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Building inclusive cultures across Financial Services

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The Financial Services profession, like many other sectors, is facing a range of Diversity, Equity and Inclusion (DE&I) challenges. Whilst some progress has been made, there are some worrying statistics. In their 2022 report, Advancing more women leaders in financial services: A global report Deloitte highlight that: “In the banking sector […] the representation of women in next generation roles is forecast at near-zero growth by 2030”, the report also states that “at the current rate it will take another 151 years to close the global economic gender gap at all levels”. Perhaps most worryingly, “Despite claiming DE&I as a priority, 69 per cent [of staff at UK financial institutions] say their firm doesn’t reflect it in practice” (BusinessMatters: Diversity is an afterthought in financial services sector).

However, thanks to the ’multiplier effect’ Deloitte go on to report “a positive, quantifiable increase, ranging between 2x-5x, of women added to senior leadership levels for each woman added to the C-suite” (Deloitte: Advancing more women leaders in financial services: A global report).

There are also challenges regarding various inequalities and a lack of inclusion experienced by disadvantaged groups. A discussion paper commissioned by the Financial Conduct Authority, Bank of England and Prudential Regulation Authority, titled Diversity and inclusion in the financial sector – working together to drive change commented that, “the situation for ethnic minorities shows signs of going into reverse…findings…show a decline in the number of black leaders and the ‘black pipeline’ to senior management for FTSE 100 companies. A wealth of evidence suggests that ethnic minority individuals struggle to achieve the same progression opportunities as their counterparts.” Research also shows that there is limited progress with social mobility. According to a 2022 report by the City of London Who gets ahead and how?: socio economic background and career progression in financial services: a study of eight organisations, “89% of senior roles [in UK financial services] are held by people from higher socio-economic backgrounds”.

Although there is, in many aspects, a long way to go to drive the diversity agenda forward, with the right leadership, support, tools and commitment, businesses can progress. Whilst the concepts of DE&I often overlap in practice, they are very different. These concepts require an understanding independently and within the context of the specific organisation they’re implemented in.

IDEX Consulting spoke to DE&I Specialist Baljit Kaur, on the challenges cultures and individuals are facing and how organisations can practically support people and build inclusive cultures.

Where should organisations start on their diversity journey?

To start, organisations should ensure decisions are informed by quantitative and qualitative data. It’s important that businesses use data to ‘inform’ their decision making as opposed to using metrics and targets to drive their decisions. Focusing on the latter, often results in leaders focusing on targets and roles filled, as opposed to creating an authentic inclusive culture.

Building a genuinely inclusive culture requires opening the door to diversity and proactively fostering diverse perspectives, allowing them to grow and influence the business strategy. Businesses should be data informed but driven by the values and culture they want to build.

How have you seen things changing over the past few years?

For many organisations, DE&I is moving up the agenda. It may on occasion stall, in certain circumstances, but progress is happening. From immigration debates to multiculturalism, diversity is a highly politicised area and we’re seeing that move from government discourse to business approach. There is an increasingly socially-minded consumer base; with that comes a heightened awareness and higher standards of practice.

Alongside this, there is a marked rise in consumer activism; companies like Google and Netflix have seen company-wide walkouts, Wells Fargo and Delta in the US faced lawsuits for committing to social pledges off the back of George Floyd, but not seeing them through. The rise in consumer activism brings with it a strong sense of accountability and a greater need for DE&I in the workplace. 

What strategies can be implemented to attract diverse talent?

When looking to attract diverse talent, it’s beneficial for businesses to re-examine their definition of diversity. Alongside diverse representation, there needs to be a focus on diversity of thought. These concepts are individually important but are vital to success when combined. There are staggering statistics on how lucrative DE&I strategies can be for businesses, not only in terms of productivity and retention but also regarding innovation and business growth.

Dismantling the recruitment process is also key because it allows for the identification of barriers to accessibility and inclusivity. The sourcing and selection process is often rife with gender, and other biases. Organisations need to examine the language and cultural terminology used in job ads and specifications. When decoding language, preconceived and subliminal ideas come to light, which often explains patterns around hiring the same talent for similar roles.

Lastly, it’s incredibly important for hiring managers and those on interview panels to address any inherent biases, which undoubtedly influences decision making. Ensuring everyone in a business is trained on unconscious bias and the importance of DE&I helps to eliminate risks associated with biased hiring.

Should training be mandatory?

Yes. It’s worth noting that if there is potential discrimination or other issues, organisations are liable from a legal perspective. Companies don’t stop to question whether health and safety training should be mandatory, so why is this questioned for DE&I?

Training is key, the most important of which is unconscious bias training. The only way professionals and organisations can rid themselves of unconscious bias is through awareness. ‘We don’t know what we don’t know’, therefore training sessions that provide awareness are invaluable, because identifying the issue is the first step to rectifying it.

Unconscious bias training in particular is highly politicised and this is where we tend to meet the most resistance. This is why ensuring mandatory training is hugely important. Training fosters awareness, but it also equips people with tangible tools and knowledge on how to go away and enact change.

While some companies make training optional to avoid any backlash of people feeling ‘forced’, a good approach to consider is adding training to yearly performance objectives. That way, professionals approach DE&I courses, just like any other training, understanding that it is a resource to improve their practice. Ultimately, it’s not just the responsibility of leaders to create and nurture diverse and inclusive spaces, it’s everyone’s. We all need that training and knowledge.

What are the benefits of training?

We have an abundance of data showing the quantitative commercial benefits of DE&I training and implementation. With “diverse companies earning 2.5 times higher cash flow per employee and inclusive teams reporting an over 35% rise in productivity(GlobeNewswire: D&I Global Market Report 2022), there is an undoubtable financial gain to inclusivity.

If there wasn’t quantifiable commercial gain, would financial institutions stop their efforts?

Stakeholders and employees are looking for organisations that are genuine and committed to authenticity, ‘No matter how brilliant an activity might be, it should not be considered great unless it was the result of a great motive’.

What role does communication play and how can it be improved?

Communication is key throughout all areas of business. Having a solid internal communication framework is essential for promoting and embedding DE&I because it ensures all parties are aware of the mission statement and the objectives at hand.

Improving communication involves detailing the motives behind the strategy, and providing opportunities for people to get involved. DE&I is always more successful when it is created and implemented collaboratively.

The four pillars of an effective internal communications strategy are:

  • Informing – ensuring every member of the business is aware of the mission statement.

  • Engaging – explaining the purpose of data informed decisions and corresponding activities and to call-to-actions.

  • Consulting – working with teams to amend policies and ways of working.

  • Support with an open dialogue – providing an opportunity for individuals to share thoughts and air concerns in a safe and supportive environment.

The above communication principles need to be driven by leaders and managers to affect any sort of change.

What are the benefits of non-anonymous surveys?

There are obvious risks to non-anonymous surveys, the foremost being whether or not individuals feel safe enough to be candid. While it’s possible to glean useful information from non-anonymous surveys, the likelihood is with almost certainty, there will be a loss of data on how employees really feel.

To gain a good understanding of how specific groups feel, it can be useful to gather disaggregated data via an anonymous survey and then correlate the results to any protected characteristics and other markers of identity. Looking out for trends or themes will help inform strategies and objectives.

How do you measure success?

  • Representational data is the simplest measure of success, ensuring a diverse range of people company-wide and in leadership roles.

  • Qualitative data such as employee engagement survey results can be really useful in assessing the culture of a business.

  • Assessing policies to ensure they are inclusive and equitable for all. An example would be extending bereavement policy to aunts and uncle for culturally tight-knit families etc.

Finally, be alert to masking. Is there a pattern of employees having to downplay cultural/ethnic characteristics? While actively looking will indeed show signs of masking, it’s vital that employees are offered a safe space to inform managers, allowing leadership a measured perspective of the problem.

What can we expect to see going forward?

Organisations need to become more outcome focused as opposed to initiative focussed. It’s about understanding that this needs to be systemic, not merely a project for human resources or the talent teams. Instead, DE&I needs to be dealt with like a change management programme that has a clear strategy and buy in from leadership. Unfortunately, there is still a great deal of divisiveness on the topic, individuals particularly in leadership roles are still holding on to that ‘what’s in it for me’ mindset. In order to support communities and offer fair and equal opportunities to all, DE&I needs to be treated like a regulatory requirement that organisations must take seriously.

If you would like support with your DE&I strategies and approach, contact Baljit Kaur, Diversity, Equity & Inclusion specialist.