As technology, customer, shareholder and regulatory expectations evolve and challenge the relevance of traditional banks and insurers in people's lives, it seems financial services organizations are yet to recognize the benefits of diverse leadership.
Although research has shown that diversity, and women in leadership roles, have a positive impact on a company's ability to innovate, navigate disruption and improve its bottom line, research shows enough is not being done to bring this change to the most influential levels.
Related: Seeing diversity in action
A recent survey of 350 business leaders across various industries revealed that in financial services, 77% of men and 66% of women agree that diversity is essential in navigating the current transitioning of the industry.
The survey, which was conducted by London-based professional services giant Ernst & Young, sought to understand how organizations are addressing the effect of diversity and the advancement of women.
The survey found four disconnects that are holding back gender parity:
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- Reality disconnect: Business leaders assume the problem is nearly solved, despite little progress within their own companies.
- Data disconnect: Companies do not effectively measure their progress on gender parity.
- Pipeline disconnect: Organizations are not creating pipelines for future female leaders.
- Perception and perspective disconnect: Men and women do not view the problem the same way.
According to the report, both banking and insurance leaders acknowledge the value of diverse leadership on non-financial performance (86%) and financial performance (70%). Simultaneously, women and men recognize that their own boards are not sufficiently diverse.
Insurance industry findings
The report shows a dim outlook for progress with only 27% of banking respondents and 6% of insurance respondents expecting a significant increase in the number of women in leadership roles over the next five years. This raises the question: Without short-term gains in gender parity, can we expect to achieve long-term goals?
"We measure the progression of gender diversity. We get up to 50% in middle management but then when we get to senior management it disappears down a black hole," a senior insurance executive said in the survey.
The survey also finds that the insurance industry needs to put a lot more effort into addressing the gender gaps.
Related: Defining 'diversity'
Only 39% of insurance companies surveyed are formally measuring their progress towards gender diversity. Of the industries surveyed, banking showed the highest figure with 59%.
Only 33% of female financial services leaders said they believe their organization is effective at promoting women into leadership positions versus 58% of men. Only 8% of insurance leaders surveyed said they have formal structured programs in place to develop women.
"We focused on informally discussing the female development program and then creating it. When it was first raised with senior management, they said, 'What about male programs?' I said, 'Well, you're looking at it.' So they tentatively supported it but now that they have seen the benefits it has brought, they're fully on board. It makes a huge difference to women and helps with gender metrics reporting," a senior insurance executive in the United States told the Ernst & Young survey.
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