A comprehensive guide to achieving gender equality in financial services

Gender inequality in financial services is one of the most limiting parts of the industry today. Often unrecognised within organisations, gender inequality is an issue that all sectors of the financial services industry need to focus on. But what is gender equality, and why does it matter?

What is gender inequality in financial services?

Let’s break down what gender inequality really is and make it easier to notice in our day-to-day lives.

Gender equality means that the rights or opportunities of a person are not impacted by gender. While this often refers to women, trans women and non-binary people also struggle with inequality. This can be seen in all industries and sectors.

In many financial services organisations today, inequality results in many women not receiving the same or equal opportunities as men. There are a number of ways in which inequality in the financial services industry impacts women, including:

The gender pay gap in Irish financial services

One of the most prominent examples of gender inequality is in the gender pay gap. This pay gap is not a perceived belief, but it is backed up by data. New regulations require that private and voluntary organisations with over 250 employees must report information on their pay. Public sector employees also have the same reporting requirements. Employers are required to publish both the mean and the median pay for employees based on their gross hourly pay for women and men. The gap between these figures is reported as a percentage. Bonus information, including mean and median bonus gaps, must also be reported.

The information provided by this reporting helps us understand how significant the difference is in pay between men and women. Data from 2022 reporting shows that the gap is widest in the finance, banking, insurance, and construction sectors. The mean hourly pay gap for the insurance sector was an estimated 21.1%, nearly twice the national average. Although the exact reason for the gap varies by company and sector, a key factor appears to be the relatively high number of men in more senior and more highly paid roles, even though in Ireland women make up 45% of the workforce. 

There are fewer female employees in financial service organisations

As you may have guessed, the pay disparity between women and men isn't the only issue affecting gender equality. There is also a significant under-representation of women within the financial services sector, especially at a senior management level. That is, there are simply fewer women in the industry than there are men.

The Central Bank of Ireland's 2018 Behaviour and Culture report looked at the retail banking sector. Its findings led to the proposed new Individual Accountability Framework, with the Bill signed in late July 2022. The report identified a toxic culture in Irish retail banks and the CBI attributed much of this to a lack of gender diversity at a senior level in Irish retail banks. This lack of gender diversity leads to poor decision making and a greater appetite for risk (and we all know where that can take us).

“The Central Bank considers that diversity and inclusion in all their forms are important components of well-managed, financially resilient, strategically-minded firms, and therefore pertinent to the Central Bank’s mandate of Safeguarding Stability, Protecting Consumers.”

Central Bank of Ireland - Behaviour and Culture of the Irish Retail Banks, July 2018

The new Senior Executive Accountability Regime (SEAR) and enhanced Fitness & Probity requirements should help to increase gender diversity within the financial services sector in Ireland and challenge the alpha male-dominated culture that has prevailed since the last century. We have already seen the impact of this within the industry with the CBI's more rigorous interview process for PCF approval.

There are fewer women on boards in financial service organisations

The board of directors of any organisation should be representative of its stakeholders. Diversity in perspectives, backgrounds, and expertise to ensure well-informed decision-making and effective governance. In many banking and financial companies, there are often few, if any, women on the board. This is an important and concerning factor. Financial services organisations need to consider the barriers for women serving on their boards.

Leadership within financial teams often plays a role in every decision made within the company. If there is inequality on the board, it's hard to see how the organisation will successfully create equality within the workforce. Decisions being made from a male viewpoint alone are not inclusive, comprehensive, or representative.

As the saying goes, you can’t be what you can’t see. Women on boards of directors and in other leadership positions within a company are important role models for mid-level and junior women. Creating opportunities for women across the business shows a desire to create an equal and fair workplace for all employees, in which everyone thrives.

The alpha male culture in financial services organisations

Without a doubt, the finance and banking sectors in Ireland and globally have a predominantly male culture. The perception is still that strong, aggressive, and dominating male figures do the best work in the industry. This culture is one of the strongest deterrents to women thinking of working in the industry, who anticipate problems fitting in and/or working their way up the career ladder in this macho environment.

Men in leadership positions within the financial sector often hold significant influence regardless of their actual achievements. Factors such as personal professional networks and social circles, unconscious bias, and cultural norms and stereotypes can lead to men being promoted over women. Studies have shown that women often need to demonstrate higher levels of performance and achievement to be perceived as equally competent as a male counterpart. This ‘double standard’ contributes to men in leadership roles being perceived as having a stronger impact than their female counterparts. 

Discrimination and harassment in the financial services sector

Other reasons for gender inequality for women in the finance sector are discrimination and harassment. Though society has improved significantly for women in many areas, the financial sector still has a large number of discrimination claims made against it on a consistent basis. Women are simply not being hired because they are not men.

Discrimination can be subtle and hard to see. There are instances where a male candidate might genuinely possess stronger credentials/qualifications and a wealth of experience for a particular role. However, it's important to acknowledge that when a female candidate presents the same qualifications, she might not receive equal consideration compared to a male candidate with fewer qualifications or less experience.

Harassment is another key factor that often limits the presence of women within financial organisations. While many companies have implemented measures to decrease harassment incidents, the effectiveness of these efforts relies on consistent application across all hierarchical levels. It's essential that anti-harassment policies are uniformly enforced to drive meaningful advancement. Within the financial service industry, women are more likely than men to experience harassment.

Why is diversity important in financial services?

Diversity is how we can work towards gender equality in financial services. Beyond being the ‘right thing to do’, there are proven commercial benefits for doing so. Research indicates that women add value to financial services teams in multiple ways. Companies with more diverse leadership are typically better able to create more diverse perspectives and better services to meet all customers and clients.

Looking at profitability, McKinsey & Company research shows that companies in the top quartile for gender diversity on executive teams were 25% more likely to have above-average profitability than companies in the bottom, while companies with more than 30% female executives were more likely to outperform companies that don’t. 

Inclusion helps leaders within these industries to ensure that the organisation is fully able to represent their employees as well as their customers. That includes in areas of demographics, cultures, and all backgrounds. Companies that do not offer this perspective are likely to be less desirable for women who need and use their services.

"To make progress in these areas, companies will typically require a step change in the level of courage and boldness they have displayed so far. They must also be ready to tackle sensitive topics around cultural norms, and to shine a spotlight on and apply consequences for individual behavior, including that in management and leadership."

McKinsey & Company, Diversity wins: How inclusion matters

For an in-depth look at this subject, we recommend the Diversity wins: How inclusion matters (2020) report from McKinsey & Company.

Nine ways to achieve gender balance in financial services

So the question is, how can organisations create more gender balance? Many financial industry firms recognise the need for change, and they want to create better inclusion. Most recognise the value of having women in key leadership positions.

Making it happen, though, is typically much more difficult. It is not just about hiring more women. Rather, a comprehensive approach must be taken to support women throughout the industry. To do that, it becomes important for companies to create policies that support female colleagues. This includes areas as far reaching as parental leave, caring for children and other dependents, and work flexibility.

This is no small process and there is no quick fix. Organisations that attempt to address the gender balance are better able to meet the unique needs of their female employees, who are typically still pulled in multiple directions in their personal and professional lives. Here are some ways organisations can make improvements.

1. Achieve gender balance by spotting areas of bias

One of the most important steps organisations can take to ensure they are creating the right atmosphere to promote gender equality is simply working to recognise bias. There are many ways this can be done, but looking for areas of specific bias towards women is crucial. For example, taking a proactive step towards recognising bias against mothers. Do business associates make comments or have beliefs that mothers cannot concentrate on the work at hand and therefore should not hold leadership roles? That could be a key area of concern.

Women of childbearing age may also be perceived as less reliable. If they have a child, and that would mean months of being unable to serve in the same capacity. This is, unfortunately, a thought process that many people in the industry have when making hiring or promotion decisions in the field. Recognise these beliefs and eliminate them to create a better culture of diversity.

Women of childbearing age and mothers can perform at the same level and contribute in the same way as men do. That they might have children should not be a deciding factor in any employment decision.

2. Achieve gender balance by being aware of unconscious bias

Not everyone that has biased beliefs recognises that they do. Unconscious bias typically originates from social stereotypes that an individual has internalised, and they are not conscious of the impact these beliefs have on their decision making. We all have unconscious biases, so the challenge for organisations is to create safeguards that eradicate the impact of these biases in decision-making.

Within the organisation, recognise that this is occurring so that change can happen. If a promotion is made, determine why that is. Is it based on true facts or is there an element of unconscious bias at play? By spotting all areas of unconscious bias like this, we can take steps in our organisation to eliminate it.

3. Achieve gender balance by eliminate biased recruitment policies

Biased recruitment policies contribute to a lack of gender equality in financial services. Opinions and beliefs about candidates based just on a first impression, for example, do not ensure a company hires the right candidate for the job. It is very common for hiring managers to form a significant opinion of a person based on that first impression.

Working to eliminate biased recruitment processes enables organisations to hire the best talent. Organisations should ensure they have:

• A diverse selection panel
• Removed gendered language from job descriptions
• Removed names and clues to gender or ethnicity on CVs at review stage
• Introduced standardised interview processes that provide consistent and transparent assessments

4. Achieve gender balance through gender pay gap reporting

As of May of 2022, reporting the gender pay gap is a legal requirement for many organisations in the public and private sectors in Ireland, including the financial services industry. Reporting is a good way to find insights into what is really happening within the company.

Organisations may assume reporting is just another task to complete to meet regulatory requirements. However, you can choose to see this as an opportunity to uncover patterns in the organisation's pay practices and question why disparities exist. Rather than an uncomfortable self-examination process, tackling endemic cultural issues or practices that lead to pay disparities and a lack of gender diversity will ensure more sustainable long-term growth for companies.

5. Achieve gender balance by identifying issues that affect women disproportionately

When developing hiring processes, employee policies, and other areas of employee management, pay closer attention to areas that are specifically concerning to women. These are typically issues that impact women more than they do men.

For example, childcare is an ongoing factor for many families. In Ireland, women still shoulder the majority of childcare responsibilities. When creating policies, ensure that childcare considerations are a factor. This could mean, for example, providing more childcare solutions at the workplace or providing financial support or more flexibility in working policies to ensure that women or men can fit their job around their caring responsibilities and are less likely to leave the workplace because it’s getting too much.

6. Achieve gender balance by attracting women to the industry

One way to encourage more women to work in the financial services sector is to hire women into key roles and make them a big part of the company's branding and image. This means having active marketing and supportive programmes to encourage more women to enter the field.

Some organisations go so far as to offer special incentives to women. Implementing mentorship and sponsorship programmes can provide guidance, support, and networking opportunities for women. These programmes can help women navigate their careers and access valuable insights from experienced professionals. Investing in training and skill development initiatives can help women enhance their capabilities and seize growth opportunities within the financial sector. This could include providing internships specifically for women. 

Collaborating with industry associations and advocacy groups to drive systemic changes that address gender disparities and promote diversity can also help to create a more inclusive landscape.

7. Achieve gender balance by promoting women to senior positions

For many organisations, it also becomes critical to focus heavily on positioning women in leadership positions within the company, including the C-suite and board of directors. Doing this encourages more women to recognise that they, too, can hold leadership positions.

Getting more women into senior positions does not mean just hiring because they are a woman, though. It means taking the initiative to create educational and skill-building programmes that help women move up the ladder within the organisation. This could include taking steps to ensure women are treated fairly at entry-level positions and then recognising their efforts to move up into the higher ranks of the organisation.

Ensuring transparent hiring and promotion processes that are free from bias can boost women's confidence in their opportunities for advancement.

8. Achieve gender balance by setting targets

Create equality related targets or goals for the company by defining clear and measurable targets for increasing the representation of women in various roles and levels within the organisation. The gender pay gap insights required for reporting could be a starting point. Focus on recognising that only a fair balance is ideal, then create strategies, programmes, and tools that encourage it.

Implement inclusive hiring practices that focus on attracting, recruiting, and retaining qualified women candidates. Consider strategies such as diverse interview panels and using gender-neutral language in job descriptions. Establish a system to regularly monitor and report on your progress and develop strategies for course correction if they are not being achieved. 

9. Achieve gender balance with equality training

Training is a key component in supporting equality, diversity, and inclusion. It helps to raise awareness, providing an understanding of the context and issues across a range of topics. Additionally, it can provide the means to deal with sensitive and difficult subjects such as unconscious bias. Education is key when overcoming prejudices and creating change, and gender equality in the workplace is no different.

Equality training contributes to fostering an inclusive workplace culture where all employees, regardless of gender, feel valued, respected, and empowered. Training for leaders and managers will help them understand the significance of their important role in promoting gender balance.

Policy training ensures that employees understand the organisation's policies relating to gender equality, anti-harassment, and anti-discrimination. This promotes compliance and sets expectations for behaviour. Teaching employees to be allies and advocates if also important for challenging stereotypes.

Create a Diversity and Inclusion Policy

Organisations that recognise the existence of gender bias and understand its impact on gender inequality can create a Diversity and Inclusion policy. This policy should cover every facet of the company, from the branding and marketing of positions to the hiring, training, and promotion of those in the company. 

A policy demonstrates the organisation's commitment to cultivating an equitable and diverse workplace. It encompasses clear definitions of terms, responsibilities for fostering inclusivity, non-discrimination assurances, strategies for diverse recruitment and promotion, and provisions for training, reporting, and addressing incidents of bias or discrimination. It serves as a guiding framework to create an environment where all employees feel valued and empowered, regardless of background. 

There is no doubt that the financial services industry still lacks gender equality, and it will take a refined and high level of focus to make the significant changes required.

Savvi Recruitment can help you address gender inequality

We offer comprehensive advisory in the form of a strategy workshop to help you get started on the road to gender equality. We help you resolve your key recruitment challenges and reduce gender bias in your recruitment process. ​We offer insights and guidance on:

• Available talent pools and market salaries
• Market trends on flexible working arrangements
• Employer branding
• Your recruitment process
• Employee retention strategies.

Contact us today to book a free strategy workshop with one of our experts!