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Do we need more women in financial services?
Trust in UK financial institutions is sadly lacking. Could an increase in the number of women in top jobs be the answer to this problem?
by Michelle McGagh on Jul 31, 2012 at 10:45
Much has been written over the past year about women in financial services. The issues raised have ranged from pay equality to boardroom roles and whether testosterone fuelled the financial crisis.
At the launch earlier this month of the Question of Trust campaign, which aims to put consumer trust on the agenda of every financial services board, the role of women in financial services was brought up again by Jason Butler, principal of London-based Bloomsbury Financial Planning.
Butler asked the panel assembled by campaign founder Shane Mullins (you can read all about his campaign here) whether trust would be improved by having more women in top financial services roles.
Gender equality in business has long been hotly debated, with a focus on how the UK can get more women into top jobs. Research by head-hunting firm Odgers Berndtson published last year revealed that women occupy just 23% of board positions at private companies in the UK, and although the number of female board members has increased since 2009, the rate of growth is a pretty pathetic 2.1%.
When it comes to women heading up private companies, just 3% of companies have a woman in the top job.
These figures are for companies overall, and if you look at financial services specifically the number of women in positions of power and falls even further – finance remains a man’s world.
There has been the suggestion that if more women had been in control of financial companies there would have been less risk taken, and the financial crisis may not have been as bad.
Attitudes to risk
In an interview with the Evening Standard recently economist Vicky Pryce touches on the topic of risk. She says male City traders do not think they are being risky when they place huge stock market bets, they are just being optimistic, and think they will beat the market.
Pryce believes women are better at ‘collegiate behaviour and caring for the common good’, traits which the Question of Trust campaign is trying to instil in financial companies. She also believes that pushing women out of top jobs is damaging for society as a whole.
‘[Women] go and do other things – sometimes part time, sometimes things that don’t use their brains particularly, and what you end up with is women generally working below their skill level… that won’t allow the economy to grow to its full potential,’ Pryce said.
Risk and reward
One other point Pryce makes is the risk-reward system in banks. Whatever your gender, those who are rewarded most highly are those who take the most risk – usually at the expense of the consumer.
The idea that gender makes one person take more risk than another is interesting, but is the argument really about what sex you are?
Surely the main problem with financial services is the short-termist reward culture, which Professor John Kay's report into the UK stock market eloquently analyses. It will be a long time before consumers trust financial institutions again, and the only thing that will help is knowing that the organisations are working in their interests, not a smiling female face.
More about this:
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