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May 2021 | GSAM Connect

Women in the Workplace: Why It Matters

Female workforce participation rates in the developed world have increased in recent decades, particularly in Europe. That’s good news, in our view, for society, and corporate profitability. But when it comes to women in senior management roles and closing the pay gap, there’s plenty of work to do, particularly in the financial services industry.

Let’s start with the good news: Female participation in the labor force has increased across age groups in Europe over the last two decades, the Global Investment Research Division of Goldman Sachs found. There are more women between the ages of 30 and 59 working in Europe than in the United States, where female participation rates have stagnated in recent years.

A big reason for this: better access to quality childcare and more generous parental leave policies. In general, European countries spend more on public childcare and offer longer parental leave than the US does. That encourages more women to enter and remain in the workforce.

The Persistence of the Pay Gap

There hasn’t been as much progress when it comes to pay, though. European countries do better than the US, Canada and Japan here, but there’s still a significant pay gap between men and women. Some of this can be explained by experience level and job description. But the majority of the gap is unexplained. For instance, based on education level, women should be paid more than men.

The situation has improved for younger employees.  As Exhibit 1 shows, there’s almost no difference today in salaries for UK men and women in their 20s and 30s. But by the time women reach their 40s and 50s, the pay gap widens considerably.


Source: ONS, Goldman Sachs Global Investment Researc

“The chart is kind of the graphical representation of the glass ceiling,” says Sharon Bell, European Strategist at the Global Investment Research Division of Goldman Sachs. “You can see women are paid similar to men in their 20s and 30s, but look what happens when you get into an age span where you're more likely to be vying for management roles.”

And when we look at European and US companies included, respectively, in the STOXX 600 and Standard & Poor’s 500 indexes, we see that men easily outnumber women when it comes to holding influential positions (Exhibit 2).


Source: Datastream, Factset, Goldman Sachs Global Investment Research

Diversity and The Bottom Line

We passionately believe that diversity of thought and experience leads to better decisions, and that companies with a diverse workforce and leadership team stand a better chance of creating the types of products, services and marketing strategies that will appeal to a diverse customer base.

As investors, we spend a lot of time meeting with companies and engaging them on diversity issues. It’s still fairly common to encounter all-male management teams—even at companies that make products aimed at women.

This raises a serious question: Can a company that markets to women but lacks any female perspective in senior management or on the board count on long term success?

We’re not so sure. Women account for the lion’s share of consumer spending. A recent study revealed that 89% of women reported controlling or sharing daily shopping, compared to only 41% of men1.

This is a big reason why we became one of the first large global asset managers to vote against the entire nominating committees of global public company boards that lacked female representation. The result: the number of women added to corporate boards has increased. Of the 214 companies we voted against last year, 79 --- 37% -- have since added at least one woman to the board.

This all matters to investors, too. Environmental, social and governance (ESG) funds, which have grown in popularity, take into account gender diversity when making investment decisions. This suggests that companies that are slow to close gender gaps may see it reflected in the bottom line.

Focus On Financial Services

We in financial services have a lot of work to do as well. As Exhibit 3 shows, our industry scores poorly when it comes to female representation in general and women in management positions in particular.

EXHIBIT 3: Female Representation Across Industries

Source: Datastream, Goldman Sachs Global Investment Research

Women-owned firms represent just 5.5% of mutual fund assets2 and less than 1% of total industry assets. In the UK, there are more men called Dave than women managing mutual funds, according to Morningstar.3

In our view, this is a missed opportunity. Diversity within an investment team can help to attract and retain talent and foster better investment ideas and outcomes. At Goldman Sachs Asset Management, we’ve prioritized diversity, and today, nearly 50% of our assets are managed by women, well above the industry average.

Another thing to keep in mind: diversity isn’t simply about head counts or checking boxes. If the corporate culture isn’t inclusive, it doesn’t matter how diverse the workforce is. Diversity won’t add value if people’s perspectives and ideas are ignored.

We may now have a chance to make the workforce more diverse and inclusive. Women were disproportionately affected by the COVID-19 crisis, with many having to assume childcare and other domestic and non-paid duties in addition to their professional obligations. As we emerge from the pandemic, we should start thinking more creatively about how to address these issues. The potential benefits of doing so, in our view, are hard to ignore. 


Women: Primed and Ready for Success, Nielsen, 2019.

Bella Research and Knight Foundation, Diversifying Investments: A Study of Ownership Diversity and Performance in the Asset Management Industry, 2019.


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About the Author

Laura  Destribats

Laura Destribats

Co-lead portfolio manager for the Global Millennials Equity Strategy, Goldman Sachs Asset Management
Claire  Hedley

Claire Hedley

Vice President, ESG Strategist, Goldman Sachs Asset Management

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