Companies providing financial services say signing up to the UK government’s Charter to increase diversity is helping tackle the problem. But complying with Charter guidelines to link pay to meeting diversity targets and maintaining stakeholder engagement in the issue is challenging.

The UK government’s Women in Finance Charter is helping get more women into financial services, according to a report on progress of the initiative which lays out new ways to tackle the sector’s diversity problem. Three years on from its launch, two thirds of the Charter’s 350 signatories across the industry say that signing up is driving change within their companies and organisations.

High-level, internal debate around gender diversity at signatory companies focuses minds on the need for change, the report by New Financial, the forum and think tank that campaigns for better capital markets, found.

Over half of the Charter’s signatories say they hadn’t confronted their gender imbalance before signing up; most said adopting the Charter had spurred them on to deal with other diversity issues particularly ethnicity, LGBT and disability, and all said they are seeking ways to involve men in meeting their Charter commitments. The survey also found that Charter signatories increasingly use it to benchmark themselves against the progress and activities of their peers in meeting the Charter’s targets.

“In just three years, the Women in Finance Charter has successfully elevated gender balance to the top of the agenda for financial services firms, and these latest results demonstrate that being a signatory is driving permanent and sustainable change for the better across the industry,” says forum member, Kate Guthrie, Group HR Director at banking group CYBG which owns Virgin Money and supported the research.

Four goals

Adopting the Charter involves voluntarily committing to its four main goals: pledging to promote gender diversity by having one member of the senior executive team responsible and accountable for gender diversity and inclusion so that diversity stays on the main agenda; setting internal targets for gender diversity in senior management and publishing diversity progress annually on a page on the company’s website dedicated to their Charter commitments. It also asks companies to ensure the pay of the senior executive team is linked to delivery of these internal diversity targets.

“The data shows the Charter has influenced signatories to take a new approach to improving diversity. It is vital that signatories continue to use the Charter to stimulate discussions at the highest levels, and maintain focus on increasing female representation,” says Yasmine Chinwala, partner at New Financial and co-author of the report.

Link pay

Hitting some of the targets has proved trickier than others. None more so than linking pay to improved diversity and maintaining stakeholder engagement in the issue, given tackling it competes with other pressing business matters for priority on decision-makers’ agenda. Other issues affecting progress, the survey found, include the shortage of female talent, particularly in the technology and investment industries, and growing competition for that talent.

Elsewhere, low turnover in senior roles makes it difficult for companies to improve diversity, and companies with small senior management teams say the departure of just one woman impacts female representation yet they do not want to feel obliged to hire a woman into a role just to meet or maintain a target. Other hurdles like organisational change within companies including mergers and acquisitions or rapid growth of business lines where women are under-represented thwarts companies’ ability to build diversity.

It also takes time to set up new processes, communicate the diversity message within a company and embed practices that will engender cultural change. Ensuring men are involved in meeting the Charter commitments is also a key to success, either via a role as the accountable executive, as male speakers on the topic or as mentors.

“Signing the Charter is just the first step, and I encourage all signatories to continue this work so we can create a fairer, more equal industry,” said John Glen MP, Economic Secretary to the Treasury in a statement.