century.
I would still take odds that we are more likely to see a female US president before we see a female CEO at one of the big banks on Wall Street, however.