Women in finance - Do financial firms maximize their talent supplies?
categories: ESG Products & Services, Responsible Investing, MOSCARDI Matt, Issue Brief, MAZZUCCHELLI Gaia
Rather than understanding gender through the lens of performance, our approach to this paper was to understand whether the gender gap was a function of talent and labor availability rather than cultural bias. In short – do financial firms maximize their available talent and labor supplies?
MSCI ESG Research estimated the available supply of talent workforce in any given country and mapped them to individual financial firms based on the geographies where they operate and recruit talents to measure whether companies’ practices were mirroring their access to talents. Our estimates point to a definitive no – financial firms largely eschew using the talent pools in the proportions available to them. In fact, while more than 60% of companies in our 91 company sample had more women in their overall workforce, at the senior management level, the exact opposite was true. More than 95% of companies in our sample had fewer women than we would expect in senior management.
We measured the implications of gender mismatch at financial companies and found that at senior management levels, companies that either matched their talent pool or skewed toward female talent had on average 43% lower compensation cost per employee than companies skewed toward men in senior management relative to available talent in 2016.