The ECB’s big gender problem

FRANKFURT — The European Central Bank’s ambitious targets on gender are fueling tensions among staff and raising concerns that diversity is coming at the price of merit.

The ECB has made big strides in increasing female representation in management in recent years, but data reviewed by POLITICO suggests that it has managed that, primarily, not by securing more qualified female applicants, but rather by boosting the chances of women who do apply — at the expense of male competitors.

The findings make for uncomfortable reading at an institution whose reputation has been badly bruised by the events of the last year. Inflation has hit a euro-era high of 10.6 percent and, while it is now coming down steadily, is still over three times the ECB’s target of 2 percent.

“When there is a new job opening, we quickly hear through the grapevine that this one is earmarked for a woman,” one dissatisfied staff member told POLITICO. Tensions were also reflected in the campaign for the Staff Committee election last June where one candidate ran on a platform of abolishing gender targets. He was just 41 votes short of making the cut.

The ECB first set gender targets in 2013, when it set itself the goal of 35 percent female representation in management positions by 2019. It missed that target but set new targets of filling at least half of opening management positions with women in 2020 under new President Christine Lagarde, one of the most prominent champions for female leadership in finance. Lagarde once famously said that the world would be different “if it was Lehman Sisters.”

"The objective of the targets was to increase the pool of applicants, but instead we observed an increase in women’s relative selection rates,” said ECB IPSO staff union vice president, Carlos Bowles.

Confronted with growing discontent among staff, Bowles called on the ECB’s leadership to redouble its efforts to boost the number of female applications.

While IPSO fully supports gender targets, a former senior ECB manager who spoke to POLITICO on the condition of anonymity warned that the targets are too ambitious and have resulted in more than one sub-optimal choice.

“It would be wise for the ECB to revisit these targets,” he said.

Not all women are thrilled about the policy either, saying the institution might end up worse off. If you hire a lone woman from a pool of applicants "the chance that you hire lower quality is a big risk," said one female staff member.

When the 2020 targets were announced, the ECB’s staff committee warned in a letter to the human resource chief that “setting the rate of at least 50 percent for all types of campaigns without taking into consideration the composition of the pool of applicants is a source of concern” as this “may result in situations where it is simply not possible to reconcile gender balance with merit.”

The ECB’s gender scorecard data seen by POLITICO show that the percentage of women who get the job they applied for is much higher than the comparable figure for men.

In the ECB’s I-L income bands, which includes all management positions, women were more than twice as likely to succeed in an application than men (11.7 percent versus 5.4 percent) in 2021 and 2022. In the previous two years, women were more than three times as likely to succeed when they applied (10.4 percent vs. 3.3 percent).

In those two years, the proportion of female applicants for these jobs stood at 28 percent and 31 percent respectively.

According to Bowles, while the numbers show the central bank achieved “a much-needed gender rebalancing,” they “also call for redirecting our future efforts towards ensuring a more diverse pool of applicants."

As it stands, the situation is causing grief among the male workforce, who sometimes think there is no point applying for a promotion. According to a 2021 survey by [email protected] for the Staff Committee, one in three men working at the ECB feel discriminated against on account of their gender in recruitment procedures. This compares with 11 percent of women.

Another former senior manager — a woman — acknowledged that the difference in selection rates between men and women is stark, and that she has heard men complaining about their chances. However, she added that in her experience, “women who apply for these jobs tend to be very driven and more driven than men,” explaining at least a part of the disproportional selection rate.

ECB human resources chief Eva Murciano rejected the suggestion that the bank is prioritizing gender equality over ability. The ECB’s own surveys suggest that staff support the gender strategy, she said.

“We recruit and promote based on merit and talent,” Murciano said. “Women are less likely to apply for promotions, but conditional on applying, women are more likely to win the campaign. The latter does not appear to be due to positive discrimination, because following promotion women perform better in terms of wage progression than men," she explained, citing ECB research.

The former senior manager, however, warned he has seen women catapulted into senior positions and then fall short, something that does neither the women nor the ECB any favors.

“I know of at least two cases where women who were quickly promoted from head of section to director general [a rise of three grades], underperformed and got burned," he said. “I’m confident they would have become excellent directors general if they had been allowed to gain experience, but they were promoted too fast to meet the targets."

At present, if ECB business areas fail to meet their 50 percent female intake target, they will be subject to “enhanced monitoring in the form of meetings with the President and the responsible Executive Board or Supervisory Board member.” That suggests the pressure to meet the target is intense. But instead of sticking to overly ambitious targets, the ECB should focus its efforts on strengthening female applicants, via mentoring programs empowering them to take the next steps up the career ladder as and when appropriate, the former senior manager added.

Asked about plans for additional measures, Murciano pointed to an existing women in leadership program and diversity and inclusion training, with a view to boosting female applications.

Bowles made three suggestions that he said could ultimately deliver better outcomes for the bank. First, that it should make sure that in-house talent gets due consideration, which he says is currently not always the case; second. that it reconsider a time-consuming internal recruitment process and enable more direct promotions based on on-the-job performance. Finally, that it broaden its concept of inclusivity.

“Targets could also be set for other diversity dimensions such as nationality or disability,” he said, adding that, whatever else happens, it is time to act to “avoid a counterproductive gender battle” in one of Europe’s most important institutions.