While the widely accepted notion of the glass ceiling describes a vertical barrier to aspiration for women, the lesser-known glass cliff evokes a forceful descent. This is the phenomenon of women being more likely than men to be appointed to leadership roles during periods of crisis – when the risk of failure is highest.
At the heart of this claim is the belief that organisations succumb to the moral and strategic imperative of visibility or representation politicking. A company appointing a woman in an executive role may be a signal that it is willing to dismantle existing hierarchies, adapt to evolving social norms or – more cynically – fulfil quotas.
Amid the shock of the pandemic, 2021 ushered in a series of historic appointments of women to leadership roles. January saw Kamala Harris sworn in as the first female US vice president and Janet Yellen as the first female US Treasury secretary. In March, Ngozi Okonjo-Iweala became the first woman to assume the office of director general of the World Trade Organization.
More recently, Hafize Gaye Erkan and Michele Bullock were appointed as the first female governors of the Central Bank of the Republic of Türkiye and Reserve Bank of Australia during a challenging economic environment in both countries. This harkens back to European Central Bank President Christine Lagarde’s comment in 2019: ‘Whenever the situation is really, really bad, you call in the woman.’
Women may also be appointed in senior roles to signal change to the market and investors. However, considering the phenomenon has its origins in a half-baked hypothesis of a mostly anecdotal nature, this claim should be tested against the data. OMFIF’s Gender Balance Index 2023 measures the number of men and women in senior leadership across the financial sector.
The report finds that, as of 2023, women make up 24% of deputy governors and C-suite staff, and 30% of the 6,221 senior staff across all institutions in the index. OMFIF’s analysis digs deeper to consider the types of roles held by senior women. This offers less encouragement: 62% of female executives in commercial banks, pension funds and sovereign funds hold revenue-generating roles, compared to 83% of their male peers. The picture is clear: there is female underrepresentation across the board and gender imbalance beyond.
Last year, the UK’s Financial Conduct Authority updated its diversity and inclusion policy to require UK-listed firms to disclose on a ‘comply or explain’ basis against two gender-related targets: having at least 40% of the board made up of women and at least one female senior board position. Of the five UK commercial banks studied in the GBI, only NatWest complied with both targets. Now, following the ejection in July of Alison Rose, who was appointed the group’s first female chief executive in the bank’s efforts to move on from a troubled decade and who oversaw the highest profits in around 15 years, it no longer meets the FCA’s requirements.
Clearly, financial institutions stand to benefit from greater female representation in their organisations. Jerry Zhang, chief executive officer of Standard Chartered, China, told OMFIF that a more diverse team is a more productive and efficient one. This perhaps stems from the idea that women can offer a broader skillset, especially pertaining to emotional intelligence and relational leadership styles. A paper from the London School of Economics finds: ‘women are more associated with caring qualities, and if a company is fatally ill, they may be appointed to cure it.’ Diversity by way of gender parity in the workplace does not undermine the quality of the workforce, it can only seek to improve it.
Rather than centring the discussion around meritocracy, Sophia Abu from the Central Bank of Nigeria, said at the virtual launch of the GBI, the priority should instead be to ensure that ‘the system they are coming into does not exclude them or does not provide barriers for them to grow’. While the number of female CEOs in the sample of commercial banks increased by one to eight this year, more than half the banks included in the index do not have any women in their C-suites.
Both the proverbial ceiling and cliff are symbolic barriers to opportunity we should be aware of and equipped to confront. The GBI finds that it will take 140 years to achieve gender parity in financial institutions. While the road to get there is paved with good intentions, efforts to achieve gender balance need to be more substantial.
Ahead of OMFIF’s discussion to promote gender balance in financial institutions on 29 August, which will explore strategies and policies for addressing the issue, it is important to identify the obstacles to inclusivity and equal opportunities. Not only does diversity bring value for public institutions representing society, it catalyses better working.
Janan Jama is Subeditor at OMFIF.