The second annual report on the Women in Finance Charter, an initiative sponsored by the U.K. Treasury to redress gender imbalance in the management ranks of financial firms, just landed. The good news is that there has been an improvement in the past year. The bad news is there’s still a long, long way to go before the industry meets even its self-set targets.
Of the 123 signatories to the charter, 45 percent had met their targets for female representation in senior management by the end of September, while 42 percent said they were on track to do so. But 10 percent reported that they weren’t likely to meet their targets, and the remaining 3 percent simply failed to provide data. Why sign up to a charter and then fail to report how you’re doing?
For the 67 firms that still had a ways to go, the proportion of senior roles held by women increased to an average of 31 percent last year from 29 percent in 2017. The report estimates that it will take three years to meet their average target of 38 percent – if they continue at their present rate of improvement. That’s a big if.
More worryingly, though, more than a quarter of all the firms surveyed failed to improve their gender balance at all in the year.
Most of the industry groups in the survey increased the percentage of women in management roles. But investment banks and asset managers remain stuck at the bottom of the rankings with the most left to do.
For the fund management industry in particular, that lowly position presents a problem at a time when investors are increasingly urging companies to swell their ranks of female managers. It’s a more than a bit hypocritical for asset managers to wag their collective finger as they strive to include environmental, social and governance considerations in their investment decisions when their own houses are so far from being in order.
One solution to motivate firms to improve their gender balance is to link executive pay to the targets. As I’ve argued before, one of the best ways to stop male, pale and stale managers from promoting solely from within their own ranks is to punish them financially for failing to cast their nets wider.
Signatories to the charter that offer performance-related pay to their managers have to pledge to include gender diversity in how that compensation is measured. Almost a third of the 96 firms that encompasses say the link has been effective.
“It is very early days to really analyse the impact of this Charter principle,” the report says. The authors are correct. But making the remuneration of those in a position to do something about improving the gender balance more dependent on shifting it would provide a financial stick to beat recalcitrants with. Actions, not words, are still in too short supply when it comes to fixing finance’s lack of senior women.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mark Gilbert is a Bloomberg Opinion columnist covering asset management. He previously was the London bureau chief for Bloomberg News. He is also the author of “Complicit: How Greed and Collusion Made the Credit Crisis Unstoppable.”