• Marian Bloodworth, Employment Partner at Kemp Little


• 13.09.2016 08:00 am
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Marian Bloodworth, employment partner in the Financial Services group at technology law firm Kemp Little, discusses the push for gender diversity in financial services

Recently we have seen the resignation of Saatchi & Saatchi executive chairman Kevin Roberts after making widely condemned comments about women not wanting senior roles at companies. Roberts also spoke out saying the problem of sexism is “way worse” in other industries such as financial services.

This may be the case, but there are signs of change. The Women in Finance Charter is a Treasury Backed initiative offering the chance for financial services firms to be more diverse by asking them to make their commitment to gender equality real and public. In July, the Treasury revealed the success of the scheme to date as 72 financial services firms, representing over 530,000 staff are now signed up to the Charter commitments. 

The Charter came out of the Jayne-Anne Gadhia review of the representation of women in senior positions in financial services, published in March 2016. The firms that have already signed up to the charter encompass a range of financial services providers and also include advisors and industry bodies, such as the BBA and FCA.

Although the firms signed up to the charter are publicly acknowledging that there is still work to do, there are a number of notable absences on the signatory list at the moment. These absences include a number of the big Wall Street banks, other investment banks and the Bank of England.

While the aims of the charter are laudable, complying will be a complex challenge for many firms – particularly where they operate on a global basis, they have existing diversity strategies which do not exactly replicate those of the Charter and they need to discuss the initiative at a senior level before committing.

So what is preventing financial services players from publicly committing to the Charter?

Being public about gender diversity

Signing up to the Charter indicates that firms agree that the progress of women in their industry and specifically their own organisation is not what it should be. The Charter requires a senior executive to agree to be responsible and accountable for meeting the Charter commitments. Firms may have difficulty finding a senior individual willing to add this initiative to their portfolio of responsibilities, not least as success in this role will fall to be judged not by the regulators, but by the manager’s senior peers internally – including the Board, as well as the Treasury and the court of public opinion. Who will hold the senior executive accountable internally, will this involve a change to their contractual terms and conditions, how will they be supported to achieve their aims and against what targets will they be judged?

Setting and publishing internal targets and progress against them

Much more granular reporting on firms’ gender splits, with statistics on hiring, promotion and exit and gender splits at every level of the organisation are needed to reveal a true picture of the gender balance within financial firms. However, with openness comes the risk that employees will use the information to inform internal grievances, equal pay claims and discrimination arguments. Reporting such data also puts the onus on firms to collate and maintain accurate records – an additional responsibility for Human Resources.

Aligning executive remuneration to diversity targets

When the Charter first came out in March, some firms expressed reservations about linking bonuses to diversity. The issue raises questions of bonus plan design, including the metrics against which progress on diversity will be measured. This may well involve a change of existing contractual entitlements. Will balanced score cards be required and will bonus evaluation for diversity purposes need to tie in more generally with senior executives’ performance appraisals? Which levels of executives should fall within the remit of the scheme and who in each firm will decide whether bonuses should be awarded or conversely, docked, and on what grounds?

There is, and will continue to be, an on-going focus on the progression of senior women at work generally. The recent extension of the 30% female board members target to firms in the FTSE 350, and the introduction of gender pay gap reporting will ensure that this remains a key business issue. However, if financial services firms are to continue performing well in the UK, they must harness the skills of a diverse workforce. For many financial services firms, the business, reputational and cultural risks of not signing up to the Charter may well mean that by October, the number of signatories to the Charter will have increased significantly.