Banks' CEOs may need a bit more financial encouragement to promote women
For all the hot air and the diversity programmes, the proportion of women promoted annually into senior positions at investment banks remains woeful. In last year's round of managing director promotions at Barclays, for example, just 28% of the new MDs were women. At Credit Suisse, just 18% of last year's EMEA MD promotions were. The lack of senior women is a problem for everyone. It's also a problem for banks' chief executives, who stand to be punished financially if they don't make progress. - But maybe not punished hard enough.
The recently published 2018 annual reports for HSBC, Barclays and Standard Chartered are a reminder that banks' boards have their eyes on diversity metrics. In 2018, the CEOs and senior executives at each bank were incentivised to increase the number of women in top slots, with varying degrees of success.
At HSBC, for example, CEO John Flint is busy pursuing a target for 30% of senior roles to be held by women by 2020. Last year, Flint exceeded his interim target with a 28.2% level of female representation in senior leadership roles. HSBC's CFO Ewen Stevenson also met his interim gender target, with 28% female representation in senior roles in finance and a 'successsion gender profile' in which 38% of mid-ranking roles finance were occupied by women. And HSBC's chief risk officer Mark Moses received plaudits from the board for ensuring nearly 28% of his senior jobs were occupied by females.
Similar things were afoot at Barclays. There, Barclays' remuneration committee noted that CEO Jes Stanley spent the past year, "personally taking accountability for trying to redress the historic gender imbalance at our most senior levels." Staley created a, 'Global Gender Task Force,' and a, 'Women’s Managing Director Forum.' Staley perpetuated a programme for rotating talented people (presumably women) around key senior management committees. And he, "personally launched a set of 2019 specific initiatives" (which aren't specified) that will help make a quick difference to the number of women in senior positions at Barclays. Fancy.
None of this is to say that promoting diversity is at all as important as generating a return above the cost of capital when it comes to CEO bonuses. At Barclays, for example, Staley received 17% out of a maximum of 20% of his 2018 bonus allocation for meeting nine personal objectives last year. One of these personal targets was diversity. Barclays, therefore, only allocates 2% of Staley's bonus on the basis of his diversity efforts.
It's the same at HSBC. There, Flint, Stevenson and Moses could have received up to 18%, 23% and 13% of their potential annual bonus allocations for achieving nine, eight and six strategic initiatives in 2018, of which diversity was only one. Like Staley, Flint therefore had 2% of his bonus allocated on the basis of diversity, while Stevenson and Moses were allocated 3% and 2% respectively.
If banks really want to make a difference to diversity figures, they might want to skew executives' bonuses further in favour of female promotions. Last year, for example, Jes Staley's bonus at Barclays was £1.1m. The implication is that he received £22k ($29k) for all his hard work on diversity. With so much else going on, it's easy to see why promoting women can fall by the wayside.
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