The asset management industry needs to recruit and support a diverse workforce, for the benefit of individual companies and economies as a whole, argues Harriet Steel.
In July of this year, 72 UK companies signed up to HM Treasury’s Women in Finance Charter. These firms, which employ over half a million people between them and represent the breadth of financial services, have committed to setting gender diversity on the senior management agenda.
Each institution has pledged to hold a member of the senior executive team responsible for gender diversity, inclusion and setting of targets. They have also committed to publishing progress against these targets and linking pay of senior executives to them. With the government driving the agenda and the support of major financial services firms operating in the UK, the launch of the Charter suggests that the future of diversity in asset management is bright.
Firms are now recognising that increasing diversity in business leadership is less about equality and ethics, and more about value creation and economics. Diversity goes beyond gender.
However, as gender diversity is binary and easily measured, it’s a very helpful prism through which to consider the status of diversity in the asset management industry and business in general.
DIVERSITY ON BOARDS
Evidence shows that businesses led by single-sex management are more likely to be subject to ‘group think’ and by definition have less understanding of a gender diverse client base. Research from MSCI found that gender diverse boards “had fewer instances of governance-related scandals such as bribery, corruption and fraud” (MSCI Governance Issue Report, 2014), while the University of British Columbia found that for each female director on a board, the cost of an acquisition fell by 15.4%.
While the pace of change to date has been stubbornly slow, there are some encouraging signs that diversity has improved – at least at board level. The good news is that across financial services there are more women joining boards per year than leaving them – 18% joining versus 8% leaving last year, so these numbers look set to continue to grow. Within financial services, the asset management sector is faring well, ranking fourth behind banks, pension funds and investment banks, with 23% of board members being female (New Financial ‘Counting Every Woman’ Report on European Financial Services, 2016).
However, the 23% financial services average figure masks the discrepancy between non-executive directors, 24% of whom are female, and executive directors, of whom only 13% are female. This clearly demonstrates that while effort has been put into improving board composition, there is still an imbalance at senior management levels. Is the lack of women due to some inherent systemic gender bias or sexism, designed to keep women out of the top seats? In my experience in asset management, the answer is a resounding no! Even in a male dominated industry like ours, individual instances of sexism are mercifully rare……Article continues in the Autumn 2016 issue of Professional Investor [login required].