New research from Ardea Investment Management’s head of research, Dr Laura Ryan, has revealed that women in financial services in Australia are less likely to be promoted due to systemic gender bias, reducing their ability to navigate their chosen career path.
Specifically, women were found to be 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.
Importantly, objective criteria such as education and experience were equal across genders.
Dr Ryan said the research, which was conducted in collaboration with researchers from the CFA Institute and the Australian National University, showed strong statistical evidence of behavioural differences that lead to gender bias in promotions.
This was attributed to the prevalence of “gifted promotions”, those received without being requested by the employee, which strongly favoured males.
“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,” Dr Ryan commented.
According to Ardea IM, these 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 rates of promotion, enhancing their perceptions of “employee potential” even if female staff exceed their potential rating 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 added.
The study also explored the impact of career breaks and found that women should stay on the front foot in asking for promotions after returning to work.
Namely, the proportion of people requesting a promotion who have not taken a career break is uniform across genders, but women who ask for a promotion are generally more successful (25.9 per cent) than men (17.2 per cent).
However, after taking a career break of at least six months, women showed a substantially lower propensity to request a promotion than men.
According to Dr Ryan, there is “no doubt” that women in financial services are taking initiative in requesting promotions, which she said dispenses the myth that women are missing out due to unwillingness to put themselves forward.
“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.”
Ardea IM’s chief executive officer, Stephen Clout, supported Dr Ryan’s call for a better framework for promotions policy in financial services.
“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,” Mr Clout concluded.