Jayne-Anne Gadhia of Virgin Money has today published the report of her review into the representation of women in senior managerial roles in the UK’s financial services industry. Analysis of data prior to the review highlighted that female progression from middle to senior levels of management is worse in financial services than in any other sector.
In response to the report, HM Treasury is launching the ‘Women in Finance’ Charter asking financial services (FS) firms to commit to key industry actions. Virgin Money has committed to sign the Charter on the first day, together with Lloyds Banking Group, Barclays, HSBC, Royal Bank of Scotland, Columbia Threadneedle and Capital Credit Union. The Treasury will publish a list of firms who have signed up to the Charter after three months. The key features of the proposed Charter are:
- The Charter will be voluntary and will apply to all FS firms as defined by the FCA and all firms that are headquartered overseas but with significant operations in the UK
- Participating firms will be expected to set out their approach to each of three overarching recommendations: reporting, executive accountability and remuneration
- Reporting: firms should set their own internal targets, against which they publicly report progress. The report encourages firms to publish metrics on gender balances at all levels of the organisation (in individual business units as well as by broad job functions)
- Executive Accountability: there should be an Executive accountable for improving gender diversity at all levels of the organisation and in all business units. This recommendation reflects the tone of the Senior Managers Regime in assigning accountability for specific roles and responsibilities
- Remuneration: executive bonuses should be explicitly tied to achieving the internal targets which firms have set for themselves. It will be up to the institution to determine how this should be done
- FS firms will have to report annually on progress against their targets which would be set annually or up to a three year basis
- There will be no sanctions for non-participation
The report also outlines ten positive actions that can be taken to improve inclusion in the workplace, including investing in supportive people managers; providing technology to support flexible working; ensuring pay structures are transparent; and implementing good flexible working policies.
We anticipate that FS firms will find that their greatest challenge lies in the report’s third recommendation: explicitly tying the bonuses of executives to achieving greater gender balance. The report notes that remuneration structures and links with variable pay can be an effective tool to change behaviours but the mechanism for doing so is left to individual firms to work out.
The report can be read here: http://uk.virginmoney.com/virgin/women-in-finance/