53% of financial services firms recently polled in our YouGov monitor agreed that having a diverse workforce helped them better understand all consumer needs.
The majority of FS firms also reported feeling they have a fairly diverse workforce in terms of gender, ethnicity, social background and education, but sexual orientation and disability are areas where they are not as confident.
Looking across the market, many FS firms are asking ‘are we saying the right thing?', or ‘is what’s meant to be a step forward going to backfire?’.
FS firms have been making steps in the right direction, exemplified by:
Lloyds – championed by the organisation’s CEO, Inga Beale, the bank launched a yearly festival in 2015 which seeks to pool resources, widen perspectives and share best practices on diversity and inclusion with the purpose of encouraging change.
Man Group – operates a global internal diversity and inclusion network, run by employees and sponsored by senior management. Also runs various mentoring programmes, including a female mentoring programme which actively identifies high-potential women within the firm and pairs them with members of the executive committee.
Blackrock – since 2015, the firm has an initiative to help leaders and managers understand how unconscious bias works and provides them with tools and guidance to mitigate bias in business decisions.
There are many other examples of great work across the industry. However, as the FCA have recently noted, there is still more to do. A specific area called out by the FCA has been sexual harassment with Megan Butler, the FCA’s director of supervision, indicating that the regulator will utilise the Senior Managers Regime to hold executives accountable when it sees firms having issues with sexual harassment.
It is not just the UK regulator that has recently made comment either. Both the European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) have encouraged financial services firms to introduce gender diversity targets - and their guidelines will come into force at the end of June. This demonstrates that the 'people side' of financial services is really starting to be put under the spotlight.
What practical steps can FS firms make if they are starting out on this journey?
Although pay - particularly given the recently reported large gender pay gap in the sector - makes headlines, there are other aspects of diversity and inclusion within FS that are important. Poor female retention and low proportion of people from ethnic minorities at senior manager status are examples.
Firms, especially new and growing companies, should:
- ensure policies and processes are in place as the organisation grows, helping to build them into the business’ operation and culture whilst avoiding last minute ‘fixes’ retrospectively;
- integrate diversity and inclusion into risk and wider business management, preventing it being left primarily as a HR responsibility; and
- articulate and communicate your strategy and commit to it - understand the business benefit of a balanced senior management team and what that can do for your growing business.
Balanced business is increasingly seen as simply the right thing to do, increasing professional reputation internally and externally with stakeholders in the business.
If you would like a conversation about how you can start work in this important area please contact Kerri Constable in the HR Services team, David Fenton, Financial Services Practice Leader, or your usual RSM contact.