The financial services sector has a gender diversity problem—and it is only intensifying as millennials start to dominate the workforce. From insurance to banking, women are underrepresented in leadership roles and their numbers diminish with each step up the career ladder.
In fact, according to research from Mercer's When Women Thrive, women comprise more than two-thirds of support staff in the average financial services organization, but only 37% of managers and 26% of senior managers. Female representation falls as their career levels rise.
Some might ask why this matters. Women have never been a dominant force in financial services. Will it really make a difference if women's representation flatlines or only creeps up incrementally?
In a word, yes. It will make a huge difference. Because while gender equity is making only modest gains, the talent shortage in financial services is skyrocketing. The only way to make up that shortfall is to tap into this pool of female talent—something that will require firms to think differently about how they attract and nurture talent.
Women represent a mere 20% of board members and 16% of executive committee members in financial services firms. Less than 10% of all U.S. fund managers are women and “men exclusively run about 74% of the industry’s assets.” Women now make up nearly 40% of business school graduates, but one study of nearly 300 U.S. and European private investment firms found that women still only made up between 17% and 23% of financial services employees—and even then, they are often in support roles.
In the meantime, the financial services sector is getting squeezed. More business graduates head for tech than financial services careers, with the popularity of finance careers dropping 22% since 2008, and top MBA graduates are 40% less likely to work in investment banking. The retirement of the baby boomer generation, and the impending retirement of Gen X is making this problem even more acute—impacting financial services in two ways: driving up the need for more financial advisors, and at the same time depleting their ranks.
This represents a serious future challenge for financial services, a sector that is already facing a talent shortage; a full 72% of today’s CEOs see the limited availability of skills as a threat to growth. Millennials will outnumber baby boomers by 2019, and they have already far surpassed the Gen X’ers who are the backbone of today’s financial services leadership. On the bright side, women’s enrollment in business schools is creeping closer and closer to gender parity. Unless financial services firms find a way to attract, promote, and retain millennial graduates—both men and women—they are headed for obsolescence.
Many companies are already trying to address this business imperative, with 85% of financial services CEOs promoting talent diversity and inclusiveness. From mentoring programs to leadership training aimed at women, organizations have created a host of initiatives to encourage women’s participation in financial services, but real progress has proven elusive. Attracting and retaining diverse talent is no small feat, though it isn’t rocket science either. Financial services organizations must start to tackle the gender diversity problem by understanding what women are looking for in their careers, and that goes far beyond good pay and benefits.
So, how can financial services do a better job of attracting, developing and retaining female employees? We took a look at what millennial women are seeking in a career and identified the top seven characteristics of an attractive job:
- Meaningful work and inspiring purpose. Before pay comes purpose. For millennial women, doing work they care about is of utmost importance. In one survey of financial service producers, women were more likely than men to choose helping people over high-income potential as the main driver to entering the field.
- Opportunities for growth and career development. Women and men want to know that they can grow in a position, developing new skills and taking on challenging assignments. Mentoring high performers can be an invaluable tool to developing millennial women’s careers.
- Flexibility and work-life balance. In a recent survey of 80,000+ students, nearly two-thirds of respondents chose work-life balance as a top career goal. Younger generations expect employers to offer flexible hours, work from home options, and parental leave, but the real problem is often one of uptake. In a 2015 survey of women in financial services, over half believed that using work-life balance programs or flexible work options would negatively affect their careers.
- Competitive rewards and benefits. What was once the backbone of the employee value proposition is now just one piece of the puzzle. Women want good pay and benefits, but it’s not their top priority in choosing a position. For industries where commission-based work is prevalent, the pay structure is challenging for women and men alike, but women tend to work fewer hours and thus end up earning less. Rethinking such pay structures could attract more risk-averse individuals, including young women.
- Job stability. Stable hours and pay are critical for those who do not have a financial fall back. Whether it’s recent college graduates or working mothers, women in particular are looking for careers that will pay the bills. One researcher found that parents discourage their daughters from entering professions such as insurance sales, because they lack stability.
- A re-entry path. According to a recent survey of MBA alumni by the Graduate Management Admission Council, 41% of women and only 12% of men report leaving the workforce at some time to take care of children. Yet evidence shows that these workers often take tremendous experience, maturity and ability along with them. If they are able to find their way back into their careers, they are among the most valuable, hardworking, and loyal employees. If financial services wish to remain competitive and to win female millennials, they must consider a path for these women (and men) to leave and re-enter the workplace more easily—sometimes after years of absence. This may mean sponsoring returnship programs, skills-update training, or finding more innovative, creative long-term flex work solutions.
- Culture that values diversity and inclusion. Organizations must do more than talk about the importance of diversity – they must work to foster a workplace where everyone can share opinions and work together to solve problems. That means going beyond updating a mission statement or creating a business resource group. A full 80% of respondents in a 2015 survey of women in financial services believed their organization talked about diversity but that opportunities were not equal for all.
Attracting millennial women into financial services (and most other fields where they remain underrepresented) requires changing the way we think about work. For so long the systems that have governed financial services have been created by and for men—and reflect their needs and priorities. For those organizations that are ready to make real change, they must start by understanding what women and young people now expect from their companies and careers. That means creating a creative and dynamic work environment where leaders support career development and employees are inspired by the work they do. It means creating an employee experience that is challenging and rewarding, and above all flexible and inclusive. If we can create that workplace, and communicate that experience with job candidates, we will be setting our firms up for long term success.