Kerry Huntley, HR business partner at Siemens Financial Services, explores some of the ways that Siemens is handling diversity issues.
The financial services industry does not typically conjure up an image of diversity, particularly in terms of gender balance. It’s undeniably a male-dominated industry. Yet in a world that is experiencing a radical rebalancing of economic maturity and power, giving rise to considerable opportunities for the role of finance in an expanding world economy, to under-utilise the talents of women seems short-sighted.
At the moment, in Siemens Financial Services (SFS), we currently have a gender balance of 51% female and 49% male. At SFS, we take a critical view on the diversity topic and we would like to share our experience and insights on this issue to stimulate further discussion on this topic. Breaking with corporate cultures, and indeed national social norms, may require regulations, rules and quotas in the first instance. But such policies are only the start and further action is needed. The purpose of diversity in the workforce (and that means right through from junior workers to board directors) is very practical: to produce the most effective, capable and high-yielding workforce and leadership that is humanly possible. It is not a political standpoint.
The gender divide – where we stand
The proportion of women who have climbed the corporate ladder and made it to main board level varies widely between countries. While progress has been made, business in general, and the financial services sector in particular, must make further efforts to recognise, capture and foster female talent. Norway was the first country to introduce legislation making a female board quota mandatory for publicly listed companies. Alongside Sweden, Norway is now known for having the highest percentage of female board members, 23% and 26% respectively. The situation in Norway is of particular interest when considering the role government policy plays in narrowing the gender gap.
It would seem that in the initial stages, legislation may hold the key to fundamentally changing attitudes. However, it is not sufficient in the long-term simply to enforce such measures. Evidence of long-term commercial benefit has to accrue if the change is to be permanent. Some evidence is emerging. Studies have demonstrated a positive correlation between women in leadership positions and a company’s financial performance, with one study revealing that Fortune 1000 companies run by women oversaw financial results, on average, that beat the stock market (103.4% versus 69.5% return for the S&P 500 stock index). However, while women comprise nearly 60% of employees in the financial services industry, less than a fifth (19%) progress through to hold more senior management roles.
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When we examine the relative position of gender diversity in a selection of countries across the globe, a picture emerges that may surprise some readers. A ranking of the top 50 countries shows that all the Scandinavian countries hold places in the top 10.
Germany, the US, Spain, the UK, China, France and Russia sit in positions from 11th to 31st. Poland and Turkey are 34th and 48th respectively.
Not all is doom and gloom, though, on gender diversity. Women’s board participation in many Asian countries is close to that in some European economies (although both are significantly behind the US). Moreover, female board participation is likely to increase significantly as regulatory requirements come into force. For instance, India’s parliament has passed a new Companies Act requiring certain types of public company to have at least one woman on the board. And companies listed on the Hong Kong Stock Exchange now have to report on a new mandatory provision on diversity in their annual reports, including gender representation at all levels.
Leveraging diversity – key steps
What, then, are the essential steps to develop a diverse talent strategy across the organisation?
A review of the various expert sources on this issue reveals consensus over three key steps:
Build the business case for diversity: Substantial evidence of the business benefits of gender diversity exists but such information must become internally recognised. It should be presented to the board, to management, and to the shop floor.
The company should publicly make a commitment to diversity and publish updates in its annual report, all the while presenting the issue as part of the strategy to grow the business, not merely as politically correct tokenism.
Implement a common standard for talent assessment: Accurate assessment of talent and potential is a crucial component of leadership development. Candidates need to demonstrate skills in areas such as risk taking, owning profit and loss
responsibility, building and leading strong teams, anticipating and managing change and resilience in the face of adversity. Behaviour-based assessment systems are useful in this context, in that they measure not only the business achievements, but also how they are achieved, a critical factor in building and leading sustainable business success. For example, at SFS a specific leadership programme is the catalyst for the continuing development of excellent leadership at the company, offering a series of leadership learning programmes to a selected group of managers.
Evaluate the leadership development pipeline and process: While succession planning at board level is common, the same cannot be said of middle-tier management progression. Organisations need to ensure a viable internal talent pipeline that embraces diverse talent before casting an eye elsewhere. For instance, at SFS we use a management tool designed to align people strategy with business strategy. It gives a fast and accurate overall picture of relevant key functions and the current succession situation as well as identifying high potentials.
The search for talent that can provide such compelling competitive advantage is not a modern, idealistic fad; it is simply good business sense. Progress still needs to be made on this front, but the tide is turning, slowly but surely. And further progress will be achieved by firms acknowledging the considerable body of evidence indicating the high level of performance by organisations successfully embracing diversity.
Kerry Huntley is HR business partner at Siemens Financial Services