Laura McGee is Founder and CEO of Diversio, and co-chair of the federal government’s Women Entrepreneurship Strategy Expert Panel
Camilla Sutton is President & CEO, Women in Capital Markets
There is massive economic potential to be realized by accelerating gender diversity in finance and advancing women into leadership roles in Canada. Financial Institutions are well aware of the potential and have committed to driving change, yet progress is still slow. Friday, March 8, on International Women’s Day, we need to come together as Canadians and take bold steps toward gender equality in finance and corporate Canada more broadly.
Achieving this goal would have a significant impact on ordinary Canadians. Research from companies such as McKinsey & Co. suggests there is the potential to unlock $150-billion in additional economic activity through gender parity, equal to a 0.6-per-cent increase in annual GDP growth. Advisory groups including the Canada-U.S. Council for Advancement of Women have highlighted the need to promote gender advancement in financial services as a means to increase the flow of capital to female entrepreneurs. Further, studies like this one suggest that financial institutions could themselves see a 3.5-per-cent boost in revenue and a 0.7-per-cent rise in productivity through greater gender diversity. Improving gender balance (especially in leadership) is likely to strengthen and improve company performance, dividends and long-term growth.
There is no magic bullet to accelerating gender diversity. It takes an authentic commitment of both resources and time. The companies that are moving more quickly through the journey share three core approaches. First, they treat it like a business priority; second, they recognize it will require internal cultural change; and third, they are partnering with others and influencing broader corporate behaviour.
Treating the acceleration of gender diversity as a business priority is critical and it is not rocket science. As stated by Julie Sweet, Accenture’s North American chief executive officer and co-chair of the Canada-U.S. Women’s Council: “You set goals, have accountable leaders, you measure progress, and you have an action plan. If you do those four things, you will make progress.” No company would consider dealing with revenue growth or cost reduction without data and metrics. The approach to diversity and inclusion is no different.
Second, internal corporate culture is often filled with bias and systematic barriers that work against women. Culture includes the beliefs and behaviours that are inherent within an organization and define their approach to business. If this culture places higher emphasis on what are typical male leadership traits, or fails to seek out the opinions of women, or allows everyday microaggressions to be acceptable, then women suffer not just in how they rise, but even in their desire to rise. To put some numbers behind this concept, Diversio surveyed more than 2,000 employees in 2018 and found that women are 1.2 times more likely than men to say their opinion is not sought out and valued at work. Women of colour, women who identify as part of the LGBTQ2+ community, and women with disabilities are up to 2.4 times more likely to say so. Boston Consulting Group found that women’s ambition varied far more by company than family status, highlighting that creating a positive culture is critical.
Improving culture requires focus and execution. For one approach, Women in Capital Markets and Diversio have partnered with some of major financial institutions in Canada, including many of the banks, pension plans and asset managers, to tackle this challenge as a group. We are collecting data to identify specific barriers, and using predictive analytics to recommend solutions both at the firm and industry level. These solutions might include programs and policies, such as 360-degree feedback and “open door” days. They might also include tools and technologies, such as collaboration platforms like 15Five and Bonusly. The idea is to use data analytics to recommend high-impact solutions and reduce the sense of wasted effort that plagues many organizations.
Finally, we cannot overlook the power of capital managers to influence corporate behaviour. Financial institutions have meaningful tools at their disposal to spur executives and board members to take on cultural challenges. For starters, banks and asset managers can promote equality by role modeling gender inclusion such as through the WCM and Diversio pilot. They can also create financial products that work for female entrepreneurs and allow the average Canadian to invest with a gender lens.
In addition, and perhaps most importantly, institutional investors can promote equality through proxy statements and investment activity. Canadian pensions have led the way on this, particularly notable is PSP and BCI, as well as CPPIB’s bold new voting policy to push for women on boards. This is a good start, and other investors should follow suit. To maximize impact, asset managers should consider aligning behind a standardized proxy statement that sends a unified message to industry: gender equality is critical, and we are committed to holding companies to account.
This International Women’s Day, we recognize the work financial institutions are doing to move from “why” should they advance women in the economy to “how” can they advance women in the economy. The business case has been made – it’s time to execute.