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Abolish ‘alpha-male’ culture in finance and encourage the progression of women to senior levels says a Treasury Committee report calling for the reform of bonus negotiations and promotion of flexible working.
- Assess bonuses against clear criteria to abolish ‘alpha-male’ culture
- Remove stigma of flexible working by senior men leading by example
- Encourage firms to publish strategies for closing gender pay gaps
- Partners and subsidiaries should not be exempt from gender pay gap reporting
- Firms should re-examine recruitment and promotion policies to eliminate unconscious bias, which will avoid potential applicants being deterred and avoid groupthink
- Culture is the overwhelming reason that women said they do not want to get involved at the senior levels of the financial services sector, which becomes a self-reinforcing barrier. The alpha-male culture in some organisations is evident in bonus negotiations, where it’s perceived that men argue more forcefully for bonuses than women. This can result in higher rewards for men, and acts as a deterrent for women. Performance bonuses should be assessed against clearly objective and formulaic criteria.
- Flexible working can be perceived as a “female” approach to working, and can adversely affect career progression. Long working hours based in the office can be unnecessary in some roles, particularly with modern technology, but a culture of “presenteeism” persists. To remove any stigma associated with flexible working, more senior men should lead by example by working flexibly. This would benefit the entire workforce by enabling all employees to balance personal responsibilities with their careers.
- The average (mean) gender pay gap per hour at banks and building societies in the UK is 35 per cent. The average (mean) gender pay gap for bonuses at banks in the UK is 52 per cent. Now that a large gender pay gap has been confirmed in the financial services sector by firms reporting their data, firms should now be required to publish their strategies for overcoming their gap and supporting the progression of women.
- Company subsidiaries that have fewer than 250 employees, and partners who are remunerated differently to employees, are exempt from gender pay gap reporting. The Committee agrees with the Economic Secretary that this is “outrageous”; subsidiaries and partners should be included in gender pay gap reporting. The Committee has also noted that it would like to see the Chancellor of the Exchequer as vociferous as the Economic Secretary.
- Unconscious bias can influence senior staff recruiting and promoting in their own image. Legacy requirements in recruiting, such as “masculine” language, or requiring a degree or certain hours to be worked, should be challenged to ensure that all requirements are strictly necessary. Firms should re-examine promotion policies and practices to ensure that unconscious bias is eliminated at every stage. This will avoid potential applicants being deterred and help avoid groupthink.
- Encouraging girls to study relevant subjects at school could increase the number of young women entering the financial services sector. Government and industry should work with schools, further education organisations and careers organisations to facilitate such encouragement. This should involve ensuring that young women are made aware of the various career paths in the financial services sector, and where these paths may lead, which could encourage them into the profit-making functions of financial services companies.
- Maternity leave can have a negative impact on the confidence of women, and many women returning to work can go into roles that are less financially rewarding or more junior than the role that they left. Employers can make unfair assumptions about the opportunities in which they may be interested. Industry should keep women up to date on live work-related issues, and should design schemes to assist women when returning to work. The Government should continue to promote the Shared Parental Leave scheme, which allows parents to share childcare, and has had a very low take up rate.
- The gender pay gaps of the regulators show similar trends to the financial services sector. They should continue to improve their representation of women at senior positions and reduce their gender pay gaps so they, alongside the Treasury, can act as an effective role model to industry. The Committee will continue to challenge the Treasury on its appointment of senior staff at the Bank of England, the FCA and all other bodies within its remit to ensure that a diverse pool of candidates is considered with each appointment.
- The Women in Finance Charter has been effective at raising awareness on gender diversity, and the Committee encourages all firms in the sector to sign the Charter. However, there is still a considerable way to go. The Charter is focused on the representation of women amongst senior positions; the Government should consider initiatives to help improve gender balance at all levels of seniority, addressing the pipeline and middle management levels.
- Gender diversity is only one aspect of the diversity agenda. Firms should widen their diversity initiatives and consider the representation of other forms of diversity within their organisations. The Treasury should extend its focus to other forms of diversity in finance, and should start by understanding its own treatment of employees from diverse backgrounds.
Commenting on the Report, Rt Hon. Nicky Morgan MP, Chair of the Treasury Committee, said:
The reporting of gender pay gaps at financial services firms confirms that a large gap exists between men and women working in finance, in part due to significantly more men than women in higher earning and more senior positions.
The benefits of gender diversity are highlighted in the report, including better financial performance, reduced groupthink and more open discussions.
The next step must be for firms to set out how they will abolish their gender pay gap and support the progression of women. Firms should focus on changing the culture in financial services firms, which remains a deterrent for women, especially the bonus culture.
In the current bonus culture – whereby individuals argue how well they have performed – it’s perceived that men argue more forcefully for bonuses, which can disadvantage women. This should be replaced by a system where performance bonuses are assessed against objective and formulaic criteria.
Firms should also encourage flexible working, promote returner schemes for women on maternity leave, and re-examine their recruitment and promotion policies to eliminate unconscious bias – people recruiting in the own image – to avoid both group think and potential applicants being deterred.
Industry, Government and the regulators all have a role to play in pipeline management. Encouraging girls to study subjects at school could increase the number of young women entering the financial services sector, and careers organisations can ensure that young women are made aware of the various career paths in the financial services sector.