Fixing the Finance Industry Requires a Critical Mass - Building Gender Balanced Business

• Here comes more ammunition, if any more is needed, for the argument that the finance industry would function better with more women in decision-making positions.

• The long-awaited National Council for Research on Women’s report “Women in Fund Management: A Road Map for Achieving Critical Mass – and Why it Matters” argues that more women are needed in the finance industry, and it provides data and reasoning to buttress the case.

• Women make up just 16% of executive and board positions in the financial services, and 9 in 10 fund managers are men, with women controlling just 3% of the $1.9 trillion in hedge funds. Of course, women are far more prevalent in most other facets of Western economies.

• That (absolute and relative) underrepresentation, if uncorrected, will weaken the US economy, the US-based group argues in the report. Wall Street must diversify, it says, not just to better respond and reflect US women in the economy but because the industry is shifting from highly leveraged and high risk to demanding reform, greater oversight, and longer-term investing strategies.

• The report then notes the large number of studies that have shown how women invest differently, and in more reasoned, consistent and risk-averse manners, than men. It also notes how hedge funds run by women have on average vastly outperformed those run by men even before the start of the retrenchment to more risk-averse strategies.

• The critical mass alluded to in the title is at least 3 in 10 leaders at a company — fewer than that, and the women involved will not be able to make significant change in corporate policy.

• Linda Basch, head of the group, summed up the need for critical mass by saying at the report’s release, “[W]e need the best talent and strongest
  thinkers…. This means bringing the voices and analyses of women to the table in sufficient numbers — a critical mass — to have an impact.”

The National Council for Research on Women report