'Mediocre' male managers are stopping women's rise

"Mediocre" male managers are blocking women's development in the finance world because they are better at office politics, new research suggests.

Women also said many managers "faked empathy" on diversity, and more direct bosses were easier to work with.

The report, backed by the London School of Economics, called for culture change to improve diversity.

Author Prof Grace Lordan said: "We've made a lot of progress since the overt sexism of the 1980s and 1990s.

"But the problem today is cronyism."

The research, based on interviews with 79 women in the City, was carried out by the LSE and the Women in Banking and Finance campaign group.

Those polled felt they had to show sustained excellence in order to progress and faced more scrutiny than male peers.

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The women also reported a tendency for male managers to stand on a platform of diversity while doing little to improve it - in other words "faking empathy".

Most of the women said they preferred harsher managers who lacked empathy because they "knew where they stood".

"A poor manager can derail your entire career. We need a culture change and managers who really understand the benefits for diversity in organisations," said Prof Lordan.

'Black women have to outperform'

According to the report, the problem was worse among black women in finance. A quarter of those surveyed were black who described having "more headwinds and less tailwinds than other women".

They said they were held up to higher levels of scrutiny and needed to work harder to receive the same recognition as men and white women.

Dr Shefaly Yogendra, a non-executive director at JP Morgan's US Smaller Companies Investment Trust, told the BBC she struggled to find work in finance when she moved to the UK 20 years ago, despite having run five businesses and having two degrees.

"I would continually not get consideration by boards of those same blue chip companies who like to look at validation of other companies before they allow people like me into boardrooms," she said.

"That systemic exclusion has not ended and it effects a lot of women, especially women of colour."

There has been renewed attention to the lack of female representation on the boards of big companies.

Government guidance states that one-third of board members in the FTSE 350 - the 350 largest companies on the London Stock Exchange - should be women and that target has largely been met.

But new research shows that nearly half of smaller listed firms have only one female director or none at all.

Gender-diversity consultancy the Pipeline slast year found that large UK firms whose executive boards are at least one-third female are 10 times more profitable on average than all-male boards.

The LSE research said rewarding collaborative working and encouraging more flexible working could boost opportunities for overlooked employees in finance, including men who are more introverted, minorities and women.

Laura Lambie, senior investment director at Investec, said that the rise of flexible working in the pandemic could improve diversity.

"If you go back 10 years it's not surprising you don't get the best managers if you're only considering half the population," she said.