Women in finance: beyond the 'glass ceiling'

Four decades have passed since management consultant Marilyn Loden coined the phrase “glass ceiling” to describe the invisible barrier blocking the way for women to progress to senior positions. In the financial services sector, the ceiling seemed to be made of toughened glass. But does the metaphor still adequately encapsulate what’s happening today, or has the quest for gender balance shifted its focus?

London Business School alumnae Sarah Bates, founder of the Diversity Project, Chair of the Diversity Project Charity and former Chair of St James’s Place Wealth Management Group, and Clare Woodman, Head of Morgan Stanley’s EMEA (European, Middle East and Africa) division, have a wealth of insights to share.

Despite the #MeToo campaign and the attention given to the gender pay gap, attempts to increase both the number and advancement of women in the financial sector are moving slowly. “The pace is not where any of us would like it to be,” says Woodman. “The metrics are not showing the direct result of this significant momentum we have at the moment.”

Bates agrees, saying that in her field of investment management, “Something hasn’t changed.” Citywire’s Alpha Female Report 2018 shows that only one in nine UK fund managers is a woman. She notices that there seems to be more female fund managers aged over 55 than younger women entering the profession and recently heard that only 13% of the graduate applicants to a large asset management company were female. She says: “For a while, a career in financial services was what people wanted to do after business school. Perhaps tech firms are now attracting that talent?”

Something seems to be putting women off opening the door to careers in financial services long before hitting the glass ceiling is even a possibility. Woodman says Morgan Stanley has made good progress with its early outreach programme, in which senior women visit schools to tell girls about the range of career opportunities in the sector – and to debunk some of the myths surrounding it. Subsequent graduate recruitment figures prove that this outreach is working, but both she and Bates agree that firms need to look very carefully at the best ways of finding new talent.

Casting the net more widely

Bates questions whether institutionalising the recruitment process and making it ostensibly more objective has replaced one sort of elitism with another by attracting only “a certain type of very competitive and capable alpha male or female” to investment management. To reach the broadest range of candidates, companies need to scrutinise every stage of how they recruit.

This starts with job adverts in which, Woodman says, the style of language makes a huge difference. Bates agrees. “You have to be very careful about specifying candidates’ qualities,” she says. “There’s academic evidence that if you use language like ‘highly competitive,’ ‘warrior’ and ‘outstanding’, you put off most members of the human race.”

When it comes to shortlists, she is very clear: ‘If you haven’t got women on shortlists, you must jolly well ask why not.’ Woodman recommends that recruiters think more broadly – going back to look at candidates for a second or third time, or enlisting the help of an additional search firm to see if different names come up. “Be dogged and determined,” she advises. “If you consistently emphasise diversity, people work harder at coming up with more balanced shortlists.”

Screening tests can also throw up problems. Bates points to US research showing that women taking online multiple choice maths tests for university entrance scored significantly lower than men (who were more willing to guess and performed better when up against the clock), but that their results significantly under-predicted performance in final exams. Timed tests reward a particular personality type, but may fail to measure other qualities important in the workplace, such as the ability to gather and evaluate information and to express ideas clearly.

Andy Haldane, Chief Economist at the Bank of England, has suggested another way of interpreting test results. He gives an example of a situation where two candidates sit a test for a job. Candidate A scores 8 out of 10 and Candidate B scores 4 out of 10. Most people would employ Candidate A. But if Candidate B correctly answers the two questions that Candidate A got wrong – or that the majority of the company’s existing employees got wrong – there’s a strong case for employing Candidate B.

Employing the higher-scoring candidate may look like a less risky strategy, but hiring people from the same background who all think alike actually increases risk. There’s less debate, fewer questions are asked and ideas go unchallenged. Haldane points out: “Groupthink was the reason most banks – as well as many regulators, central banks and academics – failed in 2008.” As lack of diversity was the cause of these failures, greater diversity can be the antidote to their recurring in future.