Financial Institutions: Closing Gender Gaps in the Region
The glass ceiling metaphor used to describe the invisible barriers that hinder women’s access to upper management positions in companies continues to ring true. Despite efforts made in recent years, women’s presence in senior management is still very limited.
A quick review of the most relevant sectors of the economy show that an overwhelming majority of general managers are men. There are exceptions, of course, but women are still rarely appointed to lead large corporations in most of the world, and unfortunately Latin America and the Caribbean is no exception.
If this is the reality in the corporate world, what can we say about the financial sector, where certain sexist dynamics have traditionally predominated and hampered progress in achieving equality? A clear example is the facetime culture, which values time in the office more than the results obtained.
It is true that more women have been hired at entry level positions in recent years, including those formerly reserved to men, such as in trading desks or investment banking. However, reaching middle management, much less senior management, stills seems beyond women’s reach, except in departments such as communications, marketing, and human resources, confirming that the glass ceiling does in effect exist.
A vision of plurality
IDB Invest has its own strategy for encouraging financial institutions to work for gender equality and diversity, not only because this is fair but because it is profitable as well.
A management committee or investment committee is more likely to make better decisions the more it understands its clients. These committees can only have this perspective if its members reflect the plurality of the different groups with which they interact daily. Moreover, the benefits of inclusive policies are quantifiable. According to the McKinsey consulting firm report, Women Matter: A Latin American Perspective, among the companies listed on the exchange those with the highest levels of women’s representation obtain investment yields that are 44 percent higher and profit margins that are 47 percent higher. In other words, ensuring equality means winning.
Starting with the premise that equality is desirable and provides benefits, what can financial institutions do to implement it internally? First, we need to forget assumptions such as that at a certain point in their careers women prefer to devote themselves to their families rather than accept the demands of additional professional growth.
This type of approach conceals the true underlying problems: that women are not actually offered the same opportunities as men and their salary expectations are less attractive because they are generally paid less, even at the management level.
Another key factor is the identification and utilization of talent, for which it is essential to have an in-depth knowledge of the female workforce and to put into effect programs that enhance skills such as leadership. At the same time, it is important to analyze working conditions that in certain institutions are seen as determining women’s professional development and that in today’s world and thanks to companies’ digital transformation have ceased to make sense in various cases.
New technologies make it possible to perform many functions with a flexibility unthinkable in the past and formulas such as telecommuting help to reconcile professional life with family life.
Making equality the norm
The role of financial institutions in the area of equality operates not only within those institutions but reflects outward as well because opening up opportunities for women in both settings are two sides of the same coin. The enormous influence that financial intermediaries have in the development of the societies where they operate has begun to be used in Latin America and the Caribbean to clear the way for projects promoted by women, led by women, or meeting women’s specific needs.
An example of this is our loan signed last year with Guatemala’s Banco G&T Continental to promote financing for small and medium enterprises (SMEs) primarily led by women. IDB Invest provided a $75 million subordinated loan over seven years to strengthen G&T’s capital, and the delivery of technical assistance on aspects such as financial education, hiring, and growth management.
In this way, Banco G&T was able to replicate and bring to scale its G&T Women program that it had already been conducting through its subsidiary in El Salvador since 2012, thanks to support from the IDB Group. This program has been successful thanks to the profitability of these women-led SME portfolios and a low rate of arrears.
Going forward, in addition to standardizing this financial support, the challenge will be to ensure that women-led SMEs grow, scale up their production, and increase their size to become large companies. To achieve this, it is essential, as it has been so far, for financial institutions to increase their commitment and invest in them.
Ultimately, this means that financial institutions, both internally and externally, must continue to help close gender gaps to promote a more just, egalitarian, and profitable financial model that is also sustainable over the medium and long term.■