A new report from McKinsey looks at the women in the financial services industry in North America, in the expectation that the findings will be pertinent even beyond the expanses of North America, that the insights and implications will “have global relevance.”
The research is part of a collaborative effort between McKinsey and LeanIn.org. [LeanIn is a 501 nonprofit organization founded by Sheryl Sandberg, the COO of Facebook, in 2013.]
The report observes that in North America women now account for one half of the entry-level work force in the financial services industry. But they represent fewer than one in five positions in the C-suite, leaving “much work to be done to achieve gender parity” in this sector.
The collaborative effort of McKinsey and LeanIn surveyed 39 companies in the field and interviewed 11 female senior executives.
The Ambition Gap
The report’s authors divided their material on careers in finance into six career stages: entry -level; manager; senior manager; vice president; senior vice president, and C-Suite. The first step, from entry-level to management, is itself a great sorting-point. Equality at the entry-level jobs sector shows immediate disparity.
In part, this is due to an “ambition gap.” Women who begin an entry-level job in finance seldom envision themselves at a top-level position. Only 26% aim for this goal, in contrast to 40% of their male peers.
This relative lack of ambition is part of a self-perpetuating cycle. The report quotes Deanna Strable, executive vice president and CFO at Principal Financial: “Because we don’t have many females in the C-suite, young women don’t see role models or potential paths toward executive level leadership and are more likely to de-select themselves out of higher level leadership roles.”
Quite aside from the ambition gap, there is an absence of support and sponsorship for those young women in finance who may be ambitious. They are less likely than their male counterparts to have managers who act as their advocates and highlight opportunities for advancement. Another interviewee Céline Dufétel, CFO at T. Rowe Price, says: “I think it can be hard for colleagues to relate to you and they’re sometimes uncomfortable giving you feedback or mentorship. They’re not as comfortable going to dinner or having a drink with you and you miss out on those valuable personal interactions.”
There is also the issue of work-life balance. Margo Cook, the President of Nuveen Advisory Services, says: “Finance careers don’t feel friendly to women. Some women are attracted to related industries like consulting or accounting where the structure better allows for them to have kids and then re-enter the workforce without the sense of falling behind.” She believes that the finance industry can and ought to do a better job of that.
Subsectors and Recommendations
The survey found that the size of the disparity of men and women in leadership positions varies from one subsector to another. They look at three subsectors: asset management and wholesale banking; banking and consumer finance; insurance. In each of these the representation of women in the C-suite is about the same (19% for asset management, 20% for consumer finance; 18% for insurance.) But the three subsectors follow different routes to that end. The various stages from management to senior vice president are much more commonly occupied by women in insurance and consumer finance than in asset management. For example, 43% of the managerial positions in consumer finance at present go to women, and 36% of senior management positions. On the other hand, only 34% of the managerial positions in asset management go to women. Further up the pyramid, 28% of the vice presidential positions in consumer finance go to women, and 24% of the senior vice president positions. The corresponding numbers for asset management are 22% and 16%.
McKinsey makes five recommendations toward achieving gender equity across the whole sector:
- Rebrand the industry. Workshops, partnerships, and targeted initiatives can help the industry shed its woman-hostile image;
- Enhance the quality of and access to sponsorship. This involves both formal mentoring and a less formal corporate-cultural shift;
- The elimination of bias and reviews and promotions. The numbers clearly suggest that there is an (often unconscious) bias working against the promotion of qualified women. Although 79% of companies in the sector offer unconscious bias training, only 18% make it mandatory;
- Give employees more flexibility re: work-life balance. Part of this involves “de-risking” the programs that already exist, so that women aren’t afraid that availing themselves of maternity leave will be a career killer; and, finally
- Build accountability through target setting and measurement. The report quotes Karen Peetz, of BNY Mellon, on this: “One powerful thing that our company did was to have HR share stats with leaders about diversity at all organizational levels. We didn’t have quotas, but we had targets for increasing diversity, year-over-year, that were part of our executive committee compensations.”