A growing number of superannuation funds admit that the sector is not immune to the systemic gender bias that exists across the financial services sector.
The gender pay gap sits at 19.1 per cent in the financial services sector, significantly above the 13.1 per cent average across the workforce, according to the latest Workplace Gender Equality Agency research.
Based on a 9am to 5pm workday, this means that women in the finance sector are effectively working for free from 3.29pm.
While some funds are making some headway to address the issue by driving positive change for an inclusive workplace, new research has found that the financial services sector is reducing the ability for women to navigate their chosen career path and realise their potential.
Investment management company Ardea Investment Management research set out to examine whether there was a statistically different promotion propensity in the sector according to gender in collaboration with researchers from the CFA Institute and the Australian National University.
Researchers found strong evidence that leads to gender bias in promotions, mostly because the prevalence of gifted promotions, those received without being requested by the employee, strongly favours males.
Researchers found women were substantially under-represented in the pool of people receiving unsolicited promotions by 25 per cent, despite comprising 52.8 per cent of total employees in the sector. This was despite objective criterion such as education and experience being equal across gender.
Superannuation the biggest, most influential sector
Ardea Investment Management’s head of research, Dr Laura Ryan points out that one of the biggest and most influential sectors in the finance industry is the superannuation industry.
“The more pressure the super funds put on the finance industry to acknowledge the positive outcomes that diversity brings, the faster we will see change,” Dr Ryan said.
The Australian findings are supported by international research that has identified that social bonds between male executives and their male managers is a significant factor in explaining higher promotional rates, enhancing perceptions of ‘employee potential’ even in the fact if female staff exceeding their potential rate in formal annual reviews.
“The much higher proportion of gifted promotions to males suggests a degree of unconscious bias, which leads to assessment of potential based on generalisations and preconceptions rather than objective parameters,” Dr Ryan said.
“We know diversity improves investment performance at fund managers. There’s an overwhelming body of research to support this. If our superannuation clients keep pointing out the link between diversity and investment performance, and they keep asking us to explain our hiring and promotion policies – we are going to listen,” she said.
Tips for achieving gender equity:
Source: Dr Laura Ryan, head of research, Ardea Investment Management
TelstraSuper has been focused on gender equity in the past couple of years, resulting in an increased number of women being promoted into senior roles, CEO Chris Davies said.
The company has achieved 50 per cent representation across its fund employees, executive team and board. “We have also strengthened already strong parental leave policies and we continue to encourage flexible working arrangements that are proving popular with all employees.
Davies continued: “The industry bodies have lobbied hard for change and been partially successful. Though these bodies and individual funds continue to request that government introduces the Super Guarantee contributions on paid parental leave, this change, and the consideration of the baby bonus being proposed by ASFA would help reduce the gender gap on super at retirement.”
An average of $138,000 less in retirement
Aware Super CEO Deanne Stewart says its own Super Pay Gap campaign earlier this year highlighted that on average, a woman working in the finance sector will retire with $138,000 less than her male counterpart. “It’s a deeply troubling reality and one that employers and governments need to work hand in hand to fix,” she said.
Its talent acquisition staff have mandatory unconscious bias training and are expected to adhere to active 40:40:20 gender targets – that is, at minimum 40 per cent of those we hire are to be women, and 40 per cent are to be men, allowing for 20 per cent to be any gender, Stewart explained.
The industry is making headway, but investment management needs particular focus. “We’ve made this a priority with strong results. Women now make up 42 per cent of our investment team, and that proportion is growing,” Stewart said.
“More broadly, every employer needs to approach gender bias with a ‘find it and fix it’ mindset, and be relentless – you can’t bury your head in the sand as a business then expect the issue to magically resolve itself across your industry,” she said.
But there are pockets of positive change within the industry. CareSuper has introduced full super paid on paid and unpaid parental leave, including full-time equivalent super contributions maintained for up to two years after returning to work if working in a reduced capacity.
CEO Michael Dundon says its recruitment policy supports positive action in recruitment to maintain gender diversity across the company. “As a result, gender composition of our workforce is about 54 per cent female across the broad and 46 per cent at senior leadership.”
The Ardea research found women showed a substantially lower propensity to request a promotion than men, prompting researchers to urge women to stay on the front foot in asking for promotions after returning to work from parental leave.
“There is no doubt that women in financial services are leaning in to request promotions, which dispenses with the myth that women are missing out due to unwillingness to put themselves forward,” Dr Ryan said.
“Their higher success rate when asking for promotion indicates that there are no objective reasons for them to not be receiving gifted promotions at a similar rate to their male colleagues,” she said.