Boss Lady

Are women changing the makeup of the financial C-suite?

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While the financial industry is acknowledging the need for greater gender diversity at the executive level, it’s been slow to realize this goal.

In North America, women make up more than half of the entry-level positions in the financial services industry, according to research from McKinsey and LeanIn.org. Despite that, the number of women who are members of the financial C-suite is just one in five.

Despite those numbers, the vast majority of financial services companies surveyed by McKinsey had made a commitment to gender diversity. At least 90 percent of those firms believed that greater gender diversity helps companies perform better. And the numbers back that up: Those companies in the top quartile for gender diversity on executive teams outperform on profitability by 21 percent and are 27 percent more likely to demonstrate superior value creation.

There are additional signs that trends are changing. Research from Deloitte showed that, while women’s representation remains below parity, it is on the rise. In fact, the overall proportion of women in the C-suite rose to 27.9 percent in 2019 from 18.6 percent in 2010.

Of course, there are a number of high-profile women heading up financial services companies. Dorothy Savarese is CEO of Cape Cod Five Cents Savings Bank; Nandita Bakhshi is CEO of Bank of the West; Stacy Hodges was hired in 2017 by NexBank as its CFO. These are just a few examples of women stepping into power positions at respected firms.

Still, even within this changing cultural climate, one question looms large: Why aren’t there more women sitting at the executive table? One might assume that the number should be in line with the number of women who begin working in the industry, but those numbers don’t pan out. Rather, women occupy 20 percent of executive committee roles and 22 percent of board positions, as the Harvard Business Review points out.

For one, a woman’s prospects are significantly worse in the financial services than in other industries, according to research conducted by Mercer. Women are more likely to leave the industry than men, or to reduce their level of ambition around the point in their careers where they would need to make more effort to progress.

The same research showed that, in many cases, the industry may still be struggling with unconscious biases and gender-role expectations. The overt sexism of the past may have largely been extinguished, but there is still progress to be made.

Whatever the current situation, it’s obvious that more needs to be done — not just for cultural cache, but for financial reasons as well. An investment in gender diversity yields positive dividends as far as performance, value, and talent are concerned.

To succeed, a commitment needs to be made by all leaders in the financial services industry and others to move toward parity. But whether it’s a question of profits or fairness, financial services firms need to make a concerted effort to change their corporate cultures or risk losing the talent of women in the industry and the confidence of their female clients. It may be a price they can’t afford to pay.

About Andrea Toulsen

andreat@thebusinesswomanmedia.com'

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