Women in the Australian financial services sector are substantially under-represented in promotions due to systemic gender bias, new research shows. This barrier is subsequently reducing women’s ability to navigate their career path in the sector and realise their potential.
The research, conducted by investment management company, Ardea Investment Management’s (Ardea IM) Head of Research, Dr Laura Ryan, was done in collaboration with researchers from the CFA Institute (Australia) and the Australian National University.
They found that despite women comprising 52.8 per cent of total employees in the financial services sector, women are considerably under-represented in unsolicited promotions, or “gifted promotions” by 25 per cent, according to data cited from the Workplace Gender Equality Agency. The data found this to be true even as education and experience was equal across genders.
“Our work shows there is strong statistical evidence of behavioural differences that lead to gender bias in promotions, mostly because the prevalence of ‘gifted promotions’, those received without being requested by the employee, strongly favours males,” Dr Ryan said.
“There is an urgent need for the Australian financial services industry to develop and adopt a standardised framework for corporate promotion policies to mitigate the systemic bias in current promotion rates for all genders.”
“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.
International research has found that social bonds between male executives and their male managers is a significant factor in explaining why these male employees receive more promotions than female employees who exceed their potential ratings in formal annual reviews.
Speaking about the need for a better promotional framework in the sector, Ardea IM CEO Stephen Clout said, “The financial services industry is noted for its analytic approach to business and investment, yet it is clear that it could do so much better by applying the same principles to staff assessment and advancement.”
“Women comprise over 50 per cent of financial services employees. This obviously means that they also represent at least 50 per cent of our potential and it is important to have mechanisms in place to ensure we all realise the benefits of this irrespective of gender.”
The research also explored the impact of career breaks on the sector’s promotional inequity, finding that after taking a career break for at least six months, women have a much lower propensity to request a promotion than men.
For women who don’t take a career break, however, the proportion asking for a promotion is equal to men, with women actually being more successful. The data says 25.9 per cent of women in this category find success compared to 17.2 per cent of men.
“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 to be receiving gifted promotions at a similar rate to their male colleagues.”