The UK government commissioned Jayne-Anne Gadhia, CEO of Virgin Money, to lead a review of women in senior management across UK financial services last year and its findings were published in March 2016. The main recommendations were that companies: should set their own internal targets against which they publicly report progress; an executive must be accountable for improving gender diversity at all levels of their organisation and in all business units and executive bonuses should be explicitly tied to achieving internal gender diversity target. The UK government responded by setting up the Charter in which firms pledge to meet Gadhia’s recommendations.
New Financial’s report analysed female representation on boards and executive committees (excos) at a sample of 200 companies across UK financial services, and found that while women hold nearly a quarter (23%) of board positions, they comprise just one in seven (14%) of executive committee members. Looking at the financial services sector across Europe there is similar disparity – within France and Germany both have board quotas for women and do better than UK boards, but again female executive committee representation lags, particularly in Germany, where the proportion of women on boards at 27% is more than three times that of excos at 8%.
The 23% average for UK boards also disguises the fact that the majority of the female board members are in non-executive director positions – according to New Financial the proportion of female non-execs (27%) is nearly four times that of female executive board directors (7%). There is also a wide difference between different sectors of financial services within the UK. For example, women make up just 7% of the boards of financial technology companies compared to 31% for banking groups while women comprise just 10% of private equity executive committees and 24% of challenger banks’ committees.
The study found that in cases of financial services firms that have non-UK owners there is better female representation on the boards – 28% compared with 20% – because, New Financial said, 90% of the non-UK boards are of listed companies, whereas only half of the UK sample is listed. However, there is better female representation on the executive committees of UK companies – 15% compared with 11%.
New Financial interviewed six of the Women in Finance Charter’s founder signatories to draw out the common themes signatories face. The biggest challenge for potential Charter signatories to overcome will be setting targets. New Financial’s Diversity Disclosure 2015 research showed 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. The Charter is voluntary, and asks companies to choose their own target that fits in with their own diversity strategy for their own business needs. However, New Financial, believes if the financial sector do not appear to be making improvement it could risk a more prescriptive approach by the government.