Proposals for bonuses to be tied to the number of senior women at financial institutions have been criticised by top City figures, who say the move threatens to deter women from working in the Square Mile.
In a government-backed review out today, Virgin Money chief exec Jayne-Anne Gadhia recommends financial services firms “connect parts of the remuneration packages of their executive teams to gender balance targets”.
But Newton Investment Management chief exec Helena Morrissey, who founded the 30% Club to increase the number of women on FTSE 100 boards, told City A.M. she was “concerned the focus on bonuses may backfire”.
“I’m worried it’s going to be confrontational,” Morrissey said, adding while financial institutions are “very happy to have targets and goals” many firms “don’t want to alienate men or have women feeling men are going to resent [them]”.
“We have a great momentum in this whole direction,” Morrissey added. “I just don’t want to go backwards on that.”
Seamus Nevin of the Institute of Directors (IoD), also had reservations, telling City A.M. that linking bonuses to gender equality targets “must result in meaningful change”.
“We would not want to see managers promoting women just because their bonus depended on it,” Nevin said.
The Treasury first asked Gadhia to look at gender representation in financial services last year. Today’s review found that women make up only 23 per cent of financial services boards in the UK, and hold just 14 per cent of seats on executive committees.
“Too few women get to the top and this is not just about childcare. Women are leaving because the culture isn’t right,” Gadhia said. “It’s very encouraging that a number of major financial services companies have already agreed to implement our recommendations. As a result, the issue will now be addressed in a way the City recognises.”
City minister Harriet Baldwin said the Treasury fully accepted Gadhia’s review – which also includes proposals for firms to set internal gender diversity targets and publish annual reports tracking their efforts – and would launch a new “Women in Finance Charter” for banks to commit to adopting the review.
Gadhia is set to sign the charter today for Virgin Money, with Lloyds Banking Group, Barclays, HSBC and Royal Bank of Scotland (RBS) also signing up. City A.M. understands, however, that multiple firms delayed putting their name to the charter until early this week over concerns about its recommendations.
The Gadhia review comes on the same day as the Women and Equalities Select Committee releases a new report claiming the government is “complicit in a system that is undermining productivity and perpetuating the gender pay gap”.
Meanwhile, a new survey out today from executive search firm Wilkinson Partners and law firm Withers recorded a seven per cent increase in the number of female partners hired in the tax and private wealth sectors.