Men still outnumber women in the financial industry, particularly in executive positions. However, the numbers are slowly improving as data begins to show the value women bring to teams, making this a great time for women to step into finance.
It is no news that women, time and time again, get the short end of the stick when it comes to economic opportunities, and that breaking into largely male-dominated fields is no easy task. This underrepresentation is clear in the world of finance. About 46% of employees in the finance sector are women. However, only 15% occupy executive roles. In 2019, the Deloitte Center for Financial Services reported that only six out of 107 financial institutions in the United States had female CEOs.
These statistics show that, although it’s possible for women to get a foot in the door, making their way up to leadership levels remains a challenge. Why does this happen? There is no simple answer, but let’s delve in to this multifaceted issue and explore what it means for women getting started in their finance careers today.
Inequality in numbers
Although diversity has become increasingly prioritized, only 4.9% of senior roles in venture capital firms are held by women. In private equity, only 10% occupy senior roles.
The problem is also very present in business schools, where more men than women study finance. What’s more, there’s an even lower percentage of women—only about 16%—that make up the faculty.
Female professors also have significantly fewer research works published than men.
The culture of the finance industry poses another difficulty. The stereotypical banker is perceived as aggressive, transactional and dominating, traits which are traditionally characterized as masculine. Thus, women in finance may feel the need to adjust to compete in a male environment. This constant feeling of needing to prove themselves puts undue pressure on women’s mental health.
When women finally get promoted, they are burdened with more work than men and rarely receive the support and flexibility they need. Nor do they receive the reward for their extra efforts. Consequently, women report more burnout than men. This burden extends beyond the workplace, as women often feel forced to either choose between career and family. Or, they juggle both as best they can, making it difficult at times to achieve work-life balance.
A 2016 Oliver Wyman survey of 850 financial services professionals worldwide, including millennial women in finance, showed that little had changed in the sexist workplace culture over 30 years. The consulting firm’s 2020 report on the same topic notes that, although the number of women in finance is on the rise, it’s not high enough yet. While we may not be dealing with the blatant sexism of the 20th century and early 2000s, gender roles and unconscious bias are still very present today. The problem is quite clear. So, what is the way forward?
Women make teams stronger—it’s in the numbers
Interestingly, despite the barriers that women face, studies have shown time and again that including women on finance teams helps results to skyrocket. An article from HEC Paris reports that private equity teams that include at least one woman have been proven to outperform all-male teams by every private equity performance indicator available.
Committees that have at least one woman outperform those only comprised of men by an IRR average of 12 percent and a striking 52% per dollar invested.
An Investment Executive article that takes a look at diversity on a large scale—particularly racial but also gender diversity—discusses how diversity at companies not only improves results but also makes for happier employees who stick around longer. Clients are also increasingly seeking businesses who clearly make diversity and inclusion a priority.
All of this shows that the need for gender diversity in finance is not just a moral objective. It is also undeniably an economic one. Women are bringing a unique perspective to the table that makes a powerful impact on companies’ success.
Making our ripple in the pond
IE University is joining the conversation as well, recently holding an event in which six current and former female students from the Bachelor in Business Administration and the Master in Finance discussed this underrepresentation of women in finance. The panelists put special focus on the importance of career research.
Women who are entering the sector can prepare for what’s in store by seeking out professionals (especially women) who are already in the industry.
They also discussed the importance of investing in young women from the start. There should be more programs that aim to provide much-needed direction, guidance and mentorship for women interested in careers in finance and investment. Needless to say, there is an equal need to invest in training more female mentors.
For this growing wave of change to continue, it’s important that women in finance have support and opportunities available even at the beginning of their careers. Firms need to understand the challenges women face and create a system where women can transition to senior leadership. One way to do this is by creating a talent model where promotion and hiring decisions are made by a diverse team from both finance and HR, not just executives. This method ensures that unbiased and well-informed decisions are made.
Kerri Gohman, president of Xero Americas, is quoted in Forbes describing how once she allowed herself to become the boldest version of herself. She began taking risks, becoming more powerful and unleashing her real capacity. To break barriers, women must not shrink before the limitations they face. Rather, they must find the courage to step out of the box that society has tried to put them in.
However, women cannot be the only ones who push against the barrier. Everyone, men and women alike, need to pull their weight to cause a cultural shift. For men, it starts with examining their own unconscious biases and listening.
Despite the challenges, it’s still one of the best times for women to take the plunge into careers in finance. Today, women are creating their own companies, launching new initiatives, breaking the bias and fighting unapologetically for what they deserve. In short, they’re taking their sledgehammers to that glass ceiling, in finance and beyond.