It is widely known that across the globe few women reach leadership positions within the financial services sector, with women only representing 12% of CFOs in large-cap firms and 34% of CFOs in mid-cap firms in 2018. Research by Catalyst shows that progress is being made, but not nearly fast enough with women’s global representation on executive committees in major financial services firms increasing at 1% per annum since 2016.
Australia (34%), the US (26%) and Singapore (23%) are amongst the frontrunners across the globe, with countries such as China (5%) and Japan (5%) amongst the poorest performing.
Recently there has been an increased focus on the importance of including women in leadership positions, including on boards. Apart from the obvious reason of legal equality, why is a policy of mixed-gender board representation important?
Broadening the leadership model
By the start of the 1990s, women had been routinely entering the workplace for 15 or 20 years in most European countries. Yet during that time, the expectation among both women and the organizations they worked for seemed to be that women would simply slot into cultures and structures that had been designed entirely by and for men.
Whilst the state of play has changed a great deal– most recently after the advent of the #MeToo movement in 2017 – today we can still see instances of initiatives solving symptoms rather than root problems.
Perhaps the crux of our representation problem is in our expectation for women to emulate traditional styles of leadership, as argued Harvard Business Reviews. Instead, it might be more fruitful to allow women leaders to pave their own way – and take note of how and what they succeed. Don’t lean in without the talent to back it up. Know your own limitations. Motivate through transformation. Put your people ahead of yourself. Don’t command; empathize. Focus on elevating others. And be humble
Recent attention has been paid to the successes of women-led nations in response to the COVID-19 pandemic. This new leadership style offers promise for a new era of global threats. Having a female leader is one signal that people of diverse backgrounds — and thus, hopefully, diverse perspectives on how to combat crises — are able to win seats at that table. Eventually, that could change perceptions of what strong leadership looks like.
“What we learned with Covid is that, actually, a different kind of leader can be very beneficial. Perhaps people will learn to recognize and value risk-averse, caring, and thoughtful leaders.”
– Dr Alice Evans, Lecturer at King’s College London
Look north for fair play
Since 2008, Scandinavian countries such as Norway have been veritable fair play (and fair pay) pioneers by legally requiring 40% female board representation. Since then many European countries have followed suit, and today France has an even higher percentage of women serving on company boards. Ten years down the line, however, not much has changed as far as boosting female employees up the corporate ladder in general, nor have the regulations made a difference in narrowing the pay gap between male and female employees on lower rungs.
In the U.S. women hold less than 20% of S&P 500 companies’ board seats, possibly as a result of legal requirements concerning female board representation. One argument against legal requirements is the risk of becoming the “token” female: no one wants to be brought on board based on his or her gender rather than skills or experience.
A study of 1,000 family firms in Sweden found that female leadership has a far more positive impact on the performance of family firms versus non-family firms. One reason could be that families are more accustomed to female representation at the board level and therefore more comfortable having important decisions that rest with female decision-makers.
Research by McKinsey shows that women-only leadership programs can help organisations transform themselves into truly inclusive workplaces, taking full advantage of the significant benefits of diverse teams operating at their best. The initiatives act as windows into overlooked parts of the company, providing a clearer view of the pitfalls and challenges that employees face. Stronger female leaders emerge from these leadership programs—and so do stronger companies.
Steps for enhancing female leadership in family firms
There a number of practical ways in which family firms and offices can enhance the representation of women at leadership and board level.
Create a pipeline
Pay close attention to how many women are in leadership positions – and who might be next. Achieving a balanced gender representation in leadership is unlikely to be solved overnight. Instead, focus on creating a culture whereby there are diverse development opportunities and executive visibility.
Visibility comes from placing women into leadership roles, and celebrating the successes that they have along the way. There’s an opportunity for co-workers, both men, and women, to help make the environment more welcoming by calling out the good work done by the women around them.
Share power and responsibility
Studies show that women are less likely to be assigned to bigger projects with larger budgets. If diversity is to move beyond representation and become an embedded practice, there needs to be a concerted effort to allow them to accomplish more. Not utilizing women’s entire skill sets not only impairs their professional development, but could also be an inefficient use of a business’s resources.
Be an advocate
Being an advocate can have just as much impact as mentorship. You can actively work to promote women and recommend them for specific projects, development opportunities or leadership roles. It also never hurts for people to have a sponsor in different departments or areas of the company. That exposure to other people and jobs can open up opportunities that make women more well-rounded leadership candidates.
By bringing a more balanced dynamic to the workplace, organizations can benefit from a strong direction in a caring manner, to build future-facing organizations where employees are encouraged to venture out into the unknown and make mistakes to help move the company forward.
Family-run firms are uniquely placed to pave the way for enhancing representation in leadership. Women directors have been associated with less rash investment policies, better acquisition decisions, and improved firm performance overall. This reluctance to rush in is partly why at least family firms incorporate more female directors and board members.
Most people spend more time with their work families than their own, so perhaps it makes sense to start looking at an organization as a second family. By doing this, and structuring it in the same way, the female leadership on a board level might not only be approached from a reputation angle or quota level (legal or otherwise) but rather as something to be embraced.