Propsal to enforce gender diversity at UK banks

This sort of thing troubles me as it appears to have at least some backing in the British government.

Apparently roughly half the employees of these banks are women, but at the senior echelons, the ratio falls to about a quarter.
The assumption seems to be that sexism is to blame, but I suspect there are actually other reasons involved, such as many women preferring more flexible working hours or similar reasons other than rank sexism in those doing the hiring.

From the Wall Street Journal, here is the proposal:

Tie Bank Bonuses to Executive Women Hires, U.K. Government Review Proposes

Quote:

LONDON—Bonuses for top U.K. finance executives should be linked to how many women their institutions employ in senior positions, a review commissioned by the British government said Wednesday. The review was announced in July by the U.K. government as part of a wider plan to boost productivity in the U.K. economy. Jayne-Anne Gadhia, chief executive of U.K. bank Virgin Money, was asked to come up with ideas to increase the representation of women in top roles in finance. As well as linking executive remuneration to gender balance, Ms. Gadhia also suggested financial businesses should appoint an executive responsible for gender, diversity, and inclusion. “It should be a wake-up call to everyone in financial services that fewer women progress to senior levels than in any other industry in the U.K.,” Ms. Gadhia said in a statement. The preliminary findings are being presented Wednesday to the U.K. Economic Secretary to the Treasury, Harriett Baldwin, along with top executives from a range of banks.

And apparently some banks are already acting on their own, which is fine. But this idea of making compensation dependent on this particular metric bothers me. There are also claims of this being backed by "research". If it were really true that firms could increase their profitability simply by putting more women in senior positions, it would seem like a no-brainer, but I'm skeptical that it's really as simple as that or that there's necessarily a causation here rather than simply a correlation. Some have even suggested that the financial crisis of 2008 could have been prevented by having more women in senior positions at banks. I'm skeptical of that claim too.

The Financial Times reports:
Call to peg bankers’ pay to appointment of women backed

Quote:

Politicians are backing a push for financial services bosses to be paid less if they do not appoint enough women to senior roles, amid calls for a shift away from a “laddish” bank culture.

Quote:

John Mann, Labour MP and the longest-serving member on the Treasury select committee, said: “I think the proposals are good, pragmatic, and I think it will have an impact on bank culture — although it’s not a panacea in any way.” He said that, when the Libor-fixing scandal unfolded, there was a “laddish” culture, which is “one of the problems, especially in banks”.

Quote:

George Kerevan, a Scottish National party MP on the Treasury select committee, said the issue about gender is also one about profits. “Research shows that having more women at board level improves the bottom line. We all know that remuneration at senior levels in the financial community is target driven and paid in large measure through bonuses,” he said. “So Jayne-Anne Gadhia’s proposal to link those bonuses to improving a firm’s gender balance makes commercial sense as well as being the right thing to do.”

Looking through the official reactions of the banks themselves, they seem to be saying that they are already making efforts to increase gender balance themselves, and have set goals.

Quote:

Banks say gender diversity is an important issue and that improvements have already been made. The British Bankers’ Association said that, although the banking industry has made “significant strides” in improving female representation at all levels, it “cannot afford to be complacent on this crucial issue”.

Quote:

Michelle Pinggera, a partner at Goldman Sachs, said: “We welcome this review and look forward to working with our industry to help drive further positive change.” Some of the biggest lenders in the UK are setting targets in an attempt to address the problem. Lloyds Banking Group, for example, last year set a target of 40 per cent of senior roles to be held by women by 2020. Royal Bank of Scotland has also unveiled a goal to have at least 30 per cent of its top three leadership levels — 700 roles — held by women by 2020. Marjorie Strachan, head of inclusion at RBS, welcomed the initial recommendations from the review. “Currently, almost 40 per cent of the 5,000 most senior roles across RBS are held by women, but we know we must do better than that,” she said. She added that RBS is further challenging itself by ensuring this target is not an aggregate across the bank, but a formal objective within each business area. “Having a clear plan to ensure the right balance of diversity makes good business sense and is an important part of changing the culture of the bank.” She added that research shows organisations with greater gender diversity outperform by 30 per cent those that are not gender diverse.

OK, what the banks themselves are doing on their own initiative is fine, even admirable. But this idea for the government to impose a quota and enforce it by actually penalizing people in organizations who don't meet the quota, I think that's crazy. And yet this proposal is being received very politely and positively.

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