The Bank of England and the UK Financial Conduct Authority have clear and admirable ambitions for diversity and inclusion within the financial sector. “Together, diversity and inclusion can reduce groupthink, encourage debate and innovation, and thereby improve outcomes for consumers and across markets, supporting financial stability.” In an April 2022 speech FCA CEO Nikhil Rathi reiterated the commitment of regulators to furthering diversity and inclusion saying the regulator had “broken new ground” in asking firms explicitly to aim for at least one of the four most senior Board positions to be held by a woman.

With further proposals set to be published, firms should look critically at whether their own efforts at inclusion are working in a sustainable fashion. There is progress on many fronts, but critics highlight systemic setbacks for women in recent years and some characterise the industry as worse for women now than in the 1990s.

Speaking to Michael Lewis in 2021, Anne Clark Wolff “one of the most powerful women to watch on Wall Street” and founder of Independence Point Advisors, a women-owned investment bank and advisory firm with a disruptive approach and focus on diversity of perspectives, said “I think it is far worse today than it was in 1990.”

She notes an outflow of women from the industry in the 1990s which has affected the pipeline of female talent since. “People want to believe that women exit because the job has long hours or is difficult. When you interview women, they never say that. They in fact say, I can respect the fact that it is difficult. They leave because of a lack of inclusion…Almost all continued to work, they just worked in a different capacity.”

Post pandemic stress

The effects of the pandemic on womens’ careers are still playing out. Burnout has reached alarmingly high levels at a time when many people have, and continue to make career and life decisions (e.g. family size, living situation) based on their pandemic experience.

The continuation of flexible, hybrid and remote working adopted during the lockdown stages of the pandemic offers potential for work life balance and combating burnout, however this has yet to be realised in many cases. The Deloitte Women in Work survey found that women who work flexible hours report poorer mental health and those who work part time report higher levels of stress and burnout.

Feelings of inclusion are also found to be affected with almost 60% of women working in hybrid models report they have already felt excluded. Women who work in a hybrid environment are significantly more likely to experience microaggressions than those who work exclusively on site or are exclusively remote. While hybrid working could be a great opportunity to drive meaningful and sustained change when it comes to gender equality at work, the data shows that many women are instead feeling more isolated and excluded.

Culture and attitudes toward flexibility play a key role, as it is not currently a straightforward solution. Almost all women surveyed were found to believe that requesting flexible working will affect their likelihood of promotion and that their workloads won't be adjusted accordingly. Hybrid work and flexibility can also be challenging to combine with predictability, which can be necessary for those with caring responsibilities. Only around one-quarter of women say their employer has set clear expectations of how and where they should work.

A lack of sponsorship?

As well as higher levels of burnout and more women taking a career step back to balance work and personal life, where women are working, they may be less likely to receive mentorship and sponsorship than in the past.

There is a circumstantial aspect to this, whereby those who work part time, flexibly, remotely or hybrid may be less able to, or choose not to participate in dinners, informal events or travel as much than colleagues without such constraints, therefore losing the opportunity for informal/adhoc mentoring which can lead to a sponsor relationship.

Clark Wolff laments that male sponsorship of young women has “gone to the wayside” as fewer men are deliberately seeing it as their role to help women continue to thrive and get [those] opportunities. The issue of personal relationships between senior men and younger women has come under additional scrutiny since the #MeToo movement, and men may view such relationships as more dangerous than they did in the past.

There may also be the case of rising bias. Research from the Chartered Management Institute found in a study of 1,149 managers across the UK that there was evidence of passive and active resistance to gender equality from male bosses in many companies. Two thirds of male managers thought their business could manage future challenges without a gender-balanced leadership, while a third thought that too much effort was focused on ensuring gender balance in the workplace.

Clark Wolff calls it a “huge issue, whether it's real or implied” noting that, “I have had a number of people cite ‘the Pence rule’ (based on Billy Graham’s rule that men not "eat, travel or meet alone with any women who [aren't] their wives"). You think about where the great mentoring often happens, or where the war stories happen, or where you feel like you develop that trust with somebody who you can ask all of those questions, it typically does happen either when you’re flying somewhere together or you’re having dinner with somebody or in those other social settings.

This means women suffer both from increased harassment, and less opportunity for mentorship and sponsorship. The Deloitte Women in Work survey found that More women this year reported experiencing harassment or microaggressions at work, a trend that is even more pronounced for LGBT+ women and women in ethnic-minority groups. Alongside this, the number of UK employment tribunal cases relating to the use of “banter” in the workplace rose 44% in 2021 according to employment law firm GQ Littler who found that the term is increasingly used as a justification for remarks alleged to be discriminatory or harassment. “Banter” related to protected characteristics (including age, sex and race) is of particular focus.

In an extraordinary example of spreading sexism in financial services, female board members at Aviva were subjected to "inappropriate" sexist remarks from individual shareholders at the insurer's AGM. Several critics took aim at group chief executive Amanda Blanc.

Blanc said on LinkedIn, as reported in the FT: "I would like to tell you that things have got better in recent years but it's fair to say that it has actually increased - the more senior the role I have taken, the more overt the unacceptable behaviour.

"The surprising thing is that this type of stuff used to be said in private, perhaps from the safety of four walls inside an office - the fact that people are now making these comments in a public AGM is a new development for me personally."

However, research on sexual harassment does not show that stopping one-on-one interaction between men and women is the solution. Organisations need clear policies on what is considered harassment and effective reporting processes and procedures to successfully counter harassment in the workplace.

So, what can the firms, and the financial services industry as a whole do to harness the potential of the new world of work before further setbacks occur?

1. Get the facts about inclusion

Sustained inclusion is challenging. As well as more women set to leave their organisations in the coming months diverse talent retention is an issue in other areas. In April Bloomberg reported Goldman Sachs youngest Black partner was leaving to start his own fund. The departure is just one of a number that highlight the challenges of sustainable inclusion and maintaining a diverse workforce. Black partners have a much shorter tenure than average and new appointments are not keeping pace with departures.

This setback can also have an impact on talent pipelines as visibility of diverse leadership reduces. Despite these challenges, a number of initiatives are bringing light to the problem. This includes Choir, a diversity business with, the words of its co-founder Sonya Dreizler, “a mission to lift the voices of women, non-binary folks, people of color, and especially women of color, in industries historically represented by white men - starting with finance.”

The business certifies financial services conferences based on how diverse and inclusive they are, considering a range of factors including whether the conference has an enforced anti-harassment policy, diversity in keynotes, diversity in all panels and women of color throughout the agenda, not just on Diversity, Equity and Inclusion (DEI) related panels. As well as a score and certification, Choir provides a full hands-on assessment which includes granular diversity metrics and outreach tools to help continue or improve diversity efforts year over year.

"A common issue we are trying to solve is that well-intended conference organizers may invite women and people of color as speakers, but those speakers (even when they have incredible experience and high-level titles) often are pigeonholed into lower visibility breakout sessions," said Dreizler.

"In fact, we've seen a number of agendas where the only women of colour speakers on the agenda are in the DEI sessions - even when DEI is not their area of professional focus."

2. Acknowledge the role for senior men

Clark Wolff encourages men in positions of power to think like a DEI officer, saying that as diversity became the purview of HR and DEI execs and “other people’s jobs” it became incredibly convenient for the men to opt out. Mentorship and sponsorship of women should not be feared, and good organisational policies can help protect the interests of both parties.

3. Make hybrid work, make flexibility genuine

Set clear expectations for hybrid and flexible workers and ensure part time roles are genuinely part time through reduced or shared responsibilities. Encourage all workers, not just those with caring responsibilities (in the main, women) to adhere to the principles and agreed ways of working.

4. Set new joiners up for success

Speaking on Dr Sabine Dembowski’s Better Boards podcast David Tyler, new Chair of the Parker Review talks about the importance of the induction process, setting new board members up to for success in building personal relationships and the ability to talk about matters such as race, “not being afraid to ask about their experiences earlier in their lives and career and how their ethnicity affected their progress. These topics should not be shied away from.”