It is no bold move to predict that, in the coming years, a major theme for Scottish financial services companies – both large and small – will be one of globalisation, or at least further internationalisation. But perhaps the most important challenge will be more societal and cultural than economic and financial: namely, increasing gender diversity.
And it is here, on the issue of gender diversity, that financial services entrepreneurs can steal a march on their more-established rivals, especially if they’re prepared to embrace a holistic approach to talent management. First let me set out the advantages that gender diversity brings to any company, whether large or small: better corporate governance; different perspective and emotional intelligence level; workforce that better reflects your client base; access to a broader recruitment pool; greater innovation and more creative problem solving; more balanced attitude towards risk; and modern and more reflective brand.
Perhaps most fundamentally, gender diversity can boost a company’s profitability. This ‘economic argument’ has been all but won in recent years. For example, a McKinsey report published in 2012 found that companies with the best financial performance had the highest number of women in top management.
Despite clear evidence of the commercial and cultural advantages of gender diversity, financial services companies across the globe are still failing to capitalise. Data in 2013 from financial institutions across 20 global markets highlighted that, despite women comprising 60% of all employees, only 25% progressed to middle management positions and only 19% progressed to senior level leadership roles.
Board and chief executive representation is even more of a concern, with only 14% of women at board level and a meagre 2% serving as chief executives. And although there is a poverty of statistics at a Scottish level on gender diversity, the anecdotal evidence very much reflects the global picture.
Clearly there is a dramatic fall-off midway through the careers of many women. As a result, firms are losing valuable talent from their business. This loss, naturally, is felt even more acutely within smaller business and start-ups.
There is little doubt there is a problem when it comes to the senior representation of women within financial services. But what is the solution? And how can financial services entrepreneurs benefit the most?
In March 2016, the Treasury and Virgin Money published the findings of a review entitled ‘Empowering Productivity: Harnessing the Talents of Women in Financial Services’. It examined many of the cultural and organisational blockages that prevent most women from advancing beyond mid-level roles or force some to leave the industry entirely. It also listed a series of initiatives to help.
For many large and established financial services companies, implementing these recommendations will be a long and challenging process. In particular, overcoming the unconscious bias that evidently exists may take several years, even generations.
But if you are an entrepreneur who is considering launching a business, or is overseeing a small but rapidly-growing company, you are at a distinct advantage. You have the opportunity to build a gender diverse business from the outset, or certainly quickly rebalance your workforce to enjoy the commercial benefits it brings. But you should not simply focus on retaining and developing female talent in order to create sustainable gender diversity. You should also put your efforts behind recruiting women internationally.
As a recruitment company specialising in the Scottish financial sector, we are often faced with the harsh reality of a dearth of senior female talent. Faced with this dilemma, hiring organisations – and the recruiters which partner them – have two options.
The first is to introduce quotas either part way through or at the end of the hiring process. The second is to increase the number of suitable candidates. But if you don’t wish to compromise on the quality of your hires – a criticism commonly made of quota systems – arguably the only feasible approach is to increase the catchment area from which you recruit. However, competing for talent on a global stage, coping with the administrative burden of visas and permits, finding a suitable external partner, and developing and managing an international recruitment process can all seem daunting tasks. Most crucially for small businesses or start-ups, what type of recruitment partner should you choose?
Unfortunately, Scottish-based organisations have often been badly served by some ‘global’ recruiters based either in London or overseas, which have often failed to grasp the specifics of the initial brief and not fully understood the organisational and cultural nuances of Scotland’s financial institutions.
On the other hand, the myth still persists that Scottish-based recruiters have knowledge only of the local market. However, home-grown consultancies with extensive vertical and horizontal market expertise, as well as a strong track record of attracting high-calibre applicants from overseas, can be best-placed to support your company’s talent management objectives. Done well, the commercial advantages of recruiting talent internationally can be huge. In addition to increasing gender diversity, building a varied workforce in terms of age, race and ethnicity, education, culture, religion and sexuality provides many benefits:
For financial services entrepreneurs aiming to build a gender diverse workforce fit for the 21st century, you need to embrace a holistic approach. Recruitment, retention and development need to be given equal weighting within your business.
But you are in a strong position. New entrants into the financial services industry have the clear advantage of working from a blank canvas, not hamstrung by outdated attitudes, archaic practices and labyrinthine bureaucracy.
As an entrepreneur, you can play a leading role in creating modern and progressive working environments. In doing so, you will capitalise on the opportunities true diversity brings.
Betsy Williamson, is managing director at Core-Asset Consulting.