The proportion of female executives has doubled in 16 years, says the Oliver Wyman consultancy © Getty Images/Hero Images

Set up a meeting with a senior executive at a big bank, insurance company or asset manager, and four times in five you will find a man on the other side of the table. Despite coming close to gender parity when hiring new starters, financial services groups have a poor record when it comes to holding on to their women as their careers progress.

The chances of encountering a senior financier of black, Asian or minority ethnic heritage (Bame) are slimmer still. Of all the big global banks, only Credit Suisse is run by a black man, Tidjane Thiam.

The good news is that in gender diversity, at least, there has been measurable progress in recent years. In fact the proportion of senior women in finance is increasing faster than in most other sectors.

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Oliver Wyman, a consultancy, puts the 2019 tally of female executives at 20 per cent but reckons the proportion has doubled in the past 16 years.

“It’s important to acknowledge the progress,” says Jessica Clempner, lead author of Oliver Wyman’s Women in Financial Services 2020 report, published this month. “More so than ever, there’s momentum. But we’re still a very long way from equality.”

She says boards are realising that this is not just about fairness in the workplace, but about sourcing the best people from the population to bolster corporate performance.

“This is not a moral argument. It’s a business imperative,” she says, pointing to a growing body of research suggesting that companies with a more diverse senior leadership team — particularly in gender terms — outperform the diversity laggards.

Morgan Stanley research, based on its proprietary “Holistic Equal Representation” (Her) score, rates companies on their gender balance at all levels of seniority in a company and points to consistent stock market outperformance by more gender-balanced employers. The annual outperformance by European stocks is an average of 1.6 per cent over the past eight years, with five financial services companies — Santander, Axa, BNP Paribas, Lloyds and UBS — accounting for half of the top 10 companies measured by Her scores and analyst ratings. McKinsey research has also established a clear boost to results at companies where diversity, particularly on gender, is prevalent in the top ranks.

The Financial Times ranking of some of the most inclusive financial services companies across Europe, as measured by data group Statista, throws up a wide spread of employers. Big-name US and UK groups American Express, JPMorgan and Lloyds are in the top five, but so are lesser-known names including Germany’s Berliner Bank and Austria’s Oberbank.

Unlike many other studies, the data reflect the experience of staff, collected through interviews, and not just employers’ stated policies or the percentages of straight, white, able-bodied men in senior roles.

The big question is what works? What makes for a genuinely diverse bank, insurer or asset manager? Experts say targets, pay and removing toxic masculinity from the workplace are the three big agents of change.

Not long ago the concept of quotas and targets was taboo for employers. Now a consensus is forming that they are an effective way to accelerate change. Targets have been set by both governments and companies. France was an early mover in 2011, demanding a 40 per cent quota of women on boards by 2017. German supervisory boards must be 30 per cent female.

Some companies have gone further off their own bat. In the UK, more than 350 financial services employers have signed up to the government’s Women in Finance charter, which obliges companies to set and meet their own targets for gender diversity.

The further targets go down through the organisation the better, says Tiina Lee, who heads Deutsche Bank’s operations in the UK and Ireland.

“There needs to be greater granularity to bring targets lower down the organisation,” she says. Deutsche has a goal that women should account for 35 per cent of vice-presidents, 28 per cent of directors and 21 per cent of managing directors.

“Ensuring there are one or two women on shortlists for senior jobs is also crucial,” adds Ms Clempner.

More broadly, she says holding senior managers to account for their ability to promote women can counteract the traditional attrition of female staff as careers progress. The financial services industry is “fine at hiring women,” she says. “But it really struggles with retaining them. At every level of seniority, women are more likely to leave than men.”

That may be due to not returning from maternity leave, being overlooked for promotions or not plugging effectively into male-dominated networks.

Clare Woodman, who heads Morgan Stanley’s operations in Europe, the Middle East and Africa, reckons minor changes in management style can be surprisingly important. One subtle tweak she has introduced for example is that committee meetings that used to happen at 7am, in line with trader habits, now take place at 2pm and are no longer dominated by a few men. “Everyone contributes,” says Ms Woodman, who is backed by a female finance chief and a woman in charge of technology, and has 30 per cent women on the European operating committee.

Using pay as an incentive for progress can be a powerful tool. Many companies now make hitting diversity targets part of the bonus packages of managers. Direct rewards for women, such as encouraging a return from maternity leave with a one-off bonus, can also make a difference. Equally, eliminating flipside penalties is crucial. This year the Financial Times highlighted the cases of more than a dozen senior women at UBS in Switzerland, who complained they had suffered lower bonuses, after periods of maternity leave. The bank insisted the practice was not systemic.

Detoxifying a male-centred workplace is an amorphous exercise. Specific schemes can help. Standard Life recently announced paternity leave benefits on a par with those for maternity, echoing an earlier initiative by Aviva and a broader standard of more balanced parental rights across Scandinavia, Germany and beyond. Assuming men are encouraged to take up such schemes, which is often not the case in German business, they can be an important part of a broader shift that embraces flexible working rather than disdaining it, says Ms Clempner. “It really helps if you have senior leaders who show the way,” she adds. “For example, if the boss works four days a week or works some time from home.”

Ms Lee at Deutsche is hopeful that even some of the most notoriously testosterone-filled spaces in finance, like the investment bank trading floor, can be neutralised to such an extent that women can prosper there, too. “At Lehman Brothers,” she remembers, “I was one of two women on a trading floor of 200 people. [But] the City is far less sexist than it was 25 years ago: the heavy drinking and laddish behaviour have subsided. Trading floors these days are far more intellectual.”

Karina Robinson, who has just taken over as master of the City of London’s Worshipful Company of International Bankers, is keen that her time in charge of the association should help advance women’s careers. “Having a figurehead who is a woman makes all the difference,” she says.

While many of the advances in diversity across financial services have been focused on gender, some of the initiatives for change — particularly around target-setting, data-measuring and pay incentives — apply to all forms of more progressive employment practices. Indeed, the UK is currently mulling targets for Bame staff and those with disabilities. Ms Clempner’s conclusion is simple: “Gender,” she says, “should be a Trojan horse for tackling diversity more broadly.”

But no matter how much diversity you appear to have in your organisation, judging it by just looking around the room is not enough, cautions Caroline Kuhnert, who heads ultra high net worth banking for UBS in Europe, the Middle East and Africa.

“Genuine diversity is extremely important,” she says. “But if you have men and women, whether they are white or black, if they’ve all been to Harvard Business School, then they’re going to think the same way. Unless you get people of different backgrounds, you’re not going to get diversity of thought.”

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