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Thursday, December 4, 2014

Men Alone Should No Longer Run Finance



Men alone should no longer run finance

John GapperJohn GapperAuthor alerts
At this rate, women should achieve executive parity in about 120 years, well into the 22nd century
James Ferguson illustration©James Ferguson
A
na Botín has wasted little time since becoming chairman of Banco Santander in September, last week appointing a new chief executive. LikeAbigail Johnson, installed as chief executive of Fidelity in October, she worked hard for her job, but it is inescapable that both are members of founding families. For women lacking a birthright, the route to the top in financial services is tough.
At the top 150 banks and financial services groups, just six chief executives are women; and only 13 per cent of the members of their executive committees are female. Although banks have tried to remedy some of the causes, men still rule the financial world.

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When I was younger, I assumed that it would change. I was a child of the 1960s, a teenager of the 1970s and a graduate of the 1980s. My generation, even if it had prejudices and did not always fulfil its ideals, grew up amid feminism. Few argued publicly that men should be in charge of the workplace and that women should stay at home.
The results of this generational experiment are now in and they are pathetic. There has been some progress but it is glacial at the top. A study published this week by Oliver Wyman, a consultancy, finds that the proportion of women on executive committees of big financial institutions rose by only 3 percentage points between 2003 and 2013.
At this rate, women should achieve executive parity in about 120 years — a third of the way into the 22nd century. Last week, I went to a lunch hosted by a bank in the City of London, attended by a crowd of senior financial and business executives. It was a pleasant event but, in terms of the gender balance, it could have been 1970.
The senior management committee of Goldman Sachsincludes five women out of 34 members. There are two women out of 16 on Morgan Stanley’s operating committee, including Ruth Porat, chief financial officer. Two women sit on Deutsche Bank’s 21-member executive committee. Barclays is an outperformer among global banks, with three women out of 11.
Financial institutions do better at board level, where the proportion of women has risen from 12 per cent in 2003 to 20 per cent in 2013. Barclays has already met its target of having a 20 per cent female board, and needs only to swap a woman for a man on a 14-member board to meet its target of 25 per cent by the end of 2015.
While this is creditable, it also shows the problem. It is simple to call a headhunter and ask for a shortlist of potential non-executives that includes women. The barrier is higher when institutions choose among the bankers, asset managers and traders seeking promotion. They tend to choose men to run revenue-producing businesses and a few women to oversee human resources and technology.
Banking and finance should be a relatively equitable industry — it does not involve lifting heavy objects, and the performance targets are fairly transparent. The degree to which it used to be a men’s club should have been curbed by financial deregulation and open competition. Yet, although many women join banks as associates and analysts, they find it more difficult to win promotion than in other industries.
Something is so wrong that it provokes some to suggest that banks should instead place women in charge, since female hegemony would be an improvement on male domination.
Christine Lagarde, International Monetary Fund managing director, is among those to express the “Lehman Sisters” view that banks got into trouble in the 2008 crisis partly because men are inherently risk-seeking.
“I do believe that women have different ways of taking risks, of addressing issues ... of ruminating a bit more before they jump to conclusions,” she told US National Public Radio. I think the results, particularly on the trading floor ... would be different.”
Men have indeed shown higher risk appetite than women in psychological experiments, but using that to argue for female hegemony strikes me as dubious and dangerous. (Ms Lagarde says she seeks only greater diversity.)
It is dubious because women bankers choose to enter a risk-intensive industry. Those who make it to the top are even less likely to conform to the average. Zoe Cruz, head of fixed income at Morgan Stanley until 2007, was known for her belief in risk-taking.
It is dangerous because an overemphasis on innate gender characteristics can lead to strange conclusions. One study found that men take greater risks in the company of women because they show off — it is a form of mating ritual. Does that prove that banks should clear trading floors of women?
It is also unnecessary. There is no need to place the burden of proof to women to demonstrate their worth. Male domination clearly weakens decision-making by curbing the diversity of opinion. It limits the talent pool and pushes women out of the industry at all levels, even ignoring the sexual harassment uncovered in this week’s FTfm survey of asset managers.
Finance was never a balanced business. Nor is it simple to solve the challenges, for example, of bringing women back into managerial jobs after career breaks to raise children, or of changing the trading floor culture. But we should not stop noticing how strange it looks and how foolish it is.

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EDITOR'S PICKS
In practice, women have a far greater choice of occupation than men. And they use that extra choice big time. It is both trivial and profound - yet taboo - to point out that most women can choose a path of motherhood, and many find it straightforward to combine this with financial dependency on a partner. Men do not have that choice. A vast sector of human endeavour and a fundamental lifetime path is simply closed to men. The impact on society is truly massive. This should be obvious.
Even in a perfect world of free childcare, a significant proportion of women would devote a  huge amount of their energy, time and attention to parenting - far more I suspect than men, who cannot bear children and who lack the same evolutionary biological nurturing instincts. So to view lack of equal representation at senior management level as clear evidence of some kind of unfair bias seems odd. Where is the serious analysis that takes this into account?
COMMENTS (29)

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MariannaNYC
"A study published this week by Oliver Wyman, a consultancy, finds that the proportion of women on executive committees of big financial institutions rose by only 3 percentage points between 2003 and 2013."
And how much has the women pool of aspiring candidates grown in the same decade?
Perhaps it is not a question of demand, but of offer. How many women are interested  in finance at the top levels? Is a career in finance considered more extreme or less women friendly than law? Medical school? Why? Should it be? What can be done to change that?
If too large a part of finance is shunned by women, that should be a sign that something is wrong with the industry. Women are not sissies: they will go to war, to the moon, they go through multiple pregnancies, they run countries....if they stay clear of finance, perhaps there is something in the industry which must be changed.
Sail_Kap
I agree there should be more women in finance and banking. But I don't agree that the way to do that is through top down target setting and board level quotas. As the author also says, it is relatively easy to hit those numbers by picking up the phone and asking headhunters to hand them a list of women candidates only. They way to do it should be to take a grassroots approach - seminars in university to encourage more women to apply. And not only targetted to STEM/Fin/Eco majors but to arts/humanities students - women can bring diversity not only because of their gender but because of their educational background as well. Go to SOAS as well as Oxbridge.
Once more women apply, you have a larger pool. Then, gender specific training - clear communication of maternity leave policy, networking events of early careers women with senior women etc. to give them a better appreciation of what are the attitudes, behaviours and life choices involved in rising in the corporate world. Perhaps some gender sensitising training for both men and women - to make them understand that women have a biological ability to bear children that men don't have. It should not be a barrier to career progression but at the same time, it cannot be an advantage as well.
This way you would organically increase the number of women in senior positions over a number of years. It is not the headlines based quick-fix that perhaps the author wants but it is better to do something right and slow than quick and wrong IMO.

Lastly, I do believe there is more to be gained from racial/ethnic diversity than gender diversity. A white man from Kent and white woman from Kent are unlikely to think very differently (sweeping generalisation alert). However, feminism has ensured that gender diversity is top-of-mind everywhere while racial diversity, by the very virtue of its diversity, doesn't have any champions. It'd be good to see major publications give some space to this issue.

Fonz
"And not only targetted to STEM/Fin/Eco majors but to arts/humanities students - women can bring diversity not only because of their gender but because of their educational background as well. Go to SOAS as well as Oxbridge."
The proportion of arts/humanities students from top 20 universities who struggle with even simple percentages is disturbingly high.
Moctezuma 
In practice, women have a far greater choice of occupation than men. And they use that extra choice big time. It is both trivial and profound - yet taboo - to point out that most women can choose a path of motherhood, and many find it straightforward to combine this with financial dependency on a partner. Men do not have that choice. A vast sector of human endeavour and a fundamental lifetime path is simply closed to men. The impact on society is truly massive. This should be obvious.
Even in a perfect world of free childcare, a significant proportion of women would devote a  huge amount of their energy, time and attention to parenting - far more I suspect than men, who cannot bear children and who lack the same evolutionary biological nurturing instincts. So to view lack of equal representation at senior management level as clear evidence of some kind of unfair bias seems odd. Where is the serious analysis that takes this into account?
Amateras
@Moctezuma Who is keeping you away from being a good and attached father to your children? Choosing a path of parenthood is as open to men as it is to women, there are plenty of cases where women work and men stay at home with the children. Are you complaining that biology is unfair and does not give men the same nurturing instincts as women have?? How convenient! You know, being equal means both genders having the same chances in case people decide to go a certain path, chances that nowadays are clearly balanced towards men. 
Fonz
Are you seriously suggesting that the majority of women are comfortable with having a stay-at-home husband?
Amateras
@Fonz @Amateras @Moctezuma Not even close... That is couples' business to sort out. What I'm saying is that each person should have the chance to choose what best fits him/her, not just feel obliged to fill some roles. It happens that I know about cases where the father is taking care of the children and the mom works; they are perfectly fine with that. 
Fonz
...and what if 75% of couples opt for the woman to take the brunt of the career hit when it comes to kids?
Amateras
@Fonz @Amateras @Moctezuma As long as the legal circumstances that lead to this option are equally benefiting to both genders (see Denmark and Sweden where the spouses can share 52 weeks of baby leave), then I wish them all the best of luck, whatever proportion of women choose to take care of the children.
Moctezuma
@Amateras @Moctezuma An interesting response to my comments. I am not complaining about anything - other than the stilted discussion of this topic. I accept nature for what it is and try to observe it with an open, curious mind. I accept that my nurturing ability and interest is different to that of my wife, who along with many of our female friends has always had zero ambition to work in the corporate world. My wife and I are far from equal in many respects but we make a good team - and that is also true across society, with clear biases towards males and females in various options, abilities and desires. Had I had no desire to work in the corporate world, it would have been much more difficult for me to take the path of a full time father. I suspect it would have been much harder for me to find a partner willing to reverse the traditional roles and who I could depend on financially.
Although parenthood is equally open to men and women, they experience it quite differently. The mothering role is not open to men and is very different to the fathering role in key respects. My point is simply that nature skews the figures.
Fonz
Its pointless looking at the numbers without looking at the reasoning.
The majority of front office roles ask for/prefer a technical background. This is where the gender split first creeps in - more men than women study technical subjects.
It is on the shoulders of everyone (women as well as men) to not stigmatise those who choose to do science/sport and instead encourage them.
Vintage
The problem is that there has never been, to my knowledge, a proper comparative study of men and women and their relative abilities in finance, science or whatever, so we have to resort to anecdote, political correctness or remarks about testosterone.  Wasn't it Larry Summers who got into terrible trouble at Harvard by postulating that the sexes have differing abilities in defined subjects.  PC has taken over at our greatest seats of learning so that no-one dares to make proper comparisons.
It seems to me highly likely that men and women have different abilities at, say, decision making because of evolution, but there is no proof either way.  In addition, a large proportion of women will have had their career substantially altered by motherhood and its responsibilities. That however does not stop the author from writing with certainty about his prescription for the world..  I begin to wonder whether the Daily Mail does not have a more balanced view than the FT on some topics.
John Gapper, FT FT
@Vintage I disagree. There have been a lot of academic and psychological studies, a couple of which are linked to in my column, about relative risk appetites of genders. You just have to go and find them. Then there is the question of whether they lead to policy conclusions.
Mysterion
@John Gapper, FT There have also been studies into the risk appetites of companies with higher and lower levels of female participation at the top level. Banks with more women had higher risk appetites than those without. The properties of individual men and women can not be used to derive the behaviours of organisations. See this for instance:
MariannaNYC
I am not sure these two links´s conclusion can be considered very exhaustive; the first was done by two PhD students and (their?) professor, the second seems a bit tentative..."This paper investigates whether exposure to the opposite sex induces greater risk-taking in both males and females. Experimental subjects evaluated a series of hypothetical monetary gambles before and after viewing pictures of opposite sex faces; control subjects viewed pictures of cars. Both males and females viewing opposite sex photos displayed a significant increase in risk tolerance, whereas the control subjects exhibited no significant change. Surprisingly, the attractiveness of the photo had no effect; subjects viewing photographs of attractive opposite sex persons displayed similar results as those viewing photographs of unattractive people."....
JRW
Look at that first sentence. The FT could help by changing its house style to something more gender-neutral. Is chair or chairperson so difficult? 
Some people will say that "man" in this situation encompasses both sexes.  Men, imagine going through life being described as a businesswoman/chairwoman etc, I think then you would soon decide you would rather have a neutral expression. 
This comment has been removed
Seedy S
"I looked at the status quo, which told me that the status quo was fine"

Your attitude is part of the problem. Why bother casting around for reasons why women are inferior? All you come up with is broken analogies and motivated reasoning. Mr Gapper's article made some good points about biological determinism - I reccommend reading it.
D Conrad
Your reply is priceless.You start with a vague quote, thereby associating yourself with some sort of self-evident wisdom.Then you attack my attitude, which is simply a low blow and completely unnecessary.Then you put words in my mouth by suggesting that I consider women inferior, which I do not.You then proceed to address John Gapper as Mr Gapper, suggesting that he needs to be addressed with more respect than the rest of us, which is not the case.You finish by claiming that the article makes good points about biological determinism, which it does not.
All I am advocating is that society should be realistic about the scientifically proven differences between genders.We need to embrace these differences if we want to build the kind of world where the biggest possible number of people can live purposefully, enjoy a degree of liberty, and pursue personal happiness.
Mutuality
And what then of the ECB’s refusal to comply with the European Parliament’s request that it appoint a female to its governing board!
Instead in keeping with the obsolete mindset that prevails in that institution, it appointed a male from the tax haven Luxembourg.
And you wonder why Europe is going down the tubes.
Go figure.
Flyer
I thought that you should invest with companies that are successful and make you money. Who cares what they have in their pants. I'm not sure I'd give my money to a woman with baby brain and divided focus between the markets and her children, but I look forward to being corrected with actual data as opposed to political correctness.
Semscand
@Flyer I'd recommend you look at the Oliver Wyman report quoted, then. It argues for the same, but in the opposite direction: old-fashioned cultural stereotypes and poor policies preventing organisations from effectively tapping into the potential of women in the industry, which would be the most economically efficient outcome
Watanabe
It is really very simple....invest in/with companies and institutions that have a good balance of men and women and equal opportunities/fairness etc (read Glassdoor and other blogs to get an insider view). Dump your investments/dealings with companies that don't have a good balance. It will all even out in the end. Women are good business people on the whole and they themselves should vote with their purses/feet. 
Whatever
I talked to senior officials (who were mostly women) in Iceland on a visit in 2012.  They had already adopted the "Lehman sisters" model.  They were totally disparaging of what the men had done to the banks and to Iceland.  They were not ever going to allow that to happen again.    In future women would run their financial systems because they were not going to bet the nation for a quick buck.  It was the purest expression of gender bias I had ever been exposed to.  I am watching this experiment with interest.  I suspect where this might go is for banks to become utilities (after the next blow-up, perhaps), and for the men to congregate in the high risk corners of the financial system where (in the view of Icelandic women) they can continue to be childish and avoid growing up.  
This comment has been removed
Lukas
@Other things to do: There are so many things wrong in your account, that I don't even know where to start. Let me refrain from going into a long discussion, and just point out two mistaken premises in your argument
- Your logical premise is that "businesses", an entity which you apparently consider to be void of agents, do what "makes sense" for business. However, that completely ignores that "businesses" do what the people they do think "makes sense", and that might not be the same as the thing that "makes sense" for the business, but instead involve giving goodies to their fellows in a boys' network
- Your implicit normative premise seems to be that businesses exist to maximize profits/shareholder value/... But you do not offer any justification for this premise. Instead it might well be that business exist to assist people to achieve their aims. Arguably, one such aim might be self-realization in both family and business (not just of women but also of men, another important aspect you omit), and for that purpose we might need what you call "special arrangements," which, in fact, it might well make sense to institutionalize as a "normal arrangement".
In sum, therefore, your argument is not so much evidence of some clever reasoning, but reveals the same old flawed reasoning and bias which is such an important Mr Gapper still has to write this article- in the year 2014. 
aBlaze
@Other things to do  A world without babies: that would keep bankers in their jobs for centuries to come, and would eliminate the need for women as well, which would then eliminate the entire problem raised by John Gapper. QED. 
Fonz
Agreed, but children should not be considered a choice but an inevitability. To offset the negative career effects and improve the childs upbringing I would argue in favour of equal maternal and paternal leave.
Bankersrock
What needs adjustment are the attitudes to women's opportunity to carve out a career for themselves outside of the main gender stereotypes women appear shackled too. If women are given the same opportunity as men, educated, trained, equality in the recruitment process, then we'll see more women in finance, no doubt about it.  If we play the diversity card, which is important, but apply this through legislation of making 30% of boardroom positions to be filled by females, then this will not be good.  Feminists argue that females do not wish to be token women in the role because legislation says so.  Everyone wants to be valued in their purpose, no matter what it is or what sex we are.  Therefore we care about contributing and being in that position via a meritocracy.  However, this opportunity is not afforded to women.  As is a number of other matters like equal pay, equal treatment, sexual discrimination in the workplace, etc.  Attitudes towards gender opportunity take an eternity to change, however, if you slap organisations hard enough they will change their behaviour.  Its about time the UK started doing this, accelerating this process, and amending the gender stereotypes of women from an early age.  Encouraging women to have a career and contributing in similar ways, by way of choice, and for the male to play an equal part in home-life, children etc is important.

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