Diversity and Inclusion (D&I) initiatives stem from the Equality Act 2010 which was introduced to, “legally protect people from discrimination in the workplace and in wider society”. This makes it illegal to discriminate against protected characteristics such as sex, disability and race, among other things, and the Act has formed the basis of D&I policies that have been widely adopted throughout a variety of sectors. As we prepare for our prestigious Round Table for C-Suite Women in Insurance and Finance in September, Brighter Consultancy now examines the current state of D&I initiatives specifically within the financial sector and looks at the strategies that have proven effective.
Incremental changes
The road to equality has been long and at times tortuous. Not just for women but for people of colour, LGBTQ+ people, people from disadvantaged backgrounds, and people with disabilities. As Frederick Douglass said, “Power concedes nothing without a demand”.
Historically, minority groups have had to fight for representation. For example, it wasn’t until 1919 that the Sex Discrimination Removal Act allowed women to enter the accountancy profession for the first time, and women were only allowed to vote in 1928. 1970 saw the introduction of the Equal Pay Act, and in 1973 the first women were admitted to the London Stock Exchange. In 1976 the Race Relations Act made discrimination on the grounds of race illegal and the Disability Discrimination Act, which outlawed discrimination against people with disabilities, was passed as late as 1995.
These landmark pieces of legislation were the culmination of years of hard-fought battles against a mainly straight, white, male establishment which was seemingly content to preserve the status quo and keep itself in positions of power and authority. The fact that things have changed and keep on changing is testament to the courage and determination of those from outside the established norm who believed that they deserved a seat at the table on their own merit.
D&I now
D&I now forms part of many organisations’ HR strategy, despite objections from some parts of the media against what they term ‘tokenism’ and dismissing these initiatives as ‘buzzwords’. The reality is that organisations that have a diverse and inclusive workforce perform better than those who don’t. Their people are happier, more motivated, relate better to their clients, make better decisions and are financially more prosperous.
In a 2023 Consultation Paper entitled ‘Diversity and inclusion in the financial sector – working together to drive change’, the Financial Conduct Authority (FCA) acknowledged the need for D&I which it said creates, ‘better outcomes for consumers and markets … reduces groupthink, unlocks talent and improves understanding of diverse consumer needs’. However, in order to do that, it emphasises the need for widening the sector’s talent pool to combat statistics like:- Only 19% of women hold C-suite positions in banking, capital markets and payments
- Only 12% of fund managers are women
- Over 100 of the FTSE250 have no ethnic minority members on their boards.
The FCA encourages large financial firms to publish gender pay gaps and report their disability, socio-economic background and ethnicity representation which, it suggests, will allow organisations to highlight changes that need to be made.
What has worked?
In the latest of its diversity reports, ‘Diversity Matters Even More The case for holistic impact’ McKinsey continues its research into the compelling case for D&I. The report notes that since 2015 the representation of women on executive teams has more than doubled and in some cases reached parity. Ethnic representation currently stands at 28% – exceeding the UK’s general population.
For the first time, McKinsey has included environmental and social-impact performance in its metrics. Its results demonstrate conclusively that a higher level of diversity on boards and in executive teams results in higher social and environmental impact scores which helps boost community involvement, positively impact ethical disposition and community orientations, as well as financial performance.Firms which have succeeded in enhancing D&I representation have used strategies such as:
- Creating policies that are informed by the people they are intended to support, creating a working environment that enables them to reach their full potential
- Improving representation of marginalised people in leadership positions
- Auditing the C-suite to ensure diversity
- Investing in training to eliminate unconscious bias
- Using inclusive language in recruitment and promotion.
However, there are still issues which need to be addressed. Reuters recently reported that women working for some of the UK’s top financial firms are still being paid on average 28.8% less than their male colleagues.
In order to attract women into the finance industry, help them thrive within it, and remove barriers to progression (as a Deloitte report suggests) the focus needs to be on creative recruitment policies that eliminate gender bias in advertisements and unconscious bias in interviews, promote effective succession planning that may hinder women’s progress, and develop more efficient policies, including such things as providing mentoring and support networks.
We’ll be discussing all these issues and more in our Round Table for C-Suite Women in Insurance and Finance in September. Contact us for more information.
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