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The ascent of Ms. Mayer and women like Meg Whitman at Hewlett-Packard, Virginia Rometty at I.B.M. and Sheryl Sandberg at Facebook contrasts sharply with the continuing misfortunes of many women on Wall Street.
In the spring, when JPMorgan Chase disclosed a $3 billion trading loss (which has since climbed to an estimated $5.8 billion), Ina R. Drew, the head of the bank’s chief investment office, became the first casualty. Ms. Drew resigned immediately and is now expected to lose the equivalent of two years’ compensation, an estimated $30 million, for her involvement in the fiasco.
Her departure followed unceremonious exits last year by female executives on Wall Street, where the scarcity of women in top positions has become a bitter symbol of the low status women hold in U.S. corporate life. JPMorgan Chase lost Heidi Miller, the former head of the bank’s international operations, and at Bank of America, Sallie Krawcheck, who ran the company’s wealth management division, also left. Zoe Cruz, another high-profile Wall Street executive and former co-head of Morgan Stanley, was ousted in 2007.
The figures tell an alarming story. Women make up more than half of the work force in the financial industry but are chief executives at fewer than 3 percent of U.S. financial companies, according to Catalyst, a New York-based global research and consulting nonprofit focused on women’s career advancement.
As of 2012, it is estimated that there are more than 8.3 million women-owned businesses in the United States, generating nearly $1.3 trillion in revenue and employing nearly 7.7 million people, according to the second annual State of Women-Owned Businesses Report, commissioned by American Express OPEN. The growth in the number (up 54 percent), employment (up 9 percent) and revenues (up 58 percent) of women-owned firms over the past 15 years exceeds the growth rates of all but the largest, publicly-traded firms.
The results of Financial News’ recent Women in Finance Survey bear out a similar view: 82% of hedge fund respondents said their gender has affected their likelihood of having a successful career, substantially higher than the 66% of total respondents who felt the same way. So why do women in hedge funds feel their gender makes it harder to succeed?
Most women in the hedge fund industry do not work in portfolio management positions, which create the performance upon which the hedge fund industry is built. Only 12% of the 10,000 members of 100 Women in Hedge Funds work in trading and portfolio management and the largest proportion, 26%, are in marketing roles.
Rachel Stewart, a consultant at global executive search firm Odgers Berndtson, said: “Among some of the experienced women, the feeling is that women coming into the industry now should be led towards more roles than marketing, operations and HR. It’s more difficult to get a seat as a partner or director if you don’t have a background of P&L responsibility, as this is the bread and butter of the hedge fund industry.”
Researchers from the universities of Leicester and Essex looked into the concept of "adulting," which is defined as the attempt by people to be seen as mature and responsible, professionally and socially, and, when looking at a London hedge fund, found that women faced problems at every stage of adult life – from getting started in the company to keeping credibility among colleagues after giving birth.
By contrast, young male staff were given more opportunities to settle into corporate life, and suffered fewer dilemmas in juggling work and parenthood, found Jo Brewis, Professor of Organisation and Consumption at the University of Leicester School of Management, and Dr Kat Riach, Senior Lecturer in Management at Essex Business School at the University of Essex.
"Our in-depth research into life for male and female workers at a busy hedge fund showed women are never the right age in organisational terms," said Professor Brewis, who has borrowed the phrase 'never the right age' from fellow management experts Professor Wendy Loretto and Dr Colin Duncan from the University of Edinburgh Business School, who originally coined it. Professor Brewis and Dr Riach gathered evidence in late 2010 through 53 interviews with men and women at the fund aged between 25 and 37, and 150 hours of observation.
They found that women's problems began when they entered the company. Unlike their male colleagues they were given little or no informal guidance and training as new members of a team.
While opinions on diversity are wide-ranging, the facts are pretty clear. Study after study has shown women to be more risk-averse than men, across a range of activities, including the Wall Street businesses of investing and trading. Study after study has shown that women place greater emphasis on interpersonal relationships, and on nurturing them, than do men. And studies show that female managers are less focused on winning in the short term and are more long-term-oriented than their male counterparts.
Do any of these sound like qualities the big banks could use more of?
Perhaps as a result of the complementarity of differing approaches of men and women, numerous studies, including the annual Women Matter surveys by McKinsey & Co. and research by Catalyst, show that more diverse management teams are more successful management teams; they deliver higher returns for shareholders across industries, including banking. Academic research indicates that more diverse teams outperform even more capable management teams, a real “wow” of a finding.
How can this be? Because adding one more PhD in applied mathematics to a team already full of them has much less effect than adding someone with expertise in, say, managing people or in IT systems. If diversity of color and gender is a proxy for diversity of experience, then adding that diversity to management teams helps bring different perspectives to the table.
If, as many maintain, women could have such a tonic influence on the markets, why are there so few women traders? Why are women not pushing their way onto the trading floors, and why are banks and hedge funds not waving them in? Women make up at most 5 percent of the traders in the financial world, and even that low number includes the results of diversity pushes at many of the large banks. The most common explanations ventured for these numbers are that women do not want to work in such a macho environment, or that they are too risk averse for the job.
There may well be a kernel of truth to these explanations, but I do not place much stock in them. To begin with, women may not like the atmosphere on a trading floor, but I am sure they like the money. There are few jobs that pay more than a trader in the financial world. Besides, women are already on the trading floor: they make up about 50 percent of the sales force, and the sales force sits right next to the trading desks. So women are already immersed in the macho environment and are dealing with the high jinks; they are just not trading. Also, I am not convinced women are as easily put off by a male environment as this explanation assumes.
There are plenty of worlds once dominated by men that have come to employ more women: law and medicine, for example, were once considered male preserves but now have a more even balance between men and women (although admittedly not at the top echelons of management). So I am not convinced by the macho environment argument.
What about the second-mentioned explanation, that men and women differ in their appetite for risk? There have been some studies conducted in behavioral finance that suggest that on computerized monetary choice tasks women are more risk averse than men. But here again, I am not entirely convinced, because other studies, of real investment behavior, show that women often outperform men over the long haul, and such outperformance is, according to formal finance theory, a sign of greater risk taking. In an important paper called “Boys Will Be Boys,” two economists at the University of California, Brad Barber and Terrance Odean, analyzed the brokerage records of 35,000 personal investors over the period 1991–1997 and found that single women outperformed single men by 1.44 percent. A similar result was announced in 2009 by Chicago-based Hedge Fund Research, which found that over the previous nine years hedge funds run by women had significantly outperformed those run by men.
From being treated as a quiet, supportive half of society, women who want to start a business in India now find the country to provide one of the most fertile environments based on indicators such as business confidence, motivation, financing options and other sources of support.
The finding is part of Dell Women's Global Entrepreneurship Study conducted across 450 women entrepreneurs from US, UK and India commissioned by Dell.
It reveals that 71 per cent of woman entrepreneurs in India have a branding in market for their businesses and eight in every 10 woman entrepreneurs are hiring which indicates an expansion spree in their individual businesses as well as increase in employment opportunities too.
"When I started my business I didn't even know how to write a business proposal for getting a loan sanctioned. But I was born to be a businesswoman and hence I could reach this stage without looking back," says Rita Singh, MESCO Steel Group who has been awarded the "Best Woman Entrepreneur of the decade" by FICCI.
Another entrepreneur Ishita Swarup, who owns a shopping portal 99 labels says, "Women have become more experimental and are slowly shedding their inhibitions of taking risk. I frequently meet women who want to start something of their own but are afraid of taking the plunge and always advise them to just make a plan and hit the market. Over thinking should be kept for handling crisis if there are any."
The findings of the fifth annual Financial News Women in Finance survey are sobering: Of the 650 female respondents to the survey, all of whom work in the financial services industry, two thirds said their gender made it harder for them to succeed and a similar proportion said they felt they needed to work harder than male counterparts in order to be viewed at the same level of achievement by managers.
Ruth Grant, a litigation partner and co-chair of the diversity committee at law firm Hogan Lovells, said: “There is a mismatch between what’s being done and outcomes. There is a difference between management having projects and structures that they put in place and actually embedding those ideas into the corporate culture and how the business makes them part of the daily life and DNA of an organisation.”
The survey results are a timely reminder that, while top-level management of financial firms is largely convinced that change is necessary and has begun to implement programmes, there is still more that needs to be done. The challenge, particularly in depressed market conditions, is keeping gender diversity on the priority list.
Helena Morrissey, chief executive of Newton Investment Management and founder of the 30% Club, which has had notable successes encouraging chairmen to bring more women into board roles, said: “There has been a very long, slow burn over the understanding of gender imbalance, but a sharp pick-up and growing momentum for change over the past 18 months. The financial services sector, and especially bigger companies, are trying very hard, partly in an attempt to rehabilitate their reputation. It is a paradigm shift for many people.”
Financial firms do appear to be making more of an effort. This year, 38% of survey respondents said their company had no diversity programme or women’s networking forum, less than the 46% who responded similarly last year. Whether the shift is due to more companies launching programmes is arguable but, certainly, there is increased awareness and communication within firms to promote uptake of such initiatives.
Click through the slideshow for a firm-by-firm breakdown of the numbers.
The FEM Study: METHODOLOGY
All the data for assets under management comes from the National Venture Capital Association, which sent us their latest list from Thomson Reuters, current as of Q1 2012. The list included private equity firms that also do venture capital investing, which we attempted to identify and omit. However, some may still be included in the final list of 71 firms.*
Next, we went to each firm’s website and tallied up the number of partners and managing directors, noting how many were women. Obviously, the structure is different at different firms. For consistency, and to give firms the greatest benefit of the doubt, we counted anyone as a partner who had “partner” in his or her title, including venture partners, founding partners, administrative partners and other variations. We also included managing directors, who are senior partners. We did not include vice presidents, principals or associates. When partner titles were unlisted or ambiguous, we called and asked for the numbers.
We then calculated, for each firm on the list, the percentage of partners who are female. Rather than call it POPWAF, we decided to call this number the Female Equality Metric, or FEM. (At first we called it the Kleiner number, but decided to reserve that term for “number of discrimination lawsuits filed.”)
A firm with all male partners has a FEM of zero. A firm with all female partners (LOL, JK) would have a FEM of 100. If you think gender diversity is important, a low FEM is bad and a high FEM is good. If you think women should stay at the receptionist’s desk and out of the corner offices, a low FEM is good and a high FEM is bad. And if you think Silicon Valley is a meritocracy, as does Greg McAdoo of Sequoia Capital, which coincidentally has zero women partners, then you’ll probably dismiss these numbers as meaningless.
But page through this list of venture capital’s heavyweights, and it’s striking to see how few women have made it to the upper ranks. Also striking was the perfect 100 POFR, or percentage of female receptionists, at the 26 VC firms we called. We paged through team page after team page—the staff at a venture capital firm is almost universally called the “team”—where men’s faces lined the top rows and women’s faces appeared further down, if anywhere. “We have female administrative assistants,” explained one woman who picked up the phone, when asked whether any of the partners and managing directors were women.