As proposals for addressing gender imbalances go this one’s an unusual one. Jayne-Anne Ghadia, the chief executive of Virgin Money, has proposed that City bosses’ bonuses should be tied to their progress in appointing more women to senior roles.
‘It’s really important to drive the right behaviours and we know that gender balance and diversity is really important for business,’ she told BBC Radio 4’s Today programme this morning. ‘It gives better business outcomes so let’s reward people on that basis.’
It’s ‘only one part of what remuneration should be tied to,’ said Ghadia, who was asked by the Treasury to look into women in finance in July and will make more detailed recommendations next year.
Nonetheless, the idea, which comes after Lord Davies released his latest report on women in the boardroom last week, raises a number of questions. Firstly, why is the City being singled out? Engineering and tech, to cite just two examples, are also heavily male-dominated.
‘Fewer women progress to senior levels than in any other industry in the UK,’ Ghadia said, pointing out that financial services is 60% female, yet only 20% at senior levels. On the other hand, the problems in engineering and tech-heavy companies start at the very beginning, with not enough female graduates from relevant subjects.
Still, we are yet to pin down a specific reason why the City is so bad at promoting women. ‘There are many views as to why that might be,’ Ghadia told the BBC. ‘Motherhood, remuneration, the 'old boys' network' are all mentioned, but only scratch the surface of an issue that has been hidden for too long.’
The notorious long-hours culture in finance and the need to entertain when in client-facing roles are surely reasons why women drop off the career ladder when they start families. But until the specific causes are pinned down, it seems foolish to propose a solution that may not match the problem. The City is as infamous for sexism as it is for boozey excess, but it has arguably been unfairly singled out, especially since the financial crisis when it was forced to clean up its act on all fronts.
There is also a chicken and egg question when it comes to diversity. More diverse companies perform better. But could it be that better performing companies are more likely to appoint a more diverse workforce, rather than the other way around?
If companies don’t see ‘business benefits’ from drives to become more gender balanced, or more diverse generally, there is a danger of the measures running aground. Executives could ‘promote’ women into token positions, or sideline those they hire into supposedly more senior roles, in order to hit their targets and collect their bonuses.
In short, companies need to be open to diversity of thought and experience before they can benefit from it. That’s not to say tying bonuses to diversity won’t work, but there isn’t enough detail in either the research or the proposals to judge yet.
Ghadia did also say that businesses should measure and report on gender balance and appoint a top-level executive responsible for the issue. It’s unclear whether this is strictly necessary given the government’s upcoming requirement for companies to publish their gender pay gap. We don’t know its impact yet, but the legislation may, for example, encourage companies to explain their gaps in more detail - such as by publishing their proportion of senior women - to head off criticism.
Moreover, some companies are already pursuing their own programmes. Barclays and Lloyds, for example, have set targets for increasing the percentage of female senior managers.
Ghadia is right that any proposals should be set out ‘in the way that the City understands,’ allowing ‘businesses [to] have their own agenda.’ Whether that should be bonuses, more detailed reporting or something else entirely remains to be seen.