Please READ the chapter 3 instructions thoroughly and the rubrics. The assignment is to write chapter 3 and DO NOT focus on firm/bank performance. FOCUS on the Independent and dependent variables. Also, be sure to look at the research questions and read chapters 1 and 2 thoroughly.
Gender Diversity and Job Performance in the Banking Industry
Chapter 1
Student Name
Professor Name
17 April 2020
Contents
1.0 Introduction
3
1.1 Basic Concepts of the Study 5
1.2 Facts and Relevant Contexts
6
1.3 Overview on the Topic
9
2.0 Background of the Study
10
3.0 Statement of the Problem
10
4.0 Purpose of the Study
13
4.1 Study Method
..13
4.2 Study Design
14
4.3 Variables
14
4.4 Target Population
14
4.5 Sample Frame
15
4.6 Sampling Techniques
15
4.7 Sample Size
15
4.8 Data Collection Method
15
4.9 Data Analysis
16
4.10 Summary of Results
17
5.0 Research Questions
17
6.0 Research Method
20
7.0 Definition of Key Terms 22
8.0 References
24
Appendix
31
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LAST, FIRST_DIS9901A-8-12 28
1.0 Introduction
Innovative technological developments and a revolutionized worldwide economy has brought the world population closer to one another. Increased globalization has befitted organizations, educational institutions, and small-to-large-scale firms which have integrated diverse workforces to impact productivity (Owen & Temesvary, 2019). A diverse workforce with individuals from different cultures with different perceptions and ways of approaching and resolving issues is beneficial to the banking industry. Workforce diversity involves different aspects including gender, age, education, and ethnicity among others (Anitha, 2014). This creates a pool of ideas to use within the organization to promote a competitive advantage. Martin and Phillis (2017) stated that an organization gets multifold advantages because males and females have distinct ways of approaching an issue and perception differences which attribute to different styles of problem resolution when diversity is represented by gender.
According to Owen and Temesvary (2018), exclusion of gender diversity in the decision-making process could result in excluding a significant number of customers. For achieving a dominant edge and maintaining productivity, organizations should strive to achieve diversity in the workplace to increased employee engagement and reduced employee turnover that can help lead to a more competitive advantage. Increasing gender diversity in the workplace helps to allow an organization to have various skill sets; thus, making it easier to accomplish work tasks (Sammarra, Profili, Maimone & Gabrielli, 2017). Female employees can be assigned responsibilities matching their expertise and helping to empower team members to perform. Diverse aspects such as age and ethnicity can help to provide a sense of belonging which is a source of intrinsic motivation enabling increased job performance. Skilled and loyal employees provide the needed assets for organizational success and serve as important business resources.
Diversity is an aspect we acknowledge and deal within our daily lives. Diversity is measured in terms of gender, race in all organizations. In this study, diversity will focus on gender, which will serve as the independent variable. Gender diversity will be measured by the (a) level of support given to men versus women (b) amount and frequency of professional development training provided to men versus women (c) amount and timeliness of feedback provided to men versus women (d) opportunities for advancement available to men versus women and (e) incentives and rewards for good results to men versus women.
Organizations and companies for years have embraced workforce diversity and invested more in diversity programs to help attract a broader talent pools of employees. This increases the reputation and strengthens the cultural values of the organization. This research study seeks to examine the effect of gender diversity on individual job performance in the banking sector using control variables of age, ethnicity and education diversity. Qualitative and quantitative research methods will be used in this study to establish the relationship between the variables using four research questions: (a) What relationship exists between the age and individual job performance? (b) What influence does an employee’s educational background have on their performance in an organization? (c) What is the relationship between ethnicity and individual job performance? (d) What relationship exists between gender diversity and individual job performance? The study will include a sample size of 230 middle managers from 13 headquarter banks because middle managers make employment decisions and interact with employees frequently. This is not the first study to focus on gender diversity in the banking sector, but there is little literature on the topic. One goal of this study is to add to the existing literature on the topic and provide the need for further research.
Religious diversity in social and educational realms is extremely important. This importance has been emphasized in current research. Ghosha stated an example of such emphasis is found in a study where Bergan and McContha (2000) discovered positive relation between religious diversity and happiness across three wide-ranging age groups (adolescents, young adults and adults). According to Ghosh, Walker (2003) analyzed various aspects of religion and morality and determine that the religious experience is significant in moral functioning. Ghosh explained that in another study, Roccas (2005) also emphasizes the correlations between religious diversity and moral values. This debate is reinforced by the social norm theory. The theory suggests that the religious norms of the local population in which the organization is built on impacts the management perspective towards risk, regardless of whether management itself is religious, considering the local population is an integral element of the environment which the managers live and operate (Ghosh, 2017). The influence on management is augmented by the need of organizations to maintain organizational legitimacy.
1.1 Basic Concepts of the Study
Gender diversity may add value to an organization such as increased social sensitivity when solving problems and increasing diverse thoughts which results in better company performance (Anitha, 2014). Many studies show evidence of a positive relationships between gender diversity on executive and board position and job performance of firms. There is significant relation between gender diversity on executive and board positions and employee job performance (Rizwan, Khan, Nadeem & Abbas, 2016). The dependent variable in this study will be individual job performance. Employee job performance will include (a) Quantity of output, (b) Quality of output (c) Timeliness of output, presence / attendance on the job (d) Efficiency of the work completed and (e) Effectiveness of work completed. Little is known about the effects of gender diversity on job performance in the banking sector. A research gap exists on this study and there is a need for further research. This study will include various research methods and design, using a suitable sample for efficient results, and research questions.
The study will use a descriptive research design. Descriptive research design is used to measure subjective aspects in business performance (Ghauri, Grønhaug & Strange, 2020). This research design involves various qualitative and quantitative methods to examine variables. A researcher observes and measures variables in this design. The main research tool for this study is a questionnaire. Using this mixed approach will help to collect suitable data to provide a better understanding of the topic. Most data collected in this study will be obtained using a quantitative research method.
The dependent variable is individual employee performance and the independent variable is gender diversity. The control variables in the study are ethnicity, age and education diversity. The questionnaire will be administered on a sample size of 230 middle-level managers. The study will target middle-level managers from the three tiers of commercial banks in ten states. The study will use a stratified random probability sampling technique. Data collection will be from primary and secondary sources using qualitative and quantitative methods. Data analyses for quantitative data will be done through descriptive statistics and the Statistical Package for Social Sciences (SPSS version 21). Qualitative data will be analyzed through content analysis. An OLS multiple regression models will show the relationship between the dependent and independent variables.
1.2 Facts and Relevant Contexts
The banking industry is exploding and has faced challenges like workforce diversity which has negative and positive impacts of performance depending on how workforce diversity managed (McCabe, 2018). Banks have embraced diversity as it is reflected on their websites through sections labeled “Diversity and Inclusion.” Banks worldwide have standardized highlighting new policies which help to ensure equal opportunities for people from all genders (Anitha, 2014). Few banks have been able to fully achieve gender diversity. A study by SKEMA on 71 banks in 20 countries in 2018 showed that although more women are joining the banking industry workforce, they also face the challenge of moving up the hierarchy. Diversity and inclusion lag in American banks. Many studies have focused on managing work diversity and performance of an organizational performance, but few studies have focused specifically on the effects of gender diversity and individual job performance in the banking industry in the United States.
Job performance is an important factor in determining the performance of any organization. Previous studies show that matching employees improperly to job characteristics can lead to low job performance. Correct matching of employees and job characteristics leads to higher job performance (Farooqui & Nagendra, 2014). Job performance shows the non-financial and financial outputs of employees related directly with the organizational performance. Several researchers have done studies on job performance with many hypothesized studies having a positive effect.
Gender inequalities have been a subject for debate for decades. Organizations are seen to hire more male workers than women because of the perception that males perform better and can manage their jobs better (Farooqui & Nagendra, 2014). Women continue to have an upper hand in domestic work and caregiving. Equal opportunity to women is important for improved performance in any organization. A study by Joshi and Jackson (2003) showed the relationship between gender diversity and job performance in the executive positions was positive. A study by Jayne and Dipboye (2004) found that gender diversity does not result in positive results like building commitment or improving talents. Recent studies show that gender discrimination affects employee performance.
Employers use the academic background of employees to judge their employability. Employers will not hire an employee whose education or training they deem inadequate. Studies have shown that employee productivity depends on their education level; a more educated employee is more productive (Mahy & Vermeylen, 2015). When advertising for vacancies, employers state mandatory education qualifications for a position.
Multicultural workforce has been a focus since the 1990s and it continues to gain momentum. Organizations are increasingly using teams to increase business performance and employee satisfaction and use greater participation (Anitha, 2014). The advantage of multicultural business is having different ethnical views in solving problem which results in increased performance of the team. Ethnicity is used as a proxy for cultural diversity and it can lead to positive performance relating to broadening the perspectives and viewpoints of a firm. According to Rizwan, Khan, Nadeem and Abbas (2016), high ethnicity diversity can lead to conflict and communication problems because of social categorization. As an organization becomes more diverse in ethnic lines, it calls for more management on how different people interact at work.
Many organizations are embracing age diversity including banks. Individuals tend to identify themselves with certain groups (Hoff, 2014). In the same way, if an employee’s age is considered relevant for distinction, it may lead to differences in age groups in an organization. This leads to emotional conflict and age discrimination which affects productivity and performance. Some researchers believe that increased age diversity can lead to challenges for HR management. Inmyxai and Takahashi (2008) argued that older people have more experience and are more mature while younger employees learn new things and ideas. Combining these two generations can create a viable corporate culture as the values complement each other. This leads to better performance.
Park and Roberson (2007) stated that an immense amount or research has explored the effects of a firm’s reputation on the key focus areas of social values and ethics, or corporate social performance, which integrates a diversity dimension. Diversity is defined in this research study as to how a firm’s treatment of the individuals employed, their employees as well as the hiring of minorities and women, has been highlighted as one of the most important elements of stakeholder impressions of corporate social performance (Park & Roberson, 2007). The results found in the study provide evidence of an association between corporate social and financial performance (Park & Roberson, 2007). The research also suggests that corporate social performance signals a responsiveness of the firm to social and environmental issues and, effective stakeholder management (Park & Roberson, 2007).
1.3 Overview on the Topic
Based on the information provided above on different diversities, there are inconclusive outcomes of diversity on job performance. This study seeks to contribute to the body of knowledge on the effects of gender diversity on individual job performance in the banking industry and contribute to the existing body of knowledge in the United States and other countries. The motivation is to examine if American banks have similar or dissimilar effects compared to the existing literature on the topic (Hoff, 2014). The focus of this study will be the banking sector because it is among the most regulated and best governed sector in the United States and one of the biggest employers in the country. Gender diversity is an ongoing subject that needs to be incorporated in the banking sector.
2.0 Background of the Study
Modern-day workforce has become varied compared to previous iterations because of changes in demographic factors like immigration and globalization. The minority workforce in the United States is rising with an estimated 25% increase by 2050. Some countries like Korea and Japan are still highly male dominated and homogenous in all aspects of social life. These countries have experienced economic development over the recent decades that have led to fundamental changes in the labor market. More companies have adopted policies involving layoffs and downsizing. Managing diversity in Japan and Korea covers HR because of ethnic homogeneity, but the main debate is rooted in gender issues. A study done in 2003 in Korea showed that the participation of women in the economy was 48.9% while in Japan the rate of women participation was 48.3% in 2004 (Lee, Jang & Sarkur, 2008).
Some countries like Egypt have embraced diversity, which has been taking an increasing trend in the past couple of years. The workforce in Egypt is comprised of individuals who are fluent in several languages like Arabic, English, German and French with highly diverse education backgrounds. Nigeria is also ethnically heterogeneous and characterized by demographic diversities. Developing and developed countries have been caught up in the globalization web, which has led to demographic diversity in the workforce.
3.0 Statement of the Problem
Diversity is a critical and fascinating issue in the current workforce. It is important to note that any organization that plans to be more dynamic and profitable should hold a borderless viewpoint and has a duty to ensure that workforce diversity is part and parcel of daily business operations. Understanding the effects of workforce diversity on organizational results such as employees’ job performance and the generic performance of the organization has become an important issue (Choi & Rainey, 2010). This trend was discovered in the 1980s and recognized as an opportunity for many organizations to strengthen creativity, increase the ability to reach potential markets and attain a competitive advantage. It is a challenging task to develop an organizational environment that supports creativity without workforce diversity. The challenge is because of the inadequate diverse perceptions and approach to problems, which is a consequence of the limited pool of diverse ideas. Many organizations face challenges to maintain a competitive advantage, because knowledge and skills might not available within the workforce.
The Significance of the Research to Practice and the Community of Scholars
Thanks to the internet and other related technologies and innovation, life moves at a faster rate. People are always adjusting and learning new ways of doing things and even demanding different innovation from our executives, leaders, and scientists. Without study and investigation, our demand for such innovation would go unanswered. Research pushes humanity forward. It is driven by curiosity: we are inquisitive, seek different opinions, and engage in learning everything there is to learn. Without research and curiosity, progress will slow down, and our lives will be entirely different.
Joëlle Panaccio and Waxin (2010) explained that PBQ banks net financial revenues in 2002 increased approximately 10%. Considering that PBQ is a medium sized bank which focuses on retail and small-business banking, and is comprised of just about 7000 employees, the increase was something to look forward too since that was also the case for other small and medium banks (Joëlle Panaccio & Waxin, 2010). More than half of the 7000 employees were a part of the union of a bank. In the latter of 2002, PBQ’s revenues had fallen 50% considering the difficult year most Canadian banks experienced. Françoise was aware that PBQ was stagnant and far behind on the diversity forefront (Joëlle Panaccio & Waxin, 2010). Members of obvious minority groups represented less than 6% of the workforce; PBQ employees were predominantly French speaking Quebecois Females comprised a noteworthy quantity of the workforce, yet they were under-represented in management jobs. Women did represent well over 80% of administrative and office employees, but only 18% of those women were senior managers (Joëlle Panaccio & Waxin, 2010). Since the initial launch of first Employment Act, in 1986, an immense amount of equity plans has been created, however none have led to permanent modifications. The sensitivity of such issues was never prioritized in the past. Françoise, the tenth HR Director was completely cognizant of the magnitude of the challenge, considering only nine people help the position of Human Resource Director between the years 1986 and 2002 (Joëlle Panaccio & Waxin, 2010).
The research seeks to contextualize findings in a more extensive body of research and produce knowledge applicable outside the research environment. The result of this research may even have implications for policy and upcoming project implementation. Several studies have shown evidence of positive relationships between gender diversity for board of directors, executive positions, and job performance of organizations but less is known about the impacts of gender diversity on individual job performance within the banking industry (Madera, Ng, Sundermann, & Hebl, 2019; Jeong & Harrison, 2017). This research will have significance in helping the government form new banking regulations.
The research will also contribute to existing knowledge. This means that the study will create new knowledge and understanding based on the available knowledge by conducting innovative and extensive research. Research has been conducted to examine the effects of gender diversity on job performance. According to Joshi and Jackson (2003), there is a positive relationship between performance and gender diversity. According to Anitha (2014), gender diversity may add value to an entity resulting in more social sensitivity when dealing with problems and an increase in diverse thinking leading to better organizational performance. This research will, therefore, create new knowledge and understanding based on the above studies and several others and can be used to create further understanding of this study.
4.0 Purpose of the Study
Data that exists primarily focuses on gender composition in the boardroom, but this sample size is small which makes it hard to test the effect of gender diversity in small magnitude. This study will expand on the correlation between gender and job performance in the banking sector by testing how gender diversity impacts individual job performance through a suitable research methodology.
4.1 Study Method
This study will examine the impact of gender diversity on individual job performance in the banking industry. The measures of performance will include (a) Quantity of output, (b) Quality of output (c)Timeliness of output, presence / attendance on the job (d) Efficiency of the work completed and (e) Effectiveness of work completed. The population in this study will include 13 commercial banks headquarters in the state of ten states. The study will use an OLS multiple regression model to analyze data collected. Three control variables including age, education and ethnicity diversity will be used in this study.
4.2 Study Design
This study will use a descriptive research design. According to (Cooper & Schindler, 2006), a descriptive research design is used to help the researcher to observe and describe the behavior of the sample population without affecting it. The study adopted descriptive research design because of the advantages of using interviews and questionnaires without changing the environment under study.
4.3 Variables
The independent variable in this study is gender diversity and the dependent variable is individual job performance. The control variables are age, ethnicity, and education diversity and any additional variables related to this study will fall under these three categories.
4.4 Target Population
The population in this study refers to a group with common observable characteristics. A target population is where the desired data originates (Cooper & Schindler, 2006). This study will target all middle level bank managers from three tiers of commercial banks in several states. These managers include human resources, finance, marketing, operations and ICT managers and because they make most employment decisions. Middle-level managers are more available than top level management and have frequent interactions with the employee.
4.5 Sample Frame
A list of all potential samples that can be sampled is a sample frame (Kothari, 2004). The sample frame is the middle level management in the banking industry for this study.
4.6 Sampling Techniques
The stratified random probability sampling technique will be used to collect data from employees of the bank. The researcher will distribute 230 questionnaires to the valid respondents and attempt to collect 221 questionnaires after a proper response for a suitable sample size and response rate. The researcher selected this sample method because it would not be feasible to attempt to have every manager from 13 headquarter banks to take the survey. The researcher determined that bank managers supervised different areas (attributes) including human resources, finance, marketing, operations and ICT and subsequently from using a stratified random sampling process, five strata were created.
4.7 Sample Size
A sum of a subset of a population chosen for a study is a sample (Kothari, 2004). Using stratified random sampling, 30% of commercial banks will be selected for this study. This sample will be comprised of managers working in four (4) tier one banks, four (4) tier two banks, and five (5) tier three banks. The sample size includes 230 middle managers from 13 commercial banks headquarters from the following states: Arkansas, California, Massachusetts, Missouri, New Jersey, New York, North Carolina, South Carolina, Texas, and Virginia.
4.8 Data Collection Method
The study will use secondary and primary data. The quantitative and qualitative tools will be used to collect primary data (Yin, 2008). The qualitative tools will be observations and interviews and the quantitative collection tool will include a questionnaire. Changing and adopting different questionnaires of related studies will help to construct the questionnaire. Questionnaires offer a cost-effective way of getting data from a large sample and allows for anonymity (Yin, 2008). The questionnaire will be open-ended and close-ended.
4.9 Data Analysis
The data analysis process will involve organizing the collected data to efficiently and easily communicate results. Data analysis in this study will involve qualitative and quantitative methods. The quantitative data analysis will be done through the Statistical Package for Social Sciences (SPSS version 21) (Bryman, 2003). Descriptive statistics helped in analyzing quantitative data. These included standard deviation, frequency distribution, mean and percentages. The data will be presented using tables. Descriptive statistics is used to organize and review data. The study will use content analysis for qualitative data and present the results as prose. An OLS multiple regression model will help to show the relationship between the dependent and independent variables.
The OLS multiple regression model is:
Performance = a + b*gender + Controls+ error term
Y = β0 + β1X1 + β2X2 + β3X3 + β4X4+ E
where Y= employee performance in the banking industry
β0= constant term
β1, β2, β3 and β4=beta coefficient
X1= Gender diversity.
X2= Age diversity.
X3= Ethnicity diversity.
X4= Education diversity
E= error term
4.10 Summary of Results
The results will add to the body of literature on the impact of gender diversity on individual job performance in the banking sector. Results from this study will provide banks and future researchers with a reference. The study will use research methods for data accuracy.
5.0 Research Questions
Research on effects of gender diversity in the banking sector has focused mainly on boardrooms and executive positions (Campbell & MÃnguez-Vera, 2008). This creates a problem because the resulting sample is too small to account for the general population. It also makes it difficult to detect the statistically significant effect of gender diversity and ignores the broader corporate sector. This results in varied empirical results making it hard to determine the effects of gender diversity on job performance in the banking sector (Joshi, 2017). Few researchers have conducted research on the effects of gender diversity on job performance.
Cowan University Professor Leonie Still conducted a study in which she researched the career prospects and opportunities for women in the banking and financial industry (McAllister, 1997). The study began July 1996, and the goal of the researcher was to determine if there were any obvious career barriers challenging women’s progress in banking. This study could not have taken place without the jointure of the Human Rights organization and EEO Commission and Westpac industry (McAllister, 1997). The study was comprised of an attitude survey given to 10% of employees and a sequence of focus groups discussions with male and female employees. The focus groups represented all hierarchical levels and employment types.
According to McAllister (1997), findings from the attitude survey revealed significant variances in perceptions between male and female employees. The topics that were addressed within the survey ranged from respect in recruitment, selection, promotion and transfer, conditions of service and personal qualities. Digging deeper into the survey results, it was found that women felt underprivileged whereas men believed that women were showed favoritism by being given more opportunities to progress in the financing and banking industry (McAllister, 1997). Men also felt that the culture was more than supportive the women’s goal and aspirations within the industry.
Perceptual differences were some of the reasons revealed during the focus group discussions. Other issues were noted during the discussion such as the lack of career structures for part-time employees and lack of flexible working hours (McAllister, 1997). The study disclosed that there is a definite need for more policies, training, mentoring and networking arrangements, to assist women to make more lateral career moves (McAllister, 1997).
Researches from scholars, research organizations, and institutions of higher learning related to the topic were limited. The results would help to enlighten readers and scholars on the effects of gender diversity on job performance in the banking sector in the United States. There exists a significant gap in data on gender composition by hierarchy within organizations (Joshi, 2017). This study seeks to fill the gap by adding more material and information in this body of research. The study seeks to explore the effects of gender diversity on individual job performance in the banking sector. The dependent variable is individual job performance in the banking sector. The independent variable is gender diversity. The control variables in this study are age, ethnicity, and education diversity.
It is important to consider all variables that results to gender diversity within the workforce. Most of the variables including ethnicity, education and age are critical as it has diverse influences on the individuals which contributes to the general job performance. There is influence on the sense of belonging, especially when there are diverse ethnic groups within the organization. Employees feel they are part of the group which might provide intrinsic motivation to increase the performance. Diversity with regards to education provides a pool of skillsets that makes it possible to have a pool of ideas for proposing solutions. Employees can consult each other especially when they face difficult because of the diverse expertise with regards to the daily emerging issues. Team members should integrate best practices based on the counsel that they can get from other members of the group.
This study will examine this relationship by answering the following research questions:
1. What relationship exists between the age and individual job performance?
2. What influence does an employee’s educational background have on their performance in an organization?
3. What is the relationship between ethnicity and individual job performance?
4. What relationship exists between gender diversity and individual job performance?
The measurement of these questions will be done through several variables. The independent variable is gender diversity while the dependent variable is individual employee performance in the banking sector. The control variables will be age, ethnicity, and education diversity
A research study by Joshi’s (2017), like other studies, is based on diversity in corporate board rooms. Few studies have focused on gender diversity in the overall banking sector. This study will add to this little body of literature and become a reference point for banks. Future researchers will use this study in their research.
6.0 Research Method
Human resource departments are focusing more on implementing diversity in the workplace. This study examines the effects of gender diversity on individual job performance in the banking sector by examining a sample size of 230 managers in 13 bank headquarters in ten different states. The control variables in this study are age, ethnicity, and education diversity. Four research questions were used to examine the problem in this study. The measures of performance are profitability, efficiency, corporate reputation, and talent recruitment and retention. To answer these research questions, the study will use an appropriate research method and design.
This study will use a descriptive research design to describe the population systematically and accurately by answering the how, when, and where questions (Williams, 2007). A researcher using this design does not control the variables but observes and measures them. This study used this research design because not much is known about the problem. The study will involve eliciting the opinion of different managers in different banks. The study will include questionnaires as the tool to examine the variables. The researcher adopted a descriptive design because of the advantage of using observations, interview, and questionnaires without changing the environment under study (Kothari, 2004).
Using questionnaires is cost effective when collecting data from a large sample and allows for anonymity. Using questionnaires in this study will be efficient in finances, energy, and time. Pre-testing was done before administering the questionnaire to determine if the questions were relevant and understandable. The pre-testing phase helps determine the reliability of research tools (Creswell, 2006). In this study, pretesting involved 23 staff selected through a simple random sampling method. The rule in pretesting is to test the survey with at least 12 to 50 people before pilot testing. Twenty-three people in this study represent 10% of the sample which is a cost, time and energy efficient number.
Validity of a study refers to the extent to which data analysis results embodies the study. The two types of validity are content and face validity. Content validity in this study will be attained by seeking an expert opinion in this field. The probability of a question being misunderstood is the face validity (Creswell, 2006). Pretesting increases the probability of face validity.
Reliability involves measuring the consistency of the results depending on the research tools used. This study used internal consistency to statistically measure questionnaire reliability. The measure of internal consistency was through Cronbach’s Alpha with 0–1 alpha. As the value increases, reliability also increases. The 0.6–0.7 coefficient shows an acceptable reliability while 0.8 and above show good reliability (Greener, 2008).
Data collection will be from secondary sources and primary source through questionnaire. The researcher had informed about consent from respondents before administering the questionnaires (Bryman, 2003). The drop and pick method will be used to administer the questionnaires. This method is effective to increase response rate and reduce non-response bias.
The data analysis process will be qualitative and quantitative in this study. Analysis of quantitative data will be completed through the Statistical Package for Social Sciences (SPSS version 21) (Bryman, 2003). The questionnaires will be numbered for easier referencing before data collection and analysis. The variables will be chronologically coded to coded variable number. Numbered questionnaires and coded variable number will make it simple to identify and make corrections in data entry (Creswell, 2006). Quantitative data will be analyzed through descriptive statistics. Data presentation will be completed through tables. Coding qualitative data will be thematical, and the evaluation will be done statistically. The analysis will be done through content analysis and prose will be used for data presentation.
Summary
There are inconclusive outcomes of diversity on job performance. This study seeks to contribute to the body of knowledge on the effects of gender diversity on individual job performance in the banking industry and contribute to the existing body of knowledge nationally and worldwide. The focus of this study is the banking sector because it is among the most regulated and best governed sectors nationally and one of the largest employers domestically. Gender diversity is an ongoing subject that needs to be incorporated in the banking sector. A descriptive research design will be used because little is known about the problem and the researcher could observe the sample without changing the environment. Data collection and analysis for the study will be conducted using qualitative and quantitative methods.
7.0 Definition of Key Terms
To prevent confusion and misuse of the intended meaning, the following key terms are
defined:
Employee Performance: Refers to the behaviors of workers in the environment and how well they perform their job (Anitha, 2014).
Workforce Diversity: Represents the similarities and differences among employees (Rizwan, Khan, Nadeem & Abba, 2016).
Gender Diversity: Equitable representation of people with different gender (Healey & Stepnick, 2020).
Ethnicity: The state of belonging to a particular social group with a common cultural tradition (Healey & Stepnick, 2020).
Education background: Refers to all the educational experience one has undergone since childhood (Silva, Leite, Vilas-Boas & Simões, 2019).
Competitive advantage: Leverage over competitors through offering something special (Akewushola, Elegunde & Saka, 2018).
8.0 References
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Frey, W. H. (2018). Diversity explosion: How new racial demographics are remaking America. Brookings Institution Press.
García-Meca, E. (2016). Political connections, gender diversity and compensation policy. Review of Managerial Science, 10(3), 553-576. doi: 10.1007/s11846-015-0167-7
Ghauri, P., Grønhaug, K., & Strange, R. (2020). Research methods in business studies. Cambridge University Press.
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Appendix
Annotated Bibliography
1. García-Meca, E., García-Sánchez, I., & Martínez-Ferrero, J. (2015). Board diversity and its effects on bank performance: An international analysis. Journal of Banking & Finance, 53, 202-214. Doi: 10.1016/j.jbankfin.2014.12.002
This article shows the effects of board diversity, gender, and nationality, on the performance of the bank. This study focused on the board which played a vital role in steering the performance of the bank. This research was built on two hypotheses; that gender diversity does not affect the performance of the bank and that the board nationality diversity does not affect the performance of the bank. One hundred and fifty-nine banks from nine different countries were put under observation between 2004 and 2010 to test the hypothesis. Out of this research, 877 observations were recorded. Throughout this period, the characteristics of the board members were noted from the Spencer & Stuart Board Index databases. Conversely, data and information used to measure performance were derived from the Compustat database.
The results of this study suggested that the type of diversity may have different effects on the bank’s performance. The results suggested that nationality diversity in the board had negative effects on the bank’s performance, conversely, gender diversity proved to have positive effects on the work performed. This research study is useful to financial institutions especially when it comes to the appointment of board members while ensuring diversity.
2. Thanh Tu, T., Huu Loi, H., & Hoang Yen, T. (2019). Relationship between gender diversity on boards and firm’s performance – Case Study about ASEAN Banking Sector. Doi: 10.5430/ijfr.v6n2p150
This is study aimed to establish the relationship between gender diversity in the board of management and directors, and job performance in the banking industry. The study focused on the ASEAN banking system, which included countries with growing development but low rates of gender diversity. The study incorporated a literature review from past researches and afterward a research process that they conducted. The methodology involved a sample of 100 banks from four countries in four years. Information for these banks in the period of observation was derived from databases. In three of the selected countries, the results showed that women’s presence on the board led to higher profitability. The remaining which showed negative implications of women being on the board of directors revealed these kinds of results because of other factors like economic and cultural background.
The results obtained from the data were scientifically analyzed to give a conclusion. Further research should be conducted on the same, focusing on different countries to get a conclusive theoretical explanation of this relationship. It is, however, clear that diversity in terms of gender has positive implications on the performance of the bank.
3. Kramaric, T., & Pervan, M. (2016). Does board structure affect the performance of croatian banks? Journal of Financial Studies and Research, 1-11. Doi: 10.5171/2016.158535
This study was aimed at analyzing how and to what extent board structure influences a bank’s performance. The board structure being analyzed was the gender of the president, female members in the management board, board size, and supervisory board female members. The study involved a sample study that focused on the banking sector in Croatia. The research focused on all Croatian banks that were active between 2002 and 2013. To measure the performance of the bank, Return on Equity was employed as a variable. From the results, the gender of the president did not affect the performance of the bank. On the contrary, the analysis from the results showed that gender diversity affected the bank’s performance negatively. The researchers concluded that the call for gender diversity was not derived from the need for job performance, but rather from sociological needs.
4. Nunley, J., Pugh, A., Romero, N., & Seals, R. (2015). Racial discrimination in the labor market for recent college graduates: Evidence from a field experiment. The B.E. Journal of Economic Analysis & Policy, 15(3), 1093-1125. Doi: 10.1515/bejeap-2014-0082
This article is aimed at presenting experimental evidence on racial discrimination among graduates. The study involved random creation of resumes that were sent to different online advertisements in various economic sectors, including banking, finance, and management. The resumes were sent to seven different cities in the United States. Eight names were used for the whole process, in which there were four males and four females. Among the four males and female names, two were white names and two were black female names. For each advertisement, four resumes were sent, maintaining equality among white and black names. The results observed were analyzed using the regression method. It was observed that out of all the applications, black applicants received fewer invitations for an interview as compared to white applicants. Racial discrimination was seen more on the jobs that required more interaction with customers. One strength of this research study was that it ensured uniformity among the participants and the resumes were distributed evenly in the different organizations. This uniformity ensures the accuracy of the study. It creates a need for further study changing other factors like the type of degree.
5. Flory, J., Leibbrandt, A., Rott, C., & Stoddard, O. (2019). Increasing workplace diversity: Evidence from a recruiting experiment at a Fortune 500 Company. Journal of Human Resources, 0518-9489R1. Doi: 10.3368/jhr.56.1.0518-9489r1
This article contains a research study conducted to show how workplace diversity can be enhanced and emphasizes the need for diversity in the workplace. The need for this study was triggered by the fact that minority groups like Hispanic and black Americans are underrepresented in leadership roles. This research involved the use of experiments to test hypotheses related to effective ways of attracting minority groups in top professions. The three hypotheses used included the following: making diversity an organizational value, attracting employees from different fields of training, and including information to support claims on diversity. The experiment design used in this research involved a firm that intends to recruit fresh graduates into its program in careers in financial services. This process involves the sending of advertisements to various networks where applicants get the links that guide them to the application process. Once they click on the link, applicants are required to fill their names after which they are subjected to random treatments. These treatments involve the use of certain messages that may influence the applicants. Different types of signals were sent to the applicants, and the results were analyzed to determine how effective the signals were on the minority groups. Based on the results, this study suggested that signals addressing workplace diversity have a great impact on the people applying for jobs, especially in the financial industry. This research study creates a need for further research on other ways that can be used to attract diversity in the workplace. This is because diversity in the workplace is an area of major concern today.
6. Rizwan, M., Khan, M. N., Nadeem, B., & Abbas, Q. (2016). The impact of workforce diversity on employee performance: Evidence from the banking sector of Pakistan. American Journal of Marketing Research, 2(2), 53-60.
Workforce diversity can be achieved in various forms like age diversity, ethnicity, and gender diversity. Diversity has been proved to have positive outcomes for any organization. This article focuses on research that was conducted to determine the effect of diversity on the performance of employees, in the banking industry in Pakistan. Among many other questions, this research sought to answer the relationship between workforce diversity and employee performance. The technique used to conduct this research was a random sampling method that involved the distribution of questionnaires to participants from different banks in Lahore. The data collected was analyzed using the regression analysis. The results showed that ethnicity has a positive impact on employee performance. An increase in ethnicity diversity increases employee performance. This research created opportunities for further research to be conducted on the same. This will help in the making of informed decisions especially by human resource management during recruitments. Further research should be conducted on other minority groups like the physically challenged to reduce discrimination during recruitment. The study conducted is significant because it has focused on a specific effect, employee performance, which results from diversity. Other potential effects of diversity include employee turnover and employee satisfaction. From the annotated bibliography, work force diversity has an impact on the performance of any organization. One of the gaps created in this literature is that gender diversity creates negative impacts while other articles have shown positive impact. My research topic will focus on gender diversity, as one of the work force diversity, and how it affects performance of an organization.
The required components (and approximate length guidelines) of Chapter 3 include:
· Introduction (2 pages)
· Research Design and Methodology (3-5 pages)
· Population and Sample (less than one page)
· Materials/Instrumentation (2 pages)
· Operational Definitions of Variables (less than 1 page)
· Data Collection and Analysis (2 pages)
· Assumptions/Limitations/Delimitations (2 pages)
· Ethical Assurances (1 page)
· Summary (1 page)
1. Please DO NOT focus on firm performance at all, the study will not be approved.
2. Watch out for grammar; the professor will not approve it.
3. Follow the guidelines of Chapter 3 by thoroughly READING chapters 1 and 2 and take notice of what States the data collection will take place.
4. I can’t stress enough; please read chapters 1 and 2….VARIABLES are the key….REFRAIN FROM FIRM/BANK PERFORMANCE
CriteriaDoes not Meet Meets
In troductory R emark s
The section is missing; or
some topic areas are not
included in the
Introduction or are not
explained clearly.
The chapter outline is not
provided and/or is
unclear.
The reader is adequately
oriented to the topic areas
covered. An outline of the logical
flow of the chapter is presented.
All major themes/concepts are
introduced.
R es earch Methodology
a n d Design
There is a lack of alignment
among the chosen research
method and design and the
study’s problem, purpose, and
research questions.
There is a lack of justification
and alternate choices for
methods.
Fo r Qualitative Studies: Lacks
clear discussion of the study
phenomenon, boundaries of
case(s), and/or constructs
explored.
Describes how the research method and
design are aligned with the study
problem, purpose, and research
questions.
Uses scholarly support to describe how
the design choice is consistent with the
research method, and alternate choices
are discussed.
Fo r Qualitative Studies: Describes the
study phenomenon, boundaries of
case(s) and/or constructs explored.
P o pulation a nd Sampl e
Lacks a description of the
sample, demographics, and
the representation of the
sample to the broader
population.
There is little to no
description of the
inclusion/exclusion criteria
used to select the participants
(sample) of the study.
Fo r Quantitative Studies: A
power analysis is not
described and appropriately
cited.
Provides a description of the target
population and the relation to the larger
population.
Inclusion/exclusion criteria for selecting
participants (sample) of the study are
noted.
Fo r Quantitative Studies: Power
analysis is described and appropriately
cited.
M a terials/Instrumentat
i o n
Lacks a description of the
instruments associated with
Provides a description of the
instruments associated with the chosen
the chosen research method
and design used. Details
missing regarding instrument
origin, reliability, and validity.
Fo r Quantitative Studies: (e.g.,
tests or surveys). Lacks
explanation of any permission
needed to use the
instrument(s) and cites
properly. Instrument
permissions are missing in
appendices
Fo r Qualitative Studies: (e.g.,
observation
checklists/protocols,
interview or focus group
discussion Handbooks). Did
not clearly explain the process
for conducting an expert
review of instruments (e.g.,
provides justification of
reviewers being credible –
reviewers may include, but
not limited to NCU
dissertation team members,
professional colleagues, peers,
or non-research participants
representative of the greater
population); and/or did not
clearly explain use of a field
test if practicing the
administration of the
instruments is warranted.
Fo r Pilot Study: Does not
clearly explain the procedure
for conducting a pilot study
(did not conduct pilot) if using
a self-created instrument (e.g.,
survey
questionnaire); does not
include explanation of a field
test if practicing the
administration of the
instruments is warranted.
research method and design used.
Includes information regarding
instrument origin, reliability, and
validity.
Fo r Quantitative Studies: (e.g., tests or
surveys). Includes any permission
needed to use the instrument(s) and
cites properly.
Fo r Qualitative Studies: (e.g.,
observation checklists/protocols,
interview or focus group discussion
Handbooks). Describes process for
conducting an expert review of
instruments (e.g., provides justification
of reviewers being credible – reviewers
may include, but not limited to NCU
dissertation team members,
professional colleagues, peers, or non-
research participants representative of
the greater population); describes use
of a field test if practicing the
administration of the instruments is
warranted.
Fo r Pilot Study: Explains the procedure
for conducting a pilot study (requires
IRB approval for pilot) if using a self-
created instrument (e.g., survey
questionnaire); explains use of a field
test if practicing the administration of
the instruments is warranted.
O p erational
D efinitions of Variables
(Q u antitative Studies
O n l y)
Discussion of the study
variables examined is lacking
information and/or is unclear.
Describes study variables in terms of being
measurable and/or observable. (Reviewer –
mark Meets/NA for Qualitative studi es
P r ocedures
Procedures are not clear
or replicable. Steps are
missing; recruitment,
selection, and informed
consent are not
established. IRB ethical
practices are missing or
unclear
Describes the procedures to
conduct the study in enough detail
to practically replicate the study,
including participant recruitment
and notification, and informed
consent. IRB ethical practices are
noted
D a ta Collection and
A n alysis
Does not clearly provide a
description of the data and the
processes to collect data. Lack of
alignment between the data
collected and the research
questions and/or hypotheses of
the study.
F o r Q u a nti tative S tu dies: Does
not clearly provide the data
analysis processes including, but
not limited to, clearly describing
the statistical tests performed
and the purpose/outc ome , coding
of data linked to each RQ, the
software used (e.g., SPSS,
Qualtrics).
F o r Q u a litative Stu die s: Does not
clearly identify the coding
process of data linked to RQs;
does not clearly describe the
transcription of data, the
software used for textual analysis
(e.g., Nivo, DeDoose), and does
not justify manual analysis by
researcher. There is missing or
unclear explanation of the use of
a member check to validate data
collected.
Provides a description of the data collected
and the processes used in gathering the
data. Explains alignment between the data
collected and the research questions and/or
hypotheses of the study.
F o r Q u a nti tative S tu dies: Includes the data
analysis processes including, but not limited
to, describing the statistical tests performed
and the purpose/outc ome , coding of data
linked to each RQ, the software used (e.g.,
SPSS, Qualtrics).
F o r Q u a litative Stu die s: Identifies the
coding process of data linked to RQs.
Describes the transcription of data, the
software used for textual analysis (e.g., Nivo,
DeDoose), and describes manual analys is by
researcher. Describes the use of a member
check to validate data collected.
A s s umptions/Limitatio
n s / Delimitations
Does not clearly outline the
assumptions/limitations /deli mita
tions (or has missing components)
inherent to the choice of method
and design.
F o r Q u a nti tative S tu dies: Does
not include or lacks key elements
such as, but not limited to,
threats to internal and external
validity, credibility, and
generalizability.
Outlines the
assumptions/limitations/delimita
tions to the choice of method and
design.
F or Q uantitative Studies :
Includes key elements such as,
but not limited to, threats to
F o r Q u a litative Stu die s: Does not
include or lacks key elements
such as, but not limited to threats
to credibility, trustworthiness ,
and transferability.
internal and external validity,
credibility, and generalizability.
F or Q ualitative Studies: Includes
key elements such as, but not
limited to threats to credibility,
trustworthiness, and
transferability.
E th ical Assurance s
L a c ks discussion of
c ompl iance with the
s t andards to conduct
r e s earch as appr opriate
t o t he pr oposed r esear ch
de s ign and is not aligned
t o I RB requi rements.
Describes compliance with the
standards to conduct research as
appropriate to the proposed
research design and aligned to IRB
requirements.
Su mmary
Chapter does not conclude
with a summary of key
points from the Chapter –
elements are missing,
incomplete, and/new
information is presented.
Chapter concludes with an
organized summary of key points
discussed/presented in the
Chapter.
NORMAN,ELTON_DIS9902A-12-1 1
LAST, FIRST DIS9902A-12-4 1
Gender Diversity and Job Performance in the Banking Industry
Chapter 2
Student Name
Professor Name
14 May 2020
Table of Contents
Introduction
3
Patterns of Gender Diversity
6
Senior Management
7
Importance of Diverse Board
8
Theoretical Background
8
Agency Theory
9
Resource Dependence Theory
12
Human Capital Theory
13
Gender Differences Theory
15
Group Effectiveness Theory
16
Tokenism and Critical Mass Theory
17
Inconsistencies in Literature
20
Themes from the Literature
21
Importance of Gender Diversity in an Organization
21
Female Directors and Individual Job Performance 24
Leadership Characteristics
25
Women in Top Leadership 26
Misconduct Risk 29
Integration 30
Economic Value 31
Better Governance 32
Barriers to Gender Diversity
33
Gender Norms 33
Female Mentors 36
Network 37
Competitive Environment 37
Cultural Transformation 38
Human Development from Adolescence 39
Summary
40
References 41
Introduction
The topic of gender diversity and individual job performance in the banking industry has gained increasing prominence in many countries. Although the number of qualified female graduates and the number of working women in the banking industry has increased in the past decades, there are few women represented in top managerial positions (Campbell & Minguez-Vera, 2015). Some nations in the European Union decided to use political influence to trigger a change in this representation. For example, statutory gender quotas for boards of management were introduced in Italy, Norway, Germany, and Spain (Post & Byron, 2016). These governmental initiatives were guided by two sets of arguments: the business case for gender diversity and the moral case for gender diversity.
The increase in women in management roles and the workforce has transformed the conditions of women employment in contradictory and complex ways. While women are entering managerial and professional jobs in banks, there has been an increase in the number of women joining part-time and low-paid jobs, vertical and horizontal segregation is evident (Fan, Jiang, Zhang, & Zhou, 2019). The theoretical explanation of these trends of women’s employment has focused on gender inequality to a detailed analysis of everyday relationships in the banking industry. There is a need to explore gender discrimination in white-collar professions, particularly in the banking industry. This concern helps to raise questions on the relevance of existing research in understanding the change women experience in work and employment. The goal of this chapter is to review the existing literature on women’s employment in managerial positions in the banking industry, discuss the limitations of previous research, and highlight and discuss the gap in the literature in current and past studies.
The moral arguments favoring gender diversity focuses on compliance with set regulatory requirements, fairness, and equal opportunities for everyone. This understanding of gender diversity is the discrimination-and-fairness paradigm. The core elements of the moral argument are gender-blindness and equality (Kundu & Mor, 2018). The supporters of equality argue that women represent half of mankind , which translates to half of its capabilities and intelligence. Women should be equally represented in management roles. The supporters of conformism are against the idea of gender-specific differences, and they tend to promote equality of the two sexes. Supporters of the business case for gender inclusion in management positions argue that diversity is not entirely about fairness, but it makes business sense and will be further explained in this chapter (Owen & Temesvary, 2019).
The economic point of the argument is that gender inclusion focuses more on the difference between men and women and the resulting advantages which include (a) A wider talent pool, (b) Different perspectives, (c) Enhanced collaboration, (d) Improved staff retention, (e) Improved recruitment and reputation and (f) Greater profitability. The line of reasoning for a business case is that an organization’s workforce should reflect the societal diversity of its clients to have access to every segment and gain legitimacy with the customers. The number of ladies in senior positions is indeed associated with a reputational effect, which is pronounced for the banking industry, considering its close interaction with the final clients.
The research studies on gender diversity in the financial sector by Steffensmeiera, Schwartzb, & Rochea (2015); Fan et al. (2019) has helped to explore how diversity helps to promote equal opportunities and recognize values in cultural differences. A gap in the literature needs to be addressed on the benefits of institutionalizing a diverse workforce to improve business practices, improve processes and working strategies. Although improving internal processes and strategies can impact job performance indirectly, the real benefits of gender inclusion in the banking industry should be measurable to achieve the commitment of leadership. The business case of diversity should be linked to the main objectives of the company. The business case is relevant for supporting the increase in female representation in senior management and on the banking board of directors (Luanglath, Ali, & Mohannak, 2019). It is posited by Adams and Funk (2015) that inclusion in a team positively impacts the performance of the team and the individual. When the representation of women on a board is small, they are mostly ignored or skipped entirely and this delays task-related information to be received by women.
The research question of this literature review is: Does recent research give evidence for the benefits of gender diversity in the banking industry? One literature review addressed the effects of gender diversity in workplace (Shore, Cleveland & Sanchez, 2018). The research shows that the relationship between performance and gender diversity is not direct but context-sensitive. This study involves an empirical investigation of the demographic issues of gender diversity and the effects on job performance. The literature review includes empirical evidence and theoretical constructs to evaluate the effects of gender diversity of an organization.
Research evidence by Ostry, Loungani and Berg (2019) shows that financial institutions embrace and promote culture and gender diversity through attraction, recruitment, and retention of workers from diverse interests, backgrounds, and cultures. A diverse team strengthens banks by bringing experience while allowing customers of different genders and races to feel accommodated while transacting with the banks. Businesses should help to better the lives of workers by providing career development opportunities through mentoring and training. Such career development opportunities will also help to prepare workers for better career opportunities and highly competitive salaries. Gender diversity is reflective of the bank values and defines customers, which the financial institution serves (Christiansen, Lin, Pereira, Topalova, & Turk, 2016)—providing opportunities for diverse communities to benefit employees, communities, and customers.
Patterns of Gender Diversity
Theorists have tried tries to explain the factors that lead to the financial crisis in a bank, and there are different explanations for the shift of banking industries toward excessive venture in risky markets. One underexplored argument is that homogeneity of decision-making in financial institutions reinforces cognitive biases. Despite this, women are continually making progress toward assuming senior leadership ranks. In this chapter, it is argued that women are underrepresented in board positions and senior leadership in the banking industry. Moreover, the chapter contends that the increased gender-imbalance in the leadership ranks of banks may undermine risk management oversight (Bart & McQueen, 2017). Hillary Clinton was selected to serve as a candidate for the presidency of the United States in 2016. Women are currently getting positions as head of state and “CEO (Chief Executive Officers) at Fortune 500 companies” (Lorenzo & Reeves, 2018).
Studies by Bart and McQueen (2017); Christiansen, Lin, Pereira, Topalova and Turk (2016); Fan et al. (2019) posit that introducing gender diversity among the decision-making authorities such as senior executives lead to a superior outcome. The explanations for the increasing trend of women in senior positions point to two possible phenomena: globalization and the new economy. The existing study on new economy shows that changes in nature of work contribute to women employment. Banks under the new economy experiment with new types of employment, changing its temporal, spatial, and contractual dimensions (Weic & Nijmana, 2020 ). New technology has contributed to increased opportunities for women because they do not need physical strength.
Senior Management
Law gives the board of directors of a company the power to decision making. The Board of Directors (BOD) manages the internal affairs of business by monitoring the performance, assisting in decision making, and giving advice to the executive officers of the bank. State courts give the BOD substantial deference in the execution of these duties. The law directs the owners of the bank to elect the board members and empower them to make decisions on behalf of the owners. For example, according to the “New York General Business Corporation Law,” business should be managed under the supervision and control of BOD (Jia, 2017). This further means that the board monitor and ensure bank comply with both the federal and state laws. The board may elect to form board committees that have selected groups of members with expertise to help the designated committee. The board committee appointments, in most cases, are highly competitive.
The board committee has the responsibility of risk management and oversight of the board in terms of accuracy of risk controls, internal controls, and risk management policies. The committee may develop some practices or form mandatory policies that direct how the executives address specific issues. The BOD employs the service of experts to advise on technical matters, but this is subject to the board approval (Kundu & Mor, 2018). In some cases, the senior manager conducts internal audits, and in a different case, the manager hires external auditors to evaluate the financial records. The BOD consults with business partners to develop the process of selling shares and create interest in the public. The BOD appoints senior management officers such as “Chief Financial Officer (CFO)” and CEO. American law does not define the credentials for the executive or the directors (Kundu & Mor, 2018). The banks typically appoint directors who can attract investors. The board members look for managers with reputable track records, relevant professional licenses, and leadership skills. Some executive positions require a great understanding of technical issues.
Importance of Diverse Board
Examining the structure of BOD creates the impression that the process of decision making is deeply imbued with expertise, and it depends on the existing culture. The bank management is one plagued with self-interests and greedy (Kılıç & Kuzey, 2017). To solve the weakness in the decision making, some researchers (Ahern & Dittmar, 2017; Christiansen et al. (2016) believe that businesses should focus on greater diversity in senior management. The question of the benefits of board diversity has increased in America and other nations (Fawcett, 2019). The common argument is that gender diversity in senior management enhances better governance and improves the overall financial performance. Many supporters of the positioning of women in senior management posit that the diversity improves leadership quality and maximize wealth among the shareholders. This section of the chapter explores the advantages of these elements in the business case for gender balance and job performance (Matsa & Miller, 2015; Christiansen et al., 2016).
Theoretical Background
Some prevalent theories which can be used in this research are agency theory, human capital theory, the resource dependency theory, and gender differences theory. Kanter’s critical mass theory gives an insight into the implication of categorization to study the effects of groupings of female managers on banks’ survival. According to Kılıç and Kuzey (2017), gender-diverse boards have improved bank linkage with the external environment. The board influences the bank by changing and improving interpersonal interaction.
Diversity improves the innovative and creative decision-making and leads business to better performance. The diversity brings the benefits of mixed skill sets. Banks lose the skills of minority gender, and this affects the ability to achieve a competitive advantage. The mix of the skills is referred to as intellectual capital theory (Owen & Temesvary, 2019). Gender-sensitive boards improve the flow of information from the managers and produce unique information in the decision-making process. This means that gender-inclusion is more likely to attract diverse talents from the human capital theory. The resource dependence theory supports the idea that the presence of women in senior roles improves the company’s financial performance by using internal and external resources.
Agency Theory
The underlying concept of agency theory is the conflict of interest between directors’ team and shareholders, where the managers are concerned about their interest (Bower & Paine, 2017). Strong governance is an essential tool in the organizational context to reduce the problems and challenges brought by an agency that arise because of the separation of management control and ownership of the bank. The agency theory is a consistent theoretical approach and shows the importance of gender inclusion in an organization. The agency theory argues that gender-balanced BOD enhances the functions of the management team. The diversity of BOD reduces cases of opportunistic actions of the management team by giving out the correct information. The control and monitoring of the functions of the board on the management team are essential in reducing principal-agent conflicts.
Oyotode-Adebile and Raja (2019) support that gender-balanced BOD is effective in strategic decision making and setting the bank’s policies. Rogish, Sandler and Shemluck (2019) also believe that banks with a high proportion of female CEOs present lower agency costs, more so in areas with less competitive markets. Based on this hypothesis, “the captured board,” it is arguable that banks increase their market dominance because of cutting down the agency losses. The independence issues of gender diversity in the board reduce the agency costs by working diligently compared to directors that are closer to the management team. In the same light, gender diversity improves the independence of the board of directors because the female members come up with different experiences and perspectives that encourage them to question some practices and not conform to conventional ways of doing things (Oyotode-Adebile & Raja, 2019). This means that boards of directors who have high gender balance are more independent compared to boards that have lower female members. The female managers independent, and they have a different background of men network. Gender balances reduce the effects of the old-boys syndrome, hence the diversity creates better monitoring of the management team
In addition to controlling and monitoring the function of the management team, a functional board is responsible for disseminating information and integrating to ensure that correct information is given to the relevant organization in a timely way. Studies by Ahern & Dittmar (2017); Kılıç & Kuzey (2017) show that there is a relationship between company report and a sound control system. A board that is controlled by the management has fraudulent reporting. Misleading and inadequate information to the bank shareholders give rise to conflicts and adverse effects on the performance. According to Oyotode-Adebile & Raja (2019); Rogish, Sandler, & Shemluck (2019); Jia (2017), gender-balanced management is useful in directing the information and improve the public disclosures on the business operations. Efficient boards are in a position to solve conflicting actions of the team of management and avert the agency conflicts by bringing down issues of information asymmetry; this increases the operation of the bank. Moreover, gender diversity in senior positions helps the company monitoring management activities more effectively (Sabatier, 2015). Unfortunately, in many cases, the women leaders are marginalized by the male leaders, and their effort is readily regarded in decision-making. Consequently, the board gender inclusion and balance may not improve the board functionality if the female directors are marginalized and subjected to tokenism.
Gender diversity in high-ranking positions has positive effects on the bank’s economic position. Gender diversity can be disadvantageous to financial performance if it results in over-monitoring (Owena & JuditTemesvary, 2018; Nguyen, Locke, & Reddy, 2015). In a well-governed bank, over-monitoring of workers and using excess control from the gender-balanced boards lead to a decrease in the business financial performance. Strong business control can cause failure in communication among the managers and the boards, and they can, in effect, lower the shareholder value (Sabatier, 2015). It is also argued that gender-diverse management may result in internal conflicts because of the differences during a meeting and varying opinions (Adams & Funk, 2015). According to a study by Hsu, Kuo, & Chang, (2016); Groening, (2018), there is a negative link between gender-inclusion in high-ranking management and bank value, and this means more effort and time are used to resolve fights in the management team which has gender balance.
Though some pieces of evidence show that gender inclusion in banks improves monitoring roles, the agency theory is not clear on the prediction of direction or explanation of the correlation between inclusion and improvement in financial performance. Although Hsu, Kuo and Chang (2016) agree that the principal-agent concept explains the monitoring responsibility and the freedom of board function, the agency theory is not valid in certain incidents. Using agency theory as a ground for studying the link between gender inclusion and bank financial position results in a conflicting conclusion
Resource Dependence Theory
Dominance use of the above agency theory has resulted in conflicting positions on the issue of inclusion concerning business performance. The resource dependence theory is more convincing in the business case for gender diversity. Pfeffer developed the theory, and he indicated that business general runs in an open system in which their survival or success is dependent on the resources and the external environment (Ahern & Dittmar, 2017). The supports of resource dependence theory further argue that the board of directors (BOD) gives an important link between business and its resources and the dependencies on the environment. According to Pfeffer, the BOD gives four important resources to any business. These resources include a channel of communication, legitimize the business, and establish a business network with other institutions. The directors are insiders, support specialists, business experts, and influential community role. The insiders can be defined as retired or current workers in a bank or any other business, while the business experts are the officers and executives of the company. The support specialist is the professionals in the banking industry, and the community influential are leaders in academia or government department (Luanglath, Ali, & Mohannak, 2018). As the directors give access to a different business resource for the bank, the gender-balanced boards tend to expand the profile of the BOD and create a link with important external and internal resources. Gender diversity management improves the relationship between the banks, their competitors, and customers.
The function of the management is to give the linkage between the external environment and the business to create economic benefits. This implies that the board should attain mixed skillset expertise, knowledge, and experience in different areas to create a competitive advantage for the bank. Considering the merits of gender diversity in senior management, several studies have evolved from the resource dependence theory, and it can be concluded that heterogeneous board improves the value of the business and it creates a competitive advantage within the management. According to Allemand & Barbe (2016); Bart & McQueen (2017), heterogeneity of management cause improved decision-making because of more great innovation and knowledge base. This improves the competitive advantage for the bank. It is also argued that cognitive conflicts in a gender-balanced group create innovative solutions. The high-quality decision-making processes influence the management and business positively, and these have positive effects on financial performance. The four main resources in gender-inclusive management include different perspectives, knowledge, skills, and experience. These unique and critical resources of female managers and directors can be different from their male counterparts more so in a diverse environment, and this difference is important in handing business uncertainty. The addition of business resources from female managers is an open opportunity for banks to enter new markets easily.
Human Capital Theory
According to the theory by Rosenstock, Strecher and Becker (1988), enhanced productive and cognitive abilities of each employee’s cumulative experience and education benefits the bank in terms of individual intellectual property. The BOD includes people who have a broad range of skills and experience. The productive and cognitive abilities of the directors allow them to interpret and seek information that influences the effectiveness of the board decision-making. In this sense, gender diversity describes the recognition of different abilities in males and females, and, in doing so, celebrates them. In some studies, recent statistics in America and Europe show that ladies are smarter in college, and the employment rates of young females are on the rise. According to Luanglath, Ali and Mohannak (2019), concerning gender diversity, the female senior managers in the big banks are more likely to have a master’s degree with international experience. These data show that women have achieved much in the academic world, and they have the relevant skills as their male counterparts, and they can contribute to the workforce. The positive outcomes of education: job knowledge, cognitive ability, and achievement motivation accelerate performance on jobs with high complexity. Female managers with high educational achievement provide a diverse perspective in bank discussions; they ask different questions and participate in workforce performance.
The active collaboration in the gender-balanced board gives various perspectives in dealing and understanding with complex banking environment and solving specific problems. This makes diverse management successful in decision-making. Despite academic qualifications, improvising the reasoning ability and levels of each person, the practical abilities of each manager differ based on values, experience, and skills. Proven experience and academic level of female members of the board is an extra-human capital; this is an asset to any bank. Different genders have different human capital. According to Delgado-Márquez, de Castro and Justo (2017), female members of the board who have little background in business management and the banking industry may not be an asset in high-level positions. Human capital theory supports the idea that female CEO and board members add value to the bank and if the female lack appropriate experience and exposures, it limits the advancement of the board, and it may have an undesirable consequence of the individual performance (Stamarski & Hing, 2015). Another school of thought argues that the higher education qualification of female directors normally cause emotional conflicts in the decision-making process, and this again impact the operation of any business (Lorenzo & Reeves, 2018) negatively. Although gender-inclusion improves critical thinking, it may result in a less effective decision-making process and slow the process because of conflict of interest. The disagreement and conflicts cause annoyance and tension among senior management, and leads to ineffective board processes. The costs of getting consensus and resolving management conflicts in any business are value destruction, and it outweighs the benefits.
Gender Differences Theory
This theory is based on the recognition that both males and females are different in their leadership and behavior. Studies by Post and Byron (2016); Terjesen, Couto and Francisco, (2016) ascertain the headship role of men as argotic and ladies as communal characters. The egos men have make them more self-confident, assertive, and aggressive, while female leader tends to be had common attributes such as democratic participation, speak tentatively, and less autocratic. Concerning gender diversity and inclusion in the banking sector, this theory implies that the employment of women in senior positions with different experiences results in different working principles. Intrinsic characters of female managers add value to the board; they give different working perspectives. Gender balanced board and management team is more effective in solving different natured problems. Research work by Nielsen and Madsen (2019); Fan et al. (2019) shows that a gender-balanced management team participates in deep conversation compared to a board of management, which is male-dominated. A research study by Luanglath, Ali and Mohannak (2019) shows that there is “no difference between females and males in terms of management” although in some situations they have skills and behave which are diametrically opposite.
In some research on risk-taking, it is generally agreed that females tend to shy away from risk ventures, unlike men. A study by Campbell & Minguez-Vera (2015) found that ladies are less risk-takers compared to males, and they are less likely to venture into risky experiences. Females make conservative choices in business and investment. Females who are involved in male disciplines such as engineering, economics, and finance are different from the general population. There is a higher confidence level of females who have in certain fields, indicating that females exposed to similar experience and education are confident like males. In this context, female managers in banking sectors can be adapt to the male-dominated world. This is demonstrated in research by Steffensmeiera, Schwartzb and Rochea (2015); Rogish, Sandler and Shemluck (2019) suggesting once female managers break through the glass ceiling in banking, they become more risk-taking compared to male managers. Gender difference is minimal at senior management, females with higher experience in banking have values and leadership styles which are similar to male colleagues, and this is one basis of rejecting the feminine stereotype
Group Effectiveness Theory
According to this theory, boards which have certain composition are more successful when compared to boards with different nature of the composition. Similarly, the composition of senior management affects bank effectiveness. Studies by Oyotode-Adebile and Raja (2019); Low, Roberts and Whiting (2015) in the gender diversity suggest that a board constituting of the male and female are more effective compared to a board made on one gender in terms of making adjustments and resolving problems. This means that the diversity in management in terms of human capital resources and personality improves decision-making, increase creativity, and network boundary. The positive effects of gender-inclusion on the management can be disadvantageous if the management takes longer to make decisions and comes to consensus. According to a study by Sabatier (2015), a gender-balanced board has a negative effect on a bank because of board conflict that needs more effort and time in getting to agree on the strategic decision. This slows actions and responsiveness required to respond to the business rivals in the banking industry.
Tokenism and Critical Mass Theory
Kanter introduced this theory, and it supports the critical mass theory. According to Kanter, the opportunity for advancement is based on important relative social groups, and these groups are based on race and gender (Wylie, 2018). Kanter further indicated that masculine principles dominate many business entities. This means that gender is an implication of token, and female in this context are dysfunctional in the corporation. In this case, a token in board gender diversity means a single female manager or board member who is considered a representative of the female category. The representation of females on top is a token, and to some degree, it is a solo. The contribution of these female managers is limited because she does not have full participation in decision-making. In some organizations, the female director is appointed to submit to the set legislative requirement on gender balance.
Relating the above in senior management of banks, the tokenism dysfunction of a business affects is values, practices, and norms and shape the representation of junior workers in the job practice. A case of tokenism is the fall of Enron Company in 1998; it had only one female director sitting in a BOD consisting of seventeen male directors. When there is a gender imbalance, the influence of the token lady manager on the board is minimal (Matsa & Miller, 2015; Owen & Temesvary, 2019). The image distortion that is made in single-gender management is inconsistent with public perception. It is argued that females in banks dominate in lower ranks, which normally have fewer opportunities. Based on the behavioral effects of opportunities and power, males in lower ranks and limited opportunities tend to act like females in the same position and ranks. The general belief is that female is identified as communal and possess the qualities of the leader.
This theory is based on classical analysis of absolute numbers in management and is emphasizes the importance of this relative number. The critical theory argues that gender should have significant representation to make its contribution heard and make a difference in decision-making. According to the critical mass theory, there are four categories of the composition of females and males in management. These groupings include uniform group or homogeneous group where the members of senior management share some characteristics that are male or female-only; a skewed group where the board has minority representation; a titled group there the minority has a relatively high balance and a balanced group where the minority gender is made up of about 40% of the total representation. In this case, the skewed group is a problematic composition because the female directors are token to the management, and it is prone to stereotype by the dominated male gender. The minority female manager in a male-dominated board cannot effectively express their position and influence the process of decision making in the said group. When the number of minorities in this skewed composition of senior management increase in relative proportion towards the titled group or the balance group, then there is a presence of a distinct group.
The representation of female in a balanced or even a titled group bring their perspective, knowledge, value, and skills to contribute to the group discussion and generally improve the effectiveness of the board process and formulation. Despite this, there is a concern about what makes an effective number of gender representation on the said board to make a difference in decision making. The presence of one lady is a token, and when the number increase, it becomes a voice. The increase in number means that the board decision-making is gender-conscious, and the female managers are not seen as outsiders. Based on the critical mass theory, studies by Bart and McQueen (2017); Nguyen, Locke and Reddy (2015) show that the critical mass of female members of senior management is best achieved when there are more than five directors on the boards. Dezsö and Ross (2015) indicates that about thirty percent of the minority group in management make a difference. Fan et al. (2019) and Kundu and Mor (2018) suggest that there is a “significant and positive relationship between the number of female directors and the innovation of board performance when there are more than three directors.” This means that there is a positive effect on the increase in the mass of female managers in the company’s financial performance. Gender discriminations help to decrease motivation, satisfaction, and commitment level of workers, and increase the stress levels of employees (Channa & Abbassi, 2015).
The gender-balanced has an undesirable effect on bank “return on equity (ROE)” before the critical representation of the female gender is reached. The disadvantages of opportunities at work and lower status affect women’s psychologically, reduce job satisfaction and organizational commitment, and ultimately, their individual performance (Hing & Stamarski, 2015). From this critical mass theory, the management should have a significant number of female representations that are referred to as the critical mass of the female to have an impact on financial performance. Without the critical mass of minority representation, the female manager’s contribution is reduced to become a token in management. The male-dominant group will marginalize the inputs of less represented and diminish the influence of diversity on boards on institution performance.
Inconsistencies in Literature
There are positive relationships between diversity and the individual job performance (Channa & Abbassi, 2015). According to Sohail, Uddin, & Basit (2019) individual job performance is influenced by independent varibales such as gender and age. However, this claim has not received conclusive support in research studies. Previous studies have mixed evidence between female presence in senior bank management and business performance. There are four reasons for the conflicting research findings. The research data are drawn from different cultures and countries with a different jurisdiction, and this prevents consistency in research findings (Allemand & Barbe, 2016; Chandani & Mahmood, 2018; Kundu & Mor, 2018). Based on the legal provisions in various countries, a corporate governance system allows a board to act as a supervisor and controller. The impact of gender diversity in the bank depends on board governance. In a well-structured board, over-monitoring of workers is counterproductive, and it hinders the decision-making process. These findings vary based on regulatory requirements, the economic climate, and the governance structure.
The pieces of research examining bank governance and management are plagued with endogeneity issues. The link between financial performance and gender diversity is endogenous (Hsu, Kuo, & Chang, 2016). It is impractical to control the reverse causality between the variables. A relevant external variable should correlate with problematic explanatory variables, and it should be uncorrelated to error terms of the dependent variable. The endogeneity problem typically leads to unreliable findings if the subject under study is not well addressed.
The research includes different measurements of diversity and individual job performance using different timeframes, and this results in conflicting findings. The terms to measure gender diversity include the number of female directors and the presence of females on BOD. Performance measures are “return on assets, market capitalization, and return on equity” (Adams & Ferreira, 2015). A focus on these short-terms of performance does not capture the effects of gender diversity (Nguyen, Locke, & Reddy, 2015; Hsu, Kuo, & Chang, 2016). There is a need to have a long-term analysis of the impact of gender balance on the board of directors. For instance, research using cross-sectional data, focusing on a specific time, suggests gender balance in management is better compared to the homogenous board. Studies using panel data shows there is no implication of the presence of more female on the performance of the board. Using different statistical methods in the analysis result in inconclusive findings. Some literature on gender diversity applies fixed effect estimation, while others use the ordinary least square method. Depending on the statistical method used, the result varies, and they are not consistent throughout each method.
Themes from the Literature
Importance of Gender Diversity in an Organization
Two main functions of senior management relate to bank business and general operations. The senior managers are influential players in the bank, and they decide the strategic directions. The managers fulfill their supervisor role to the banking team, which includes monitoring using company resources and assets and response to business threats. Previous literature from Low, Roberts and Whiting (2015) and Sabatier (2015) on the senior management and gender diversity provides pieces of evidence that increase in gender inclusion may result to better the monitoring function. This study builds on the same notion and research on the relationship between gender diversity and individual job performance.
From an optimistic view, inclusion on gender in management promises various capabilities, beliefs, and attitudes (Kundu & Mor, 2018; Chandani & Mahmood, 2018). Inclusion further provides differing approaches and perspectives to the problems an openness to exchange of ideas, which in many cases leads to an increase in creativity and team performance. From a moral perspective, it is arguable that diversity in the workplace should be exercised to reflect the diversity of the workforce. Securing equal opportunities, rights, and responsibilities for current and prospective workers regardless of age and gender should be the desired objective. This position is applied to all areas of human resource management, right from the recruitment process, the allocation of duties to workers, the process of workers promotion, and the composition of the team to the highest levels. However, while the moral perspective favoring gender inclusion is reasonable and accepted, another perspective gives a different picture.
When analyzing the effects of gender diversity, the social-psychological perspective fosters a pessimistic position. The social-psychological perspective is based on three theoretical approaches, and these are similarity-attraction, information processing, and self-and social categorization perspective. According to the information processing school of thought, a group benefit from diversity as each member of the said group gain access to the wide range of skills, information, and knowledge. The level of information tends to increase the overall group performance. According to the similarity-attraction perspective, which is a part of the interpersonal attraction theory, people are, in most cases, attracted to similarity and not diversity.
This position is emphasized by the social identity theory, which argues that people intuitively seek for grouping themselves into like groups. Criteria such as gender and age serve as determinants for the similarity and distinction of the social level. This position is supported by in-group bias; there is a tendency of people to favor people in the same group over out-group. These types of preferences are dominant in social interaction, allocation of resources, and assessment of people. This means that people will have more cohesion and robust social inclusion and integration in a homogenous setting; this is a weighty argument against gender diversity.
The economic perspective provides different arguments that are against and for gender diversity. Proponents of gender diversity suggest a positive and direct impact on workforce general performance. According to Sohail, Uddin, & Basit (2019), there is a link between managing gender diversity and improving competitive bank advantage. It is argued that gender diversity management leads to a competitive advantage in resource acquisition, marketing success, organizational flexibility, innovativeness, and problem-solving.
The authors argue that the fair share of women in the banking industry and more so in the managerial positions increases in the labor market because of demographic changes. As companies are in increased competition for excellent workers from these underrepresented groups, the bank’s reputation regarding its operating efforts to manage diversity gains insignificance. Persons from different gender hold different beliefs, perspectives, and attitudes. They are also different in terms of their cognitive functioning. Gender diversity should have a desirable effect on the team’s overall creativity and innovation, as well as decision making and problem-solving (Fan et al. (2019). This idea is supported by arguments that argue that a heterogeneous group is more successful compared to a homogenous groups in solving business problems. The system flexibility is improved by managing gender diversity for two main reasons: the firms’ policies and processes are dissolved, and the bank is open to change.
Some banks have realized that gender inclusion improves the creativity in the middle and lower managerial levels and strengthens the external relationship with consumers and customers. Various ideas and viewpoints should be advantageous for the upper class of management. The reason why inclusion should a top business priority and concern is that; alterative business ideas and initiative promise clear returns and concrete results in the short-term. Banks should, therefore, create a sound business case for gender diversity to get support from the top. The inclusion results to lower turnover cost, avoidance of lawsuits on sexual discrimination, improvement in retaining and attracting excellent workers in the diverse background, and creating greater creativity. Despite this, the diversity initiative should be handled like any other business process to achieve leadership commitment.
Female Directors and Individual Job Performance
Banks that operate under the principle of corporate governance tend to be more powerful and profitable for their shareholders. The selection of the BOD is an important part as these people are centrally involved in decision making and policy formulation. Further research suggests that a higher ratio of female in board increase profitability and productivity, thus there is positive performance effects of management gender diversity. The induction of women directors is mandatory in some countries like Spain and Norway, they have made it a law to have at 40% women directors. This is proof that women are different from men in personality, educational background, experience, and it is prudent to consider these traits in decision making.
There is evidence that a greater number of women have high development evaluation and program, and this increase earning values of an organization. According to the resource dependency theory, women have diversified networks through which they understand and capture certain customers and markets compared to their male counterparts. Members of top management teams are in most cases recruited from within the workforce. In this light, it is expected that the female managers motivate the subordinate women workers (Stamarski & Hing, 2015). It follows that female representation in management promotes great motivation and increased organizational commitment in lower-ranked managers and this leads to improved individual performance.
Leadership Characteristics
The main research question is if there is a benefit in employing more women in banks and create diverse gender institution. This means it is essential to understand the leadership traits between women and men. According to, women are more accommodative compared to men, and this influence group performance and goal attainment. Women form coalitions in competitive activities, unlike men who exploit coalitions for personal benefits. It is also argued that women have nurturing behaviors, and they pursue a collaborative leadership style compared to men who are more controlling and exercise power. Women managers are considered to be accommodative and passive, while men are seen to be active, authoritarian, and aggressive (Lorenzo & Reeves, 2018; Post & Byron, 2016). There is a dilemma for female managers who are high achievers, yet they fear being considered less feminine as men more often hold their position. When women are the minority in the workplace, they are more visible, and this increased pressure on women’s leadership responsibilities as they always under observation.
It is challenging to determine traits of specific gender compared to what traits are influenced by cultural and social pressures that girls are to behave in a certain way. Some research work shows that women and men act based on the social expectations that are set on them. One biological factor, according to Adams and Funk (2015), is that women tend to be prone to depression and anxiety compared to men. On leadership style, it is argued that there is no difference between female and men style of leadership. Women tend to have a relationship-oriented approach compared to men who demonstrated task orientation. Men are motivated to master their roles, they are dominant and forceful, and they tend to be inclined to use initiating structure leadership (Delgado-Márquez, de Castro, & Justo, 2017; Groening, 2018). Women are focused on people, and this makes them understand and kind, this is an inclination to consider leadership. Women are democratic and participative, and they are less autocratic compared to men. Female leaders use a transformation leadership approach where workers are rewarded for their achievement while men focus on a mistake by subordinates.
Female managers made the dominated area such as business and finance adapt towards male-dominated leadership traits compared to what is typically seen as a female leadership approach. This adaption, however, takes more energy from female as they are not in the position to act normally, and this put them under pressure and stress. A character that is highlighted as a definite advantage for women is that they tend to be better at working as a minority in the banking industry. Women have been the minority in many cases than men, and this makes them adjust quickly and become more understanding of workplace diversity. The women’s and men’s competitiveness as managers have reduced. Men are becoming less competitive as leaders, while female managers remain at the same level over the period. It is argued that leadership training has changed over time, and it has promoted collaboration, which leads to joint leadership type between the genders. Moreover, governments and societies are working towards the equal working environment through legislation and the introduction of school programs that encourage women to venture into male-dominated fields such as finance and economics.
Women in Top Leadership
The first Women’s Rights Convention in America was held in 1848. The Declaration of Sentiments called for women’s suffrage and opportunity for women to take part in profitable employments (Lorenzo & Reeves, 2018). It took seventy years of protest and campaigns until the American Senate passed the 19th amendment, giving women the right to participate in democratic processes. This means much can be done to create opportunities for women to participate in American bank services. Achieving gender diversity makes sense, and it is the right thing to do. Many clients view gender diversity in senior management as a requirement and consider the diversity policies of the bank that serve them before engagement. Lack of diversity could, therefore, lead to loss of business opportunities. New requirements at the government level also prompt banks to disclose diversity initiatives. The expectation in the state of California is that principal offices should have at least one female member of the board.
While financial institutions within America are seemingly doing well in inclusion and gender diversity, there is room for improvement. Canada has 34.5%, Sweden has 45%, and France has 35% of women sitting on boards of directors in banking institutions (Deloitte, 2017). Bank of America, Bank of the West, the CIT Group, and HSBC have female leaders occupying senior positions. Comprehensive gender diversity is slowly being realized; women are breaking the glass ceiling and carving a path for young females through persistence and hard work.
According to Deloitte Company, the proportion of women in a leadership position with banks in 2019 was 22%, and it is projected that this number will grow to about 30% by 2030 (Rogish, Sandler, & Shemluck, 2019). This is still below parity. At the organizational level, for each addition woman in the bank, the number of women in senior positions rose three times. The challenge of success is that women in a senior position within banks have not kept pace with the new workers, and the gap is widening. This means that there should be a strategy for improving leadership outcomes for women, and the strategy should be inclusive and multifaceted. Some of the factors that contribute to this increase include intentional recruitment, mentoring, sponsorship, and healthy peer networks. The banking industry is making a step towards achieving gender diversity. More women currently enjoy a longer, senior-level career and satisfying positions in financial institutions.
Women are not involved in management and leadership issues because they lack the necessary experience for these positions. Though there are few women in top ranks in banks and they are better educated compared to male colleagues, yet they get lower pay. Gender diversity has been linked to an increase in business profitability. Diversity and other social involvement are critical measures of success when considering business performance. Despite this, achieving a balance in gender employment and promotion remain a challenge for many banks (Fawcett, 2019). The number of men and women is almost equal in the American labor market; however, the number of women dwindles in senior positions. Women make up 5.4% of CEOs at 500 big companies in the United States. Unfortunately, while some banks have instituted diversity and inclusion in response to gender discrimination and diversity issues, traditional programs have hindered the share of women in leadership.
Misconduct Risk
Many factors influence the decision-making process of any organization. The state law mostly governs the practices and policies that the senior management and the board use to make the decision. In the United States, roughly 106 states have adopted laws that balance the authority assigned with the right accountability (Steffensmeiera, Schwartzb, & Rochea, 2015). The Enron Company in 2001 came on the spotlight as a business with gender exclusion. Before this company collapsed, financial analysts state that the company manipulated its financial disclosures, relied on hypothetical revenues, and concealed debts in its accounting practices. The revelation of Enron management misconduct led to the company file for bankruptcy protection.
The executives of this company engaged in extensive fraudulent deals to inflate the business earing and increase the stock price. The business used accounting practices to conceal extensive losses through partnership. For any business developing internal control, mitigate the risk that the management will try to manipulate. Women typically were not involved in the conspiracy groups. When women are involved in fraudulent deals, they usually have minor roles and make less profit compared to their male counterparts. Two pathways define female involvement, and these are utility and relational (Steffensmeiera, Schwartzb, & Rochea, 2015). The paralleling gendered labor market grouping process that shapes and limits women’s entry is senior management, the sex discrimination in bank criminality is pervasive, and this suggests a shift in gender socialization and women likely to be involved in white-collar crimes.
Integration
Banks have an essential position in society. They have a recognizable brand that employs many people around the world, and they act as the interface for the people through their investment operations and retail deals. This reach gives banks the power to change the perception of the people and lead by example. For example, Barclays’ Bank is known for supporting the LGBT group, and this demonstrates the rest the gay person expects from the bank and probably the full society (Terjesen, Couto, & Francisco, 2016). Through banking products and services, such as the access to banking for people who are partially sighted or the blind, banks make a difference for workers and the general public. Workers need to see the issue of integration for the business to benefit. Achieving change in a leader requires bottom-top support.
Supporting women in management roles is essential if the workers are expected to benefit. It is argued that ideas from women are less likely to win the support they need because a majority do not value these ideas, and they do not see the need for them. A contrasting employee perception at senior management drives the tension. When management is conscious of benefiting from a change of focus on gender diversity, they are most likely to promote inclusion (Chandani & Mahmood, 2018; Oyotode-Adebile & Raja, 2019). The most significant pressure is on the management and the CEO, for whom gender diversity is a significant concern. For instance, Lloyds Banking Group stressed the importance of gender diversity and how it is expected and the action to be taken. This bank commits to increasing the number of women who hold senior management roles. The type of bank, the composition of the workers, and its customers influence the focus of gender diversity.
The goal of diversity management is to create and maintain a working environment to help improve the performance of its workers (Patrick & Kumar, 2015). Diversity management is based on organizational culture, human resource policies, and institutional environments. Successful management of gender diversity can lead to better performing employees. The fact that the banking industry should adapt their gender diversity policies to account for the internal change is essential. This provides the flexibility to create the environment reflecting workers’ experience. Other banks concentrate on a different form of diversity over others in a certain period. A good example is Barclay’s Bank, which supports and sponsors LGBT events (Fawcett, 2019). The inclusion and commitment to have gender diversity means that banks aim to integrate society by designing new services that consider the needs of the audience. Aligning diversity needs with the business imperatives means the initiative receive more significant support from a business that it would be the case.
Economic Value
Data and research finding leads to growing evidence that strong economic case for gender inclusion. Banks workers need to be as diverse at the customers they serve, across their footprint, to provide services and products that the clients want. Catalysts, a company in the United States, researched the effects of employing female on board in the Fortune 500 companies. The findings of this study suggest that heterogeneous boardroom create a productive corporate culture, lower risk, and improve results (Adams & Funk, 2015; Bart & McQueen, 2017; Kılıç & Kuzey, 2017). A study by McKinsey Company in 2015 shows that there is a significant relationship between financial performance and the extent of gender diversity in the leadership team. While this evidence support correlation, and not a causal link, the research finding indicate that banks with diverse leadership team are more successful. The research supports a growing body of evidence that a diverse bank is better able to win top talent, gain increasing returns, and improve the workers’ satisfaction. In the UK, every 10% jump at senior management level increases EBIT of 3.5%, the same increase in board management leads to a 4.9% increase of EBIT. The notable change starts to take effect when the female members in senior management reach 22%; this is the tipping point.
Better Governance
Even when empirical studies do not establish that board diversity influences the management directly in terms of shareholder value, some researchers argue that gender inclusion enhanced the governance, and this leads to better decision-making outcomes and processes. One explanation for the concept of better governance is that women and men lead business entities differently. Some researchers argue that women lead organizations is a more collaborative way, and this is associated with board activity and reduce conflict. An increase in representation of the number of women in managerial roles increases the likelihood of benefits of engagement and reduce conflict (L.Owena & JuditTemesvary, 2018; Chandani & Mahmood, 2018). A homogenous group has excessive conformity that undercuts the ability to assess other group members. The crowd theory yields valuable guidance for ways of improving the board outcomes. Using the framework centered on decentralization, diversity, and independence, increasing the number of women in senior management introduces a game-changing proficiencies and perspective. Women improve board independence because they tend to be inquisitive, and they can identify various potential options. These studies, however, help to promote essential questions on ways and means of structuring the board and senior management to increase the effectiveness of decision-making.
Barriers to Gender Diversity
Gender Norms
Women are traditionally excluded from senior management and active workforce, and they remain underrepresented in decision-making forums. They experience the glass ceiling effect, and this tradition remains in an unfavorable situation. According to the Pew Research Center, women leadership power is limited, although women form 40% of the workforce in over 80 countries. The number of female senior managers and the rate of increase in their number remain scarce (Jia, 2017). Women have increased their ground on board in recent years. The number of women directors on boards in EU countries has increased from 19% to 23% from 2014 to 2016 (Ahern & Dittmar, 2017). These meager numbers of females in senior management show there is a long way to achieve equal career opportunities for women. Even when they are in high ranked positions, women face challenges such as discrimination. In effect, they experience issues of visibility. In some organizations, gender exclusion results in the categorization of workers in a way that stereotypes influence decision-making. Women in general are considered less suitable for managerial positions when compared to male workers, who seem to represent technical competencies such as self-confidence and assertiveness. The fact that their demands are essential to getting high ranked managerial jobs contributes to the problem; even more so when the female gender is associated with soft competencies such as communication, teamwork, and emotional support.
According to social identity theory, group members protect their self-esteem in order to achieve positive social identity (Bart & McQueen, 2017). This causes discrimination, indirectly and directly, competing and separating the out-group by giving considerable treatment to the in-group, and this again leads to in-group bias. According to the social identity theory, inequality exists between groups, even when the industry agents are not prejudicial. This form of discrimination results in a vicious circle over time, as the average person from the sidelined group are discouraged from participating in the industry or improving their skills as their perceived return on investment is less compared to the non-discriminated group (Sabatier, 2015). According to the occupational segregation model, representative of some groups has unequal access to job opportunities. This implies that some occupations and positions are separated; some are for men, and others are left for women. The segregation occurs on different grounds. The self-selection phenomenon posits that selection of women in low-level positions instead of dedicating themselves to higher managerial positions. This creates the glass escalator effect, through which ladies should step aside as men surpass them to top of the organization.
The lack of female directors is attributed to the reduced number of women in senior positions. Management of banks is interesting because it has the traditional position viewed as male space requiring a specific skill set (Dezsö & Ross, 2015). Simultaneously, women who are likely to get a power risk backlash effect, such as economic and social punishment for defying existing stereotype, and risk of hiring and prejudice discrimination. Employed women who have stereotypical male behaviors face setbacks because they do not fit in female set stereotypes, more so in senior positions. One reason for this phenomenon is that women who have hard skills consistent with successful directors or managers are perceived negatively by co-workers for behaving against the conventional feminine way (Lorenzo & Reeves, 2018). These women are considered more competent, but they are also less likely to be promoted.
Women need to comply with the masculine character if they are to break the glass ceiling, act as the masculine manager, and exceed male cultural norms. Organizational practices, cultures, and structures provide the context within women to decide which positions and process to use to get to senior management (Deloitte, 2017). The female family role traditionally hinders the commitment of women and their reduced lack of involvement in the bank network, and this limits their access to senior jobs.
It is theorized that women are distracted because of parenting, claiming that they have more responsibility with children, and they cannot travel and change their schedules with short notice or drop out of work altogether to stay at home and consequently fall behind in their careers. (Owen & Temesvary, 2019). This is not a relevant excuse in the current banking setting because the possibility of video meetings has eased communication and significantly reduced the need to travel. Every parent juggles with time management. Commonly, women tend to focus on the need of others, and they accept more family responsibilities. Long maternity leaves the result to less pay and slow advancement in career compared to men. While it is generally believed that banks are gender-neutral, employees are expected to correspond and display more masculine characters and qualities. Research by Owen and Temesvary (2019); Nguyen, Locke and Reddy (2015) shows that men’s styles are better rewarded compared to women’s characteristics ways. Men get more promotions and sponsorship compared to women at similar conditions.
It is assumed that women are skillful compared to men in communication and team building, however, they are worse in business skills. Based on this assumption, women are matched to a different job, which requires the different traits, in line with the dominant views. Research by Chandani and Mahmood (2018); L.Owena and JuditTemesvary (2018) shows that managers are associated with male characters. This situation explains why the disproportionate number of men hold the highest paying jobs, and they have the best opportunity for advancement. Managers and workers of the banking industry tend toward a homosocial society in an organization, and they draw and hire co-workers who have similar positions and views to themselves. Summing this section, women are victims of both the social and personal consequences of the disadvantageous situation inside and outside the organization because of several biased and cultural decision-making practices. The stereotypes work against their competences and make them lose managerial positions.
Female Mentors
Few women can gain access to career mentors who will help them gain the visibility needed to transform into senior positions. Female workers need to seek resources for developing their career. According to Low, Roberts and Whiting (2015), mentoring relationships are critical for minority groups because they face challenges in their career development. Women face different challenges than men. The mentors are important to the development of the career of men in the banking industry because the females encounter more obstacles such as lack of networks, gender inequality, and competition from male-dominated managerial hierarchies. The mentoring is beneficial to both protégé and mentor because it informed the parties about their values, roles, identities, and challenges. Mentoring helps women achieve career success. Women need mentors to coach them and pull them up the ranks to create opportunities, job satisfaction, higher salaries, and promotion. The traditional structure of mentorship hinders women’s career development. The models of mentorship are masculine.
Traditional mentorship is framed to depend on hierarchical relationships and power-depended to maintain the status quo. The traditional model is supported in positional leadership that leaves no room for females to come up the ranks. For example, in banks, there is a lack of support to expand opportunities and resources for females (Low, Roberts, & Whiting, 2015; Garcia-Solarte, Garcia-Perez de Lema, & Madrid-Guijarro, 2018). Formal mentoring may be instituted by banks, but forced mentoring are less effective in the sense of the resources invested in the mentoring relationship. The relationship is less sympathetic, and the assigned mentors are reluctant to engage in career development because of fear that their place will be taken. Female protégés achieve a lot from being coached by a person with a higher identity, having gone through career blocks that females face.
Network
This is another unpleasant truth why there are few women at the senior leadership boards and positions. Women generally lack the network and sponsors because there are few female role models in higher positions. Informal networks shape career paths, and they increase the speed and likelihood of promotion, but the lack of mentors and role models reduce the speed (Adams & Ferreira, 2015; Oyotode-Adebile & Raja, 2019). Even in cases where women have networks, they use their networks differently compared to men. Women networks have different functionality. Women in higher ranks in banks also signal that being female at such levels is a huge responsibility, and it creates commitment and a lack of time to mentor others. Therefore, young females could miss being executive leaders because of limited senior positions and lack of role models.
Competitive Environment
According to Adams and Funk (2015), women self-select not to work in a competitive position. When given the change, men choose a more competitive environment compared to women. Risk and performance do not contribute to this selecting process, but gender differences and confidence for performing in a competitive industry. The possible explanation for this difference is that men are generally overconfident and interest in venturing in a risky environment (Adams & Funk, 2015; Lorenzo & Reeves, 2018; Sabatier, 2015). In effect, if fewer women are willing to compete in the banking industry, such as promotion and selection to top functions, fewer women will win. Women find it unattractive to bear responsibilities that interfere with family life. Norway passed a law which requires all organizations to have 40% of its directors to be women. This implementation led to a drop in stock prices (Post & Byron, 2016). The decrease was, however, attributed to the promotion of less experienced people. The implementation of the law which demands gender ratio has a negative effect if an incompetent person is brought on board. Research shows that gender diversification in the board has a positive effect if it is not forced and when competence is considered.
Cultural Transformation
The banking industry is evolving with changes in technology, new strategies, and better talent. In order for the banks to remain competitive, they must stay diverse. The changes and improvements in technology provide insight into the modern workplace for women because it reduced the issues of gender exclusion in the job place. Many banks embrace the male-dominated culture expressed in hierarchical, sex-segregated, and gendered power structures (Lorenzo & Reeves, 2018). In many organizations, the values of female workers are less significant compared to male values. Some bank policies lead to entrenchment to the gender imbalance in the labor force, which promotes segregation between genders. According to cultural transformation, there is a need to have systematic changes that also change cultural patterns based on future expectations (Christiansen et al. (2016). The cultural transformation theory explains why gender inequality is a profound workplace. These manifestations are punishment for traditional organizational cultures, maternity leave, and lack of skills between genders (Mercanti, 2015).
Banks should attract the best workers in order to remain competitive (Christiansen et al. (2016). Those in a leadership role may not mirror the diversity that is represented by people with ambition and knowledge to occupy senior positions. Lack of earning places strain on the gendered system and negatively affects the professional development for females. Structural barriers affect the promotion of gender inclusion. These barriers can be grouped into external and internal barriers. The internal barriers are related to trait and personality variables; these are barriers related to stereotyping roles which society places on both females and males in the workplace. The jobs assigned to women in banks are linked with their perceived personality traits, behavioral pattern, and motivational needs. The external barriers are related to structural and situation variables. The internal and external barriers are an obstacle to female professional growth.
Human Development from Adolescence
The heart of banking and financial institutions is male-dominated. The original cause of gender inequality between males and females is the claim that biological difference defines social roles. The only difference between these genders is assigned in biology. The reproductive capacity assigned at birth leads to the gender assigned roles and identity. Female image is developed right from childhood as they are expected to be subordinate to males through the gender stereotype (Hinds, 2015; Matsa & Miller, 2015). Although society assigns gender roles to children, gender is subject to biology and not society. A society determined the gender responsibilities; the women are made to be subject. Society supports these gender roles as children move from infancy to childhood. The family-work imbalance and the subsequent division of labor hinder professional growth. The aspect also contributes to the barrier of female advancement in the profession that females are workers, mother, and wife, whereby family responsibilities led females to leave the profession to care for children (Linda-Eling, Marshall. Rallis, & Moscardi, 2015; Ahern & Dittmar, 2017). The female is more uncommitted than men to job demands because of the parenting role that cause delays in career advancement and opportunities.
According to Post and Byron (2016); Nguyen, Locke and Reddy (2015), females with children have less opportunity for occupation and education advancement and development. The gender socialization that stresses the prominence of women in the home is counter to professional development. The factor underlying the gender gaps in productivity between these genders, and they affect the quality of occupational choice, education, and commitment to the labor market. Because of family responsibilities, females have less time in the labor market, and this leads to depreciation of their earning and skills affecting gender diversity in senior positions in banks. Education also contributes to gender exclusion in the job market. Educated mother has smaller families, and this gives them time to advance in their career. The lower gender equity in education improves female and male human capital.
Summary
The theoretical framework gives insight into the effects of gender diversity on individual performance. There is no single theory that supports and explains the relationship between these variables (Groening, 2018). Some theories support the relevancy of gender balance in management board and senior positions, and their implication of the bank returns in different ways. The literature review also gives conflicting findings from empirical studies. The differences in research findings arise from many factors, such as sample population from different banks, jurisdiction, and regulatory requirements. There is a different spectrum of model specifications and different time frames (Post & Byron, 2016). Both prior empirical studies and theoretical framework do not demonstrate consensus on the relationship between gender diversity and individual performance in competitive market.
The link between gender diversity performance remains unclear (Post & Byron, 2016). The relationship between these variables largely depends on the relationship between directors, the bank governance structure, and the director’s traits. The board gender balance is also affected by the scope of complexity of the bank. The empirical research on the relationship between gender diversity and performance also face the endogeneity issue. There is consensus that the characteristics of the board on gender diversity are affected by the scope of complexity of the respective bank. It is a choice that business makes to determine the structure of the board and its composition that suits the nature and needs of the business model. This study posits that there are inconsistent findings of the existing literature because of insufficient attempts to address the endogeneity.
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