Financial services firms need to set specific goals for hiring and promoting women if the gender gap in the financial industry is truly going to change, according to research by McKinsey & Company released Thursday.
Women are poorly represented in the upper levels of all types of businesses, and the financial industry lags behind even those poor results, said McKinsey, a global financial services and banking firm in its report, “Closing the Gap: Leadership perspectives on promoting women in financial service.”
“Financial services firms could push further by consistently setting targets for female representation and promotion rates, and by holding leaders accountable for pursuing those targets. A quantitative approach will likely resonate with individuals in the numbers-driven financial services industry,” McKinsey said in the study, which included data from 39 financial services companies and interviews with 11 female senior executives at financial services firms in North America.
“Ninety-five percent of financial services companies track gender representation across all levels, and 71 percent measure the gender representation of their promotion candidates,” the report said. “However, far fewer financial services companies have clearly defined what they are striving towards. Thirty-four percent set targets for gender representation at senior levels, and 29 percent for more junior roles. But only 11 percent of financial services companies set targets for gender representation in promotions, which is lower than the 18 percent figure for companies overall -- another factor that likely contributes to the lower promotion rates for women.”
Four men reach the c-suite level for each woman who makes it there. Part of the reason for that may be due to the fact that women in entry-level positions think performance determines promotions, while more experienced women said they have learned that political savvy and sponsorships make the difference, according to the report.
The more experienced women in the industry advise those entering the profession to take risks early in their careers such as switching roles, and trying out different types of financial services fields in order to build a broad foundation of experiences that will serve them in future leadership roles.
Even for senior women, the odds are still against them. Senior women are less likely than their male peers to receive substantial support from senior management. Thirty-four percent of senior women said they have received advice on career advancement from a manager or senior leader, while 44 percent of their male peers said the same.
Senior women are also less likely to have frequent interaction about work with senior leaders at their company; 41 percent of women have these interactions at least monthly, while 49 percent of their male peers do. This trend is worse in financial services than the overall average, as 49 percent of women across all industries have such interactions.
Women in entry-level roles in financial services seldom envision themselves in a top executive position: only 26 percent aim for this goal, compared with 40 percent of their male peers and 31 percent of entry-level women across all industries.
In addition to setting specific goals, firms need to increase access to sponsors for women, eliminate biases in performance reviews and promotions, and give employees more flexibility to balance work and life.