Gender Diversity at the workplace in the Financial Industry - Dissertation Example

?Executive Summary Financial services industry is one of the largest industries in the world and is also the biggest employer of women. Despite the fact that women form the better part of the work force, overall gender diversity and gender bias is high. Literature review critically suggests that women not only face the issues in terms of their compensation and bonuses but they are also not allowed to assume the jobs requiring relatively higher technical skills. It has been argued that women in financial services industry face larger discrimination not only from their organizations but from the customers too. It has been revealed that the customers specifically ask male members to deal with their more sophisticated needs as compared to females. This is mostly due to the perception that the female employees tend to have low level of skills therefore they should not be deal with more complex needs of the clients. It is also due to this reason that women are specifically assigned to the roles which are people specific but requires very little or moderate level of skills. This research study adapted the qualitative research approach to understand and explore as to how women face the discrimination in the financial services industry. Introduction Diversity is a relatively diverse concept with different variables being included in the workplace diversity. These variables range from gender, race as well as cultural backgrounds and values each of different variables having strategic importance for the firm. It is therefore critical that the firms must develop their strategic HRM strategies in a manner which value diversity and gender equality. The aim of this dissertation is to show the benefits and importance of women at workplace in general and specifically in financial industry. . Financial industry is going through some strategic changes with many international firms are making layoffs in order to be more competitive and sustain their profitability. What is also important to note that financial services industry is relatively male dominated though at the customer services level as well as the client dealing level, many women work as important employees of the organization. Since financial industry typically operates in a manner that on one hand, it has to deal with the retail customers face to face whereas for its corporate customers it has a relatively different setup. Typical firms in financial services industry include banks, securities firms, and insurance as well as real estate sectors. The overall composition of the workforce in the financial industry therefore varies from particular sector of the industry. Financial industry is typically considered as an industry which requires risk taking and it is generally believed that men are better at managing risks as compared to women. It is however, critical to note that these trends are now changing with women are increasingly managing large investment amounts. These trends indicate that financial institutions are willing to attract and retain the female employees. The fact that organizations like UBS and Goldman Sachs have female executives indicates that the large organizations in the financial services industry are willing to attract and retain female employees. Despite the fact that women form important part of the overall workforce in financial services industry however, gender inequality as well as gaps is relatively higher in the industry as compared to other sectors of the economy. Issues such as pay gaps are common in the financial services industry. Equality and Human Rights Commission has specifically highlighted the gender inequality within the financial services industry. The commission conducted investigation regarding the persistent sex discrimination as well as the pay unequal pay and highlighted strong evidence about the industry practices. Various other surveys have also highlighted specially the issue of unequal pay between men and women working in the financial services industry critically highlighting the need to boost the morale of female workers in financial services industry. As discussed above, there is a general perception that women may not be good at the jobs which require complex management of risk and other issues. However, financial institutions are willing to and have strong commitment to improve diversity at their workplaces. It is critical that having women leaders provide competitive advantage therefore financial institutions, to some extent, do take efforts to improve diversity and encourage female leaders. The overall value of this dissertation will be high for the women who have been facing inequality and discrimination in their workplace. Generally, this paper will actually address to the women who are equally competent and strive for success however are unable to achieve the same due to repression and inequality. This paper will also attempt to highlight the economic impact of the participation of women in the workforce and how social changes can be brought in by increasing the participation of women in the workforce. More importantly, this work will benefit those countries where the overall inequality is relatively higher or barriers to women’s entry into workplace are high too and organizations are mostly male dominated. Firms, governments as well as non-profit organizations will also be able to find meaningful conclusions from this research. This research will specifically address the issue of how inclusion of women in workforce and bringing them at par with men can actually boost development. This document can therefore offer them some strategic guidelines to help them attract, hire and retain female leaders within their organizations. Developing countries can also be able to recognize the importance of how empowering women can actually improve the overall economic and social changes which could be brought about by reducing the inequality. Overall, this paper will discuss and explore as to how the participation of women can be increased in financial services industry and what could be done in order to improve the gender diversity at the workplace. Methodology Research Methodology is considered as the set of statistical tools which a research can use to explore various research topics. It critically outlines as to what could be statistically done and what researcher can actually expect to achieve. Qualitative research methodology provides an understanding of human behavior and the overall reasons behind such behavior. The qualitative research methodology therefore focus more on the why and how of the overall behavior and considers a small sample to achieve the overall research objectives. Qualitative research methodology also discusses and produces information on particular cases and therefore outlines focused research objectives. This research study will therefore also focus upon conducting a qualitative research study and aim to outline as to how overall research objectives can be achieved. First, this research study will use the secondary data including the interview analysis of the various female leaders working in the financial services industry, a review of the women societies as well as the statistical information regarding the gender gap index and other relevant information discussing about the gender inequality within the industry. Primary research will also be used to provide an in-depth analysis of the interviews conducted of 10 women working in the financial services industry. The overall purpose of conducting primary research is to actually understand the perceptions and beliefs of working women regarding the difficulties they face at their workplace. This will provide a real time example of how practically women working in financial services industry actually perceive their work environment. Literature Review Organizations are becoming increasingly complex and as such the overall diversity as a concept has become diverse too. Issues such as inequality, discrimination, diversity are relatively similar in nature however, it is important to critically distinguish between them based on the contextual factors. Variables such as ethnic background, culture, sex, religion, family status as well as color are some of the key variables which define the overall concept of diversity within organizations which are becoming increasingly complex in nature. (Thomas) It has been argued that identification of the various groups within the organization based upon the relevant power or dominance within the organization helps to identify different contextual issues. It is also within this context that gender diversity is viewed in any industry because identification of the power groups within the organization is important source of studying gender diversity. (Miles) It is argued that the membership of certain groups really matters within an organization as based upon the association with particular groups define the compensation, position, power as well as participation and retention. Segregation based upon position as well as association with particular groups therefore informally plays an important role in defining overall diversity within the organizations of any size. Various research studies have critically outlined the economic as well as social benefits of increasing the gender diversity and how organizations can actually take advantage of unique talents possessed by the women. However, despite such importance, women are continued to be under-represented in the financial services industry at global level. (Powell) Various surveys have recently pointed out to the fact that gender diversity is still low in the financial services industry with more males occupying the senior level and decision making positions. (Lumanta) Financial services industry is essential still a male dominated industry with males occupying important decision making positions. Despite the fact that women work in banks and other financial institutions however, their overall placement within the organization is mostly based upon the perception that women are not better risk takers therefore males dominate the positions of power and risk taking in banks and other financial services institutions. It is also critical to understand that male dominance in the financial services industry is also due to the overall psychology of the individual and groups comprising of males having extra faith in their abilities to take risks and make investment decisions. (Barber and Odean). It is also important to understand that there is a big gap between the knowledge education of the male as well as female employees. It has been suggested that one of the key reasons as to why women are unable to rise beyond certain positions within the financial services industry is due to the big gap between the knowledge possesed by male and female workers. The overall percentage of women in the banking sector is high with relatively low percentage of women working in the securities and insurance sector. This therefore suggests that the overall concentration of employees is relatively skewed and varies according to the sector in which employees work. 60% of the women work in the banking sector and despite such high percentage, the overall gender diversity and discrimination is on the rise. Despite such large number of women working in the financial sector, their presence is on the low level of positions. Mostly, the women are hired in those areas which are people focused and are not given the positions which demand relatively high level of skill application as well as risk taking. Such jobs are assigned to male workers. (Galbraith) In Britian, during last decades, despite the increase in the size of the financial services industry expanded however, the number of female employees working in the industry are on the decline. During the current financial crisis, job lay offs of women in banking industry is 12.50% as compared to the 8.5% layoffs for men indicating that women are facing discrimination in this regard. Only 17.8% of the women actually occupy the positions which are on the list of FSA’s approved list. This is despite the fact that overall presence of women on boards in UK is on the rise and despite such high level of presence, the numbers are not showing strong indication that the financial services industry is taking care of the diversity. (Clarke) One of the key issues of gender discrimination is based upon the pay differences. It has been argued that women are mostly discriminated in terms of compensation as compared to other variables such as promotions and assignments to more senior level positions. Surveys by Equality and Human Rights Commission critically outlined that the male workers, on average, receive 5 times more bonuses as compared to their female peers. As compared to men, women get ?2875 whereas men get ?14554 in terms of bonuses and pay compensations. This critically translated into bigger differences and a biggest source of discrimination (Equality and Human Rights Commission ) Such bigger discrimination in terms of compensation and pay is based upon the average salaries and compensations offered to female and male workers. The similar higher level of discrimination also exist at the senior director level. This discrimination is mostly within the domain of bonueses paid to the female as well as male employees. Male employees either at the senior, middle or junior level are awarded higher bonuses as compared to female employees of the organization. Traditionally, women are assigned the roles which are not based upon the risk taking i.e. female workers are assigned the roles which are routine and mundane in nature. Very few female employees actually rise to the position of decision making and engage into other sub-sectors such as investment, securities as well as the insurance. The role of female employees is mostly concentrated in the routine jobs involving procedural work and the roles which are mostly people focused. Women therefore are mostly assigned the jobs which involve direct interaction with the customers and these roles are mostly limited to fulfilling the smaller needs of the customers such as issuance of debit cards, deposits, cheque book issuance and other consumer issues. (Ogden, McTavish and McKean) What is critical to note however that despite the fact that women are being assigned more routine jobs in financial sector industry, the overall trends and business requirements advocates for more diversity. It has been suggested that more diverse the organization is, better it will be able to generate more creative ideas and innovation. The role of women beyond their traditional role in the financial services is also therefore viewed from this perspective. It has been advocated that organizations including financial services institutions should increase the number of women on their boards and on other positions as non-compliance of the same may result into the penalties from the government. (Klarsfeld and Bender) It is also critical to note that the women are considered less confident about their chances to move ahead within the organization. It is therefore argued that it is not competence of the female which is restricting them from breaking the ceiling but rather the lack of confidence. Many female workers do not find enough motivation to actually make a move to advance their careers and resultantly face a situation where their roles are traditionally limited to the smaller roles involving mundane tasks. It is critical to understand that women and men almost form the equal part of the overall workforce within financial services industry. However, the equal opportunities cease to exist as overall hierarchy within the organization started to move. Financial services institutions hire female employees at the lower levels and most of the female workers are hired equally however females are not given same level of equality at the higher level. (Martin, Warren-Smith and Scott) It has also been suggested that financial organizations often take into account the personal references while recruiting the employees. This factor has been viewed as something which could increase the exclusion of women from certain positions. Women are also being questioned about their family circumstances as well as whether their family commitments could actually restrict their ability to perform their duties or not. This is also considered as one of the key sources of discrimination against the women while making hiring and recruitment decisions. Women are also discriminated based on what is called cultural fit between the organization, its partners as well as clients. The natural outcome of such policies is often the result of hiring male employees as compared to the female employees as male employees are considered as better cultural fit with the organization and several of its stakeholders. The hiring in the investment and other sectors where relatively higher level of training and skills is required is also not providing equal opportunity to women because women are less likely to have any such skills. There are two important factors which have been highlighted as the potential barriers for women entry and rise within financial services industry. First, the structural factors are contributing towards discouraging the women to actually rise above their current levels and achieve senior level positions. Secondly, the attitudinal factors also play an important role in determining the overall position of women within the organization. The long working hours as well as the travel required meeting new clients and looking into the new markets, especially within the investment and securities sector, also plays an important in determining the overall characteristics of the workforce. The male dominance is also due to the male dominated skills. Though it has been suggested that males are more risk takers as compared to female however due to the considerations for the short term profit earning, females are not assigned to the roles which require better risk taking initiatives. (Woodward and Ozbilgin) Financial services industry has truly become global with free flow of capital across the borders. Over the period of time, financial services industry has been de-regulated at the global level therefore firms are investing across the globe. As such employees involved in the investment advisory services specially have to travel frequently in order to present information as well as evaluate different markets in order to formulate different investment strategies for various markets at global level. As discussed above, family needs of women is also one of the factors which are resulting into discrimination against them. This has also however, became one of the characteristics of the workforce where women have to make a balance between their family life and work requirements. Issues like maternity leaves are legally allowed to female employees which not only result into the gaps in career of the female employees but also make them unfavorable candidates for the positions which require consistency. (Hamilton, Gordon and Whelan-Berry) Over the period of time, the overall participation of women into the workforce has increased in many developed countries including US and UK. The increased participation of women has also attracted the attention of the researchers and the serious scholarly work on understanding the impact of gender diversity on the overall competiveness of the firm. Cox and Blake (1991) outlined that the gender diversity can actually result into the competitive advantage for the firms. The resource based view also suggests that the diversity-performance relationship is positive and can actually result into positive outcomes for the firms. Increasing participation of women into the workforce has actually resulted into economic growth for countries like UK. From 1971 to 2011, the overall economic activity of women in UK has increased from 59% to 79% while the female employment rate has also increased to the extent of 70%. This increase in the economic participation as well as the employment level has actually contributed towards the growth of the economy.1 The fact that women are being engaged in more people oriented jobs indicates that women possess special talents and skills which provide them relative edge over their male counterparts. These strengths and abilities are not only valuable but can also offer competitive advantage to the financial institutions if properly utilized. On macroeconomic level, the use of the skills and abilities of the women can significantly add to the overall growth and value generation therefore the unique skills of women should not be ignored. Some data suggested that the number of partnered mothers as compared to single mothers is relatively high in terms of employment. Those working women who are living with their partners tend to find higher opportunities to work and gain easier access to post-pregnancy integration programs as compared to the single mothers. For single mothers, it is relatively difficult to actually fit into the overall scheme of affairs. (Metcalf and Rolfe) It is also critical to note that many organizations though have diversity as well as gender discrimination policies however they are not being followed. Though research studies have comprehensively suggested that organizations following diversity programs are viewed more positively however despite such encouraging news, the overall approach towards managing diversity and gender differences is relatively lackluster in nature. (Williams and Bauer) Larger organizations such as Goldman Sachs have put into place female leadership program are some of the initiatives which can help organizations to better manage their gender diversity. The female society is also an initiative to improve the overall workplace gender diversity. Data Analysis As discussed above, this research study will comprise of using both the qualitative as well as quantitative research methodologies. Besides, both the primary as well as secondary research methodologies will be used to provide the analysis. Approximately 60% of the working women in Britain work in the banking industry and banking is also the largest industry employing women. Similar trends are also being observed in countries like US and Australia where most of the women forming part of the workforce are employed by the banking sector of the country. Beth Brooke, the Global Vice Chair of Public Policy at Ernst & Young has been managing diversity not only in her own institution but also serving as a role model for others. She is of the opinion that though her organization has nurtured the talent of women based on the overall business case however, her organization actually failed to train the leadership potential of the women employees. This suggests that the large organizations actually took different approaches towards managing the diversity within their environment. Not providing women with leadership positions and not improving their leadership qualities therefore do indicate that the organization may not have been able to develop the vision required to build effective women leadership. Some statistics suggest that the overall presence of women at the top level positions in both the finance and insurance industries is only 18.4%. Board diversity also remain stagnant over the period of time with less number of women are being given the senior level positions at the board level. One of the key reasons being cited is that women actually lose hope to reach to the senior level position. Heidi Miller of JP Morgan believes that lack of women’s presence at the top is due to the lack of genuine meritocracy within the financial organizations. She believes that though industry has moved to a position where it has been able to integrate merit however at the highest level of the organization there is a general lack of merit which is restricting women to acquire position of power within financial services industry. (American Banker) Heidi Miller also talks about the lack of informal networks for women which are considered as important for overall growth of women within the organization. The lack of informal networks despite the fact that most of the organizations have female leadership programs indicates that organization glass ceilings are relatively higher for women in financial services industry. The lack of meritocracy at the top is therefore not only creating discrimination against the women but also set precedent for others to discourage them from aspiring for higher positions within the organization. George A Ramirez, the Chief Diversity Officer at Union Bank, believes that a diverse workforce can really offer required competitive advantage to the firm. His approach therefore suggests that the organizations should start to re-think about their employees as their assets and should give due consideration to the women employees also. (American Banker) Jane Haskins, President of First Bethany Bank however believes that the glass ceiling in banking industry is breaking and investors want more women on their boards. It has also been however suggested that the women are being closely watched and listened within the organizations and overall, women in banking industry tend to have negative role models. Inadequate training and development of women within financial services industry therefore may be one of the key reasons as to why women may not be able to learn the required skills to move ahead within the organizations. The result of personal interviews conducted with the professional women working in the industry also indicates about the greater discrimination against them. One of the key points of discrimination comes from the clients who want male employees to attend to their needs as it is generally perceived that women bankers may not have the required skills to perform. This bias towards women employees therefore are client oriented therefore financial institutions naturally restricts their women employees to assume jobs which require relatively higher technical skills. It has also been reported that the clients actually underestimate the abilities of the women employees and deliberately ask for male employees to cater to look after their business needs. Pay differences as well as the overall perks has also been cited as one of the areas of discrimination against women. There are wider-level of pay differences between the men and women employees with male employees getting more because of higher and better business opportunities being assigned to them. Since clients asked specifically about the male employees therefore the job roles which involve commission based compensation always provide an inherent edge to the male employees within banks and other financial institutions. Lack of role models for women employees is also another areas where it is being generally felt that inadequate hands on training coupled with no effective role models actually contribute towards the lack of development of required skills for women to climb the organizational ladder. It has been suggested that good role models can improve the overall situation for the women within financial services organizations. Conclusion The above research study indicates that women are facing discrimination within financial services industry. There is a general gap of skills between the male and female employees of the institutions. Client biased is also one of the reasons as to why women are not assigned the more challenging roles. Participating women have suggested that the clients specifically ask for the male staff to cater to their business needs as there is a general perception that women do not possess the right skills to meet the business requirements of the clients. Lack of merit at the higher hierarchical level of the organization also indicates that the financial services industry may not be ready for the true gender diversity. Recommendations It is recommended that women should be trained and developed within financial services organizations. Since women possess skills which can offer more diversity of the views and skills therefore organizations can actually extract competitive advantage through them. Pay structures should be further rationalized and shall be based upon the performance of the employees. Organizations also need to give due consideration to the fact that they must offer equal opportunity to women and it shall not be limited only to the hiring and recruitment process only. Unbiased work and job assignments as well as the better training and development of women employees can improve their morale and make them more productive employees of the organization. At the macro-level, government should also make policies to increase the participation of women at the senior level within financial services organization. Works Cited American Banker. Heidi Miller on Women, Banking and the Meritocracy Myth. 1 October 2012. 31 December 2012 . —. Think About Employees as Assets Again, Union Bank Exec Advises. 3 May 2012. 31 December 2012 . Barber, Brad and Terrance Odean. "Boys Will Be Boys: Gender, Overconfidence, and Common Stock Investment." The Quarterly Journal of Economics 116.1 (2001): 261-292. Clarke, Paul. Can gender diversity drives survive as the financial sector contracts? 1 May 2012. 30 December 2012 . Equality and Human Rights Commission . Inquiry into Sex Discrimination in the Finance Sector. September 2009. 30 December 2012 . Galbraith, Sasha. Financial Services: The Industry Women Love to Hate. 18 March 2011. 31 December 2012 . Hamilton, Elizabeth A., Judith R. Gordon and Karen S. Whelan-Berry. 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