In July 2021 the FCA sent out a consultation paper on the subject of improving Diversity and Inclusion (D&I) in the Financial Services sector. The regulators believe that increased D&I will improve governance, decision making and risk management within firms as well as aiding innovation and supporting a broader range of goods and services.
The starting point is for the FCA to capture benchmark data from firms about their workforce with a joint consultation due in Q1 2022. This is underway at the moment.
The paper is consulting on a range of options including targets for representation, measures to make senior leaders directly accountable for diversity and inclusion in their firms, linking remuneration to D&I metrics and considering it in relation to non-financial misconduct. The paper focuses on the importance of data and disclosure in order to monitor progress.
Recently at Actus we facilitated a HR Focus group discussion for our Financial Service sector clients to discuss the topic of D&I. The session was very well received and covered a number of key themed discussions. Read on to find out what was covered on the D&I focus group:
D&I was seen to be a ‘hot topic’ in all organisations by our participants. However, there were differences in the levels of genuine sponsorship from ExCo with the majority feeling that the onus was on them to drive the agenda and/or board members were paying lip service to the topic. The sentiment was more one of compliance or ‘should do’ rather than passion or belief in it being the right thing to do.
The firm with a more mature approach was larger and had visible sponsorship from board members. This included being prepared to be videoed talking about the importance of the topic. They also had a well-established D&I network with a number of more recent spin offs including a women’s network, LGBT & Menopause and currently considering Neurodiversity and BAME. Each of the D&I groups has an ExCo sponsor.
We agreed that sponsorship is absolutely critical and explored some ideas around how to get genuine buy-in. There is no doubt that hard facts and figures around the business benefits of diversity would be helpful as well as specific benchmark data from within their firm (ideally with external comparators). We also discussed the fact that it would be more powerful to get sponsors from outside of the minority group rather than the one BAME female on Exco being expected to sponsor both for example.
Those experienced in promoting diversity groups recommend that starting with a broad D&I group (with a sincere senior sponsor) is the best way to start to allow genuine sharing of experience between different groups. As soon as the spin off groups begin, there is the chance to increase the sense of them through diversity silos when in actual fact we need everyone to be able to empathise with the different experiences of others.
There was agreement that D&I metrics may have suffered since the Pandemic. We were not certain of the reason but there was a sense that recent recruits had not been brought in, in the same proportions of diversity as those who had left. We questioned whether this was down to the age-old problem of ‘Employing people like us’ perhaps happening more in a remote world with less HR supervision. Or urgency and panic leading to recruiting people who quite literally look like the person who just left. Was it the issue that the same recruiters are providing the same types of candidate and filtering out diversity because these are the ones that get through? Were we simply writing job ads and case studies that appeal to white males and somehow discriminate against others unconsciously?
We didn’t know the answer to this although it was noted that the appetite to be challenged in this area by hiring managers was low. Blind C.V.s would be one way of exploring this although none of the participants had successfully managed to persuade their colleagues to trial such an approach yet. The other possible root cause is that there are simply fewer female/ethnically diverse candidates available with Maths, Science or Economics degrees for example. Examples of more successful diversity of recruitment were mentioned in actuarial roles where there was more gender balance.
One key benchmark which we all agreed we would love to know more about is to understand what the diversity ratios are in the labour markets for typical fin service roles. If we could establish that benchmark then it would be far easier to understand whether each business was recruiting diversity of talent proportionately or not. We will keep looking for this information!
The other area for improvement was in the middle management space as it is very difficult to improve diversity at the top table without a talent pipeline. Sadly, this did seem to be a consistent issue across the board despite recent progression made around flexible working due to the pandemic. It seems that again, some line managers were still not open to part time or flexible working. This disproportionately affects women, typically middle managers, trying to return to work after maternity leave. Of course, this is an age old issue, that won’t be fixed overnight – some might have felt that the pandemic may have bust some of those paradigms around flexible working effectiveness. Unfortunately, our focus group didn’t see any major progress in this space.
With D&I it is a vast subject and an entrenched issue so it is hard to know where to start. We agreed that the starting point is benchmarking and gathering data (before the regulator demands it). Once we have the data it is easier to set strategic goals. We also agreed that this kind of change isn’t a quick fix, instead it will require a 3-5 year strategy.