Diversity at the top

Companies in the top quartile for gender diversity on executive teams were 21 percent more likely to outperform on profitability and 27 percent more likely to demonstrate superior value creation, according to the 2017 Women in the Workplace study, a collaborative initiative between LeanIn.Org and McKinsey, which examined the gender-parity gap in financial services and looked at what can be done to close it.

A March 2019 research study conducted by Harvard Business School’s Letian Zhang, of 1,703 firms, across 35 countries and 24 industries, revealed that for those countries and industries that view gender diversity as important or culturally acceptable, there is evidence that such diversity was a driver to the companies’ success, leading to greater market value, higher revenue and more innovative thinking.

The 2018 Global Leadership Forecast study conducted by consulting firm DDI revealed that companies with women holding at least 30 percent of leadership roles are 1.4 times more likely to have sustained, profitable growth, and are 1.7 times more likely to have greater leadership strength.

However, women occupy fewer than one in five roles in the C-suite, according to McKinsey’s 2017 Women in the Workplace Study.

“Humanity is formed of an equal balance of people, so why would a business not operate better with the same equilibrium?” says Catherine Bell, chairman of inet3, a Suffolk, UK-based managing general agent, and chair of the Membership, Benefits, Events and Training Committee of the Managing General Agents’ Association (MGAA).

“Our customers are both men and women, so it makes sense that our companies reflect that at senior level.”

Elaine Caprio, former insurance company executive, president of Caprio Consulting and Coaching and leader of a non-profit called Executive Sisterhood, agrees.

“According to a Harvard Business Review, Boston Consulting Group study, 93 percent of women say they have a significant influence on what financial services their family purchases,” she says.

“These women prefer to do business with companies whose executive teams and boards are gender-diverse, because such companies offer products and services women will want to purchase.”

Bell continues: “A mixed board allows for different perspectives to tackle problems in unique ways before converging and finding a solution.”

Caprio again agrees. “Diverse leaders are more likely to create a distinct workplace culture where creative ideas are developed and considered, and where employees feel safe enough to speak up and present opposing views, challenge gender stereotypes or bring innovative ideas to their companies.

“Diverse teams are likely to be more collaborative, better at reading non-verbal cues, and more likely to permit everyone on the team to contribute to the conversation, which helps make the most of the team’s combined knowledge and skills,” she says.

Bell suggests that a legislative approach towards gender parity may highlight the importance of achieving equality.

“The Lord Davies Report (see below) suggested that boards should require a quota of men and women,” she says.

“While some may not agree, taking a legislative approach may make people focus on the importance of creating equal opportunities. It may fuel a societal expectation of what a board should look like.”

There is also evidence to support that younger generations are more likely to head towards gender-balanced companies over those where senior management is heavily weighted with men or women.

Weighted advantage
Women are still struggling to create a clear path to senior level positions.
“McKinsey’s 2018 Women in the Workplace study found that even though insurance companies in the US employed more than 60 percent of women in the general workforce, only 12 percent were top corporate officers,” says Caprio.

“In a Saint Joseph’s University study conducted in 2017, 13 of 88 insurance companies surveyed did not have even one woman on their boards of directors.”

Key findings from the Women in the Workplace studies have uncovered that as women advance through their careers, they lose ground to their male peers at every stage. The largest drop occurs early in their tenure, when women are 24 percent less likely to attain their first promotion than their male peers, even though they request promotions at similar rates.

Factors such as many women not aspiring to reach top positions, lack of sponsorship and mentoring along the way and few female role models, all play a part in the lack of women in leadership positions.

According to the reports, women in entry-level roles in financial services seldom envision themselves in a top executive position; only 26 percent have this goal, as compared with 40 percent of their male peers.

In addition, women receive less encouragement and support from managers and senior leaders in advancing their careers than their male peers.

Senior-level women view sponsorship and networking as very important factors.
“Women greatly benefit by cultivating male and female mentors, sponsors and role models within their companies as they climb the corporate ladder,” says Caprio.

“In addition, it is important for women to find external mentors and role models who are willing to assist with professional development and leadership skills, and to provide advice, as well as strategies for advancement.”

Communicating one’s worth and accomplishments to those who matter is also a vital step towards career success.

For example, prior to her appointment to the MGAA board, Bell introduced herself to each member of the board as she feared that without a personal introduction her application may have been overlooked.

She is still the only woman on the MGAA board.

An equal future 
Promoting gender parity begins from an early age.

“We need to be educating all children that there are no barriers to what they can achieve,” Bell says.

“We also need to ensure that those recruiting our future leaders are truly open-minded. Creating a supportive, challenging and accepting culture will play a huge role in ensuring that more women reach senior level positions.

“Gender and diversity awareness is the most important factor. Everyone—regardless of their background—must be offered the same opportunities to progress.”

Many senior women are championing equality in the workplace across the globe.
“A variety of women’s leadership organisations, industry events and seminars are focused upon the insurance and reinsurance industry,” says Caprio.

“Examples are the Insurance Supper Club, the Insurance Industry Charitable Foundation Women in Insurance Conference Series, Business Insurance Women to Watch, and Women’s Insurance Networking Group.”

“Inga Beale was the first female chief executive of Lloyd’s in 328 years,” Bell adds.
“This appointment had and continues to have a significant effect on the Lloyd’s market. It has spread much further afield and spurred other industries to consider their own situations.

“A lot of the time, I believe, discrimination is not deliberate—it’s just not on their agenda at all.”

The Women in the Workplace study found that 95 percent of financial services companies track gender representation across all levels, and 71 percent measure the gender representation of their promotion candidates. However, far fewer financial services companies have clearly defined what they are striving towards. 
“Success with gender diversity initiatives requires clear and consistent support from the CEO and senior management,” says Caprio.

“Leaders at all levels of a company who sponsor and develop women should be recognised and rewarded.

“Companies can actively encourage and support their own female senior or C-suite executives to serve on other corporate boards. Board service will enhance an executive’s skills and experience at her company, and will expand the existing pool of board-qualified women overall.

“Companies can expand the search criteria for board members to include female candidates who have the right experience, but who have not yet served on a corporate board.”

Flexibility to balance work and family is hugely important. The Women in the Workplace initiative found that as women’s responsibilities at work increase with seniority, they largely also maintain their tasks at home.

It also found that women—especially at senior levels—fear that partaking in flexibility programmes might hinder their advancement.

The research suggested that companies must encourage leaders of both genders to signal their acceptance and usage of flexible working policies in order to “de-risk” the opportunity for women.

In conclusion, the wheels are now in motion to ensure that diversity remains at the top of companies’ agendas.

“There are many people fighting to do the same thing and together we are a gathering storm,” says Bell.

Elaine Caprio is president of Caprio Consulting. She can be contacted at:  elaine@caprioconsulting.com

Is legislation the answer?
In Norway, a 40 percent gender quota for public limited companies was introduced in December 2003, with the goal achieved in 2008.

In 2010, Lord Davies of Abersoch was asked by the Conservative–Lib Dem coalition government to review the number of women on corporate boards in the UK. At that time, women made up 12.5 percent of corporate boards of FTSE 100 companies, up from 
9.4 percent in 2004—a very slow rate of increase.

Lord Davies recommended a self-regulatory, “business-led” approach, as opposed to legislative quotas. Ten recommendations were made in 2011 to spur an increase in female representation. One of these was that FTSE 100 boards should aim for a minimum of 25 percent female representation by 2015.

The independent Hampton-Alexander Review followed in 2016 and, continuing the same “business-led” approach, revealed that women then made up 26 percent of the members of corporate boards of FTSE 100 companies. In 2018, the Hampton-Alexander Review was committed to achieving the 33 percent target for women on boards and in leadership teams of FTSE 350 companies by 2020.

Compared with countries that have adopted binding legislative measures around the same period, namely France, Iceland, Belgium, and Italy, however, the UK does not compare well.