The City’s overtly macho culture is a breeding ground for the sort of unrestrained male aggression and risk-taking that helped to bring about the financial crisis, and it needs to be countered by hiring more women for senior roles, say two Tory MPs.
In Masters of Nothing, Matthew Hancock, George Osborne’s former adviser, and Nadhim Zahawi, former chief executive of the polling agency YouGov, write that there is an “urgent need” to get more women into City boardrooms and call on the government to introduce legislation to force change if its target of 30 per cent female representation on boards is not met quickly.
The authors also call on banks to publish gender pay audits to show whether women are receiving salaries and bonuses on a par with men.
“It is time to accept that finance is not full of men because it requires masculine behaviour, but that finance is dominated by masculine behaviour because it is full of men,” the MPs write.
Mr Osborne, the chancellor, who hosted the launch of the book in Downing Street on Monday, said it was an “incredibly important contribution” to the debate about the crash and that he looked forward to the authors’ ideas being put into practice “in the years ahead”.
In analysing the cultural triggers that helped cause “one of the biggest crises in the history of capitalism”, Mr Hancock and Mr Zahawi said male competitiveness had led to reckless decision-making.
The people at the top of banks were engaged in very masculine competition. It can be called the ‘sexio-economic effect’, or, to put it plainly, the ‘my bank’s bigger than yours’ phenomenon,” the duo write, citing Dick Fuld, former chief executive of Lehman Brothers, and Sir Fred Goodwin, former RBS chief executive, as typical.
The authors’ blueprint for reform includes proposals to make bonuses subject to clawbacks to encourage greater responsibility, and higher pay for those working in compliance to discourage a “star trader” culture.
More controversially, they say that more companies should appoint co-chief executives to disperse power, as well as a “public protagonist” figure to challenge boards. Such a person would have the authority to convene special shareholder meetings on behalf of the public.
Authors: Elizabeth Rigby & George Parker
Financial Times (London) Sept 6 2011