Why Women in Banking Lag in Leadership Roles
Below, we take a look at the stalls women in banking continue to experience on the path to leadership.
Women in Banking & the Stall to Leadership
A recent article in the New York Times summed it up succinctly: “The banking industry has relatively few female leaders.”
At Europe’s largest banks, women hold just 20% of management positions, according to the European Banking Authority. It’s only slightly better in the US, where women accounted for just under 22% of leadership roles at financial institutions, according to Deloitte’s 2019 study.
Women in banking and finance experience a promotion gap, where men take about 6.6 years to be promoted compared to 7.4 years for women, according to ADP.
And getting promoted isn’t easy. Women in banking report that they must be more creative to get ahead while ordinary performance was enough for some male counterparts. According to data compiled by Banking & Finance, a non-profit group in London, 50% of women interviewed used the word “mediocre” to describe men who fared better than women. The women said that their success often depended upon finding niche areas to showcase their performance while men could take ordinary, traditional paths and succeed.
– European Banking Authority
Absence of Women Leaders Creates Risk
Experts agree that a lack of diversity can create a high-risk environment for unethical and illegal activity. When one group dominates decision-making, it’s easy for a “look the other way” culture to thrive when members of the dominant group commit crimes. As an example, organizations with few women at the top may be less likely to discipline men for non-compliance with company policies, even including illegal behaviours, such as sexual harassment.
In fact, when it comes to gender discrimination claims, banks are among the most-penalized corporations over the past two decades, according to Good Job First’s Big Business Bias Report.
Men Are Making a Difference for Women in Banking
Here’s the good news. Men in business and in politics are speaking up and supporting women.
In Europe, men in several countries helped pass laws requiring public companies to increase representation of women on their boards. Going a step further, France’s Parliament passed new legislation to require 30% of either gender on executive teams and leadership pipelines. This law would affect companies with more than one thousand employees by 2027, which will increase to 40% by 2030.
Additionally, organizations such as HeForShe are making a difference. Started by the UN, HeForShe aims to mobilise one billion men and boys in support of gender equality. Its goal is to engage men and boys as agents of change.
Management Positions Held by Women in Banking
BNP Paribas Group Takes Action
BNP Paribas Group, the European Union’s leading bank, joined HeForShe in 2015. In March 2018, CEO Jean-Laurent Bonnafé became a “Thematic Champion” of HeForShe for 3 years. This was more than a symbolic association. BNP made public commitments such as increasing gender diversity in Human Resources, which is predominantly female, and in Global Markets, which is predominantly male.
The big news: they hit their targets. They went from 15% of women in senior management positions in global markets in 2016 to 21% in 2020 – a 40% increase. And by 2020, they increased women in the leadership talent program for Global Markets to 41%, up from 31% in 2016. They also achieved a 40% increase in the number of male HR business partner appointments. While more work must be done to achieve an ideal gender balance, BNP is an example of one banking giant’s success in setting and achieving public targets.
Changes in the US Affecting Gender Equality
In 2021, Nasdaq proposed its Board Diversity Rule which requires companies listed on its US exchange to disclose board-level diversity statistics to the public. Nasdaq-listed companies that don’t have at least two diverse directors must also file an explanation as to why.
Nasdaq’s new requirement will go into effect in 2023. It’s worth noting that John Zecca, Nasdaq’s Global Chief Legal & Regulatory Officer, is a HeForShe champion.
Men Benefit from Diverse Leadership
Companies that prioritize diversity and inclusion report higher employee engagement, fewer incidences of interpersonal aggression and sexual harassment, and rarer cases of fraud. Reduced legal action, therefore, is an obvious incentive to promote more women to leadership positions.
Interestingly, the IBM Institute for Business Value (IBV) found more men report being satisfied with their jobs when they work at companies with more female executives. And Deloitte reported a “multiplier effect,” as every woman hired for the C-suite at financial services firms resulted in a 300% increase in women in senior leadership roles at these companies.
What Can Men & Women in Banking Do Now?
Bankers know how to balance books, so in theory, tackling gender imbalance should be easy. Like most banking-related work, gender equality starts with numbers.
Does your company track the percentages of males versus females in each position, level, and division? What are your stated diversity goals? Is there a discrepancy between the average time it takes women to earn promotions versus men? Are you tracking compensation by gender?
Enroll Women & Their Bosses in Formal Development Programs
An obvious best practice is to invest in female talent. Today’s organizational psychologists favor coaching programs over “old school” management training courses. The reason? Coaching gets better engagement and is more relevant to whatever challenges your talent is dealing with now.
Specifically, IMPACT Group’s Women in Leadership™ coaching program fast-tracks the development and advancement of women through self-assessment, goal setting, coaching, and learning activities. Our program is different. Some women’s leadership programs come off as an affront to women – as though the intention is to “fix” women or train them to behave more like men. These programs typically don’t involve the female employee’s manager. IMPACT Group takes a much different approach.
Initiate Executive Sponsorship of Women at Your Bank
IMPACT Group’s leadership development program includes high-potential women and their managers, who are usually male. That means the men and women are able to witness executive sponsorship in action.
IMPACT Group’s model is aligned with the spirit of HeForShe in that it encourages male managers to take a more active role in developing current and future women leaders.
“I believe the program has opened many more discussions about how women progress through the business. It is an effective way to challenge the current situation for the better.”
Women in Leadership™ Three-Part Career Accelerator Model
Our three-part career accelerator model guides women to enhance their personal effectiveness, business acumen, and corporate visibility.
However, unlike many other programs, we don’t assume that just because someone is female, she doesn’t know how to read a balance sheet. As an example, a woman with an MBA and 10 years of finance industry experience may want to focus more on her personal brand and corporate visibility and less on business acumen. Through an assessment process and one-on-one coaching, women progress through their own custom development program.
With The Great Resignation causing such a tight job market, overlooking the large pool of female candidates for leadership roles is illogical, particularly when the benefits of gender diversity are so obvious. Learn more about our Women in Leadership™ program here.
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