- 23% of board directors of UK financial services companies are women but only 14% of executive committee members are female
- Our data shows 14% is the natural baseline for female representation, but the UK government is leading a concerted push to improve gender balance
Please find here the latest report from New Financial looking at female representation on executive committees and boards of 200 UK financial services companies.
Gender balance in UK financial services has leapt up the agenda since the government asked Jayne-Anne Gadhia, chief executive of Virgin Money, to lead a review of women in senior management, and launched HM Treasury’s Women in Finance Charter. The aim of this report is to look at the context of the Gadhia Review and the Charter and discuss how the industry can engage with these initiatives as an important stepping stone towards permanent, sustainable change.
The report presents a detailed analysis of the data New Financial provided to the Gadhia Review on female representation on executive committees and boards across UK financial services, as well as a qualitative survey of six of the Charter’s founder signatories to draw out common themes signatories face.
The highlights of the report are:
- Nearly a quarter (23%) of board directors of UK financial services companies are women, but only one in seven (14%) executive committee members are female.
- There is a big difference between excos and boards when it comes to gender diversity – for example, for investment banks, average female representation on boards at 30% is nearly triple that on excos at just 12%. So far, the UK government’s actions (such as the Davies Review) have focused on boards – our data shows this has not impacted excos.
- Whether we cut the data by country, ownership, or the number of people on the exco, the average percentage of women on excos hovers stubbornly around 14%, indicating that this is the natural baseline for women on excos in the absence of public pressure.
- There is a wide range of gender diversity across different sectors in our sample on both excos (from 10% for private equity ranging up to 24% for challenger banks) and boards (just 7% for fintech up to 31% for banking groups).
- Where women do sit on executive committees, they tend to be in support roles (seen as cost centres) rather than “profit and loss” functions (seen as revenue generating or profit centres). We found nearly two thirds of heads of HR (61%) and more than half of heads of communications (52%) on excos were women, but only 9% of heads of a division or region, and just 10% of the C-suite.
- The 23% average female representation on boards disguises the lack of women in executive directorships. The proportion of female non-execs (27%) is nearly four times that of female executive board directors (7%).
- The UK government is now focused on increasing the number of women in the executive pipeline. The Gadhia Review and HM Treasury Charter are catalysts not only for discussion but also provide a clear set of action points – including setting targets for improving gender balance – designed to shift the dial.
- The biggest hurdle for potential Charter signatories to overcome is going to be setting targets. New Financial’s Diversity Disclosure 2015 research shows just 27% of companies publicly disclose any kind of diversity target, 26% disclose a gender-based target, 24% disclose a target for women in management and 10% a target for women on boards. While it won’t be easy, no financial services company would expect sales to improve without setting a clear target and having a strategy to achieve it.
Yasmine Chinwala, partner at New Financial and author of the report, said: “The data clearly shows that without an active focus on improving gender balance in the executive pipeline, it just won’t happen. Companies need to work out for themselves why diversity is strategically important to their business, and the Gadhia Review and HM Treasury’s Women in Finance Charter provide a framework for them to take decisive action for permanent, sustainable change.”
Jayne-Anne Gadhia, chief executive of Virgin Money which supported the report, said: "Too few women get to the top so they leave the industry prematurely because the culture isn’t right, and this needs to change. The social and economic benefits of fairness, equality and inclusion are clear, and getting the gender balance right is proven beyond doubt to enable companies to drive superior results. Financial institutions must embrace diversity in their organisation in order to reap the benefits and help create a more balanced and fair financial services industry.”
Harriet Steel, head of business development, Hermes Investment Management which supported the report, said: “Senior management can often see diversity as a legislative chore, or another target to be met, and may not recognise why diversity is important and the advantages it brings to a business. Men and women approach business differently and their collaboration can lead to more informed decisions and astute risk management. Evidence shows that businesses led by single-sex management are more likely to be subject to ‘group think’ and by definition have less understanding of a gender diverse client base. Change must start within the education system and companies need to follow that with supportive policies that allow all their best talent to thrive.”
Notes to editors
Research methodology: New Financial collected data from 200 companies across 12 different sectors: banking groups, investment banks, challenger banks, building societies, asset managers, diversified financials 1 (a selection of FTSE 350 and AIM-listed companies under the FTSE definition Diversified Financials), diversified financials 2 (market infrastructure, trading platforms, cards and payments systems companies) fintech (financial technology platforms in areas such as investment, payments, alternative lending, crowdfunding, not including information and data), private equity, venture capital, hedge funds. All are regulated in the UK by the Prudential Regulatory Authority and/or the Financial Conduct Authority.
In each sector, we selected UK companies or non-UK companies with significant operations in the UK based on their size, activity, and availability and quality of information. All data was collected in January 2016. All interviews with founder signatories of HM Treasury’s Women in Finance Charter were conducted in May 2016. For further information on how we chose the sample, please contact New Financial.
The Gadhia Review: Last year, the UK government commissioned Jayne-Anne Gadhia, CEO of Virgin Money, to lead a review of women in senior management across UK financial services. The Review team published their findings in March 2016 in the report Empowering Productivity: Harnessing the talents of women in financial services (see http://uk.virginmoney.com/virgin/women-in-finance).
HM Treasury’s Women in Finance Charter: In support of the Gadhia Review’s recommendations, the UK government launched the HM Treasury Women in Finance Charter in March 2016. The Charter is targeting UK-regulated financial services firms with more than 250 staff, but encourages firms of any size to sign. Firms sign the Charter on a voluntary basis. In order to sign up to the Charter, firms have to submit an online firm at https://womeninfinance.org.uk.
About New Financial
New Financial is a think tank and forum that believes Europe needs bigger and better capital markets to help drive its recovery and growth. Diversity is one of our four core areas of coverage. We believe diversity in its broadest sense is not only an essential part of running a sustainable business but a fundamental part of addressing cultural change in the financial services industry.
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About Virgin Money
- Virgin Money offers savings, mortgages, credit cards, current accounts, currency services, pensions, investments and protection products to over 3 million customers across the UK.
- Virgin Money’s business ambition is to make “everyone better off” – this philosophy underpins our approach to business by offering good value to customers, treating employees well, making a positive contribution to society and delivering a profit to shareholders.
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