"Staff retention, employee satisfaction, productivity, profitability – as noted, there are many benefits that can be drawn from having a more diverse business."
Many will probably be scratching their head wondering what on earth that means. Well, it is the Discussion Paper (DP) that is to explore “diversity and inclusion in the financial sector”, which is to be issued by the Prudential Regulation Authority, Financial Conduct Authority and Bank of England.
The paper was announced in early July, with the three organisations saying in a joint statement that the objective is to foster “a resilient financial services sector, which brings together and responds to different views and perspectives, so that concerns can be raised and decisions are challenged effectively”.
Initiatives like this often divide opinion. On the one hand, there are those who understandably lament the fact that we are still having to address the topic of diversity – or a lack thereof – through such formal procedures in 2021. On the other hand, reports like the one now underway are at least acknowledging that this is an issue that requires attention.
More discussion than progress
In truth, while discussion of diversity in the world of financial services has increased significantly in recent years, it is worrying that little meaningful progress has been made.
For example, hundreds of banks, lenders, investment firms and insurers are signed up to the voluntary Women in Finance charter, which commits firms to link pay to gender targets. However, the charter’s annual review in 2021 showed that there was, on average, 32% female representation in senior management among charter participants last year – that represents a year-on-year increase of less than 1% since 2017.
Of course, the diversity debate spans well beyond gender; we must also assess how accepting the financial services sector is of people of different ethnicities, backgrounds and cultures, ensuring everyone is presented with equal opportunities and, crucially, environments wherein they feel supported and comfortable.
Sadly, representation of Black, Asian and Minority Ethnic (BAME*) workers in financial sector management is also only improving slowly. In its 2018 report, Paying Attention, research firm Randstad revealed that members of the BAME community currently hold fewer than one in ten management jobs in UK financial services.
*While use of the term BAME is a matter for debate, I use it here for consistency with Randstad’s report.
The benefits of greater diversity
Improving diversity has numerous benefits, depending on which direction you approach the subject from.
Take the economic argument, for instance; the aforementioned Randstad report suggested that the UK economy would benefit to the tune of £24 billion if those from BAME backgrounds progressed in their careers as the same rate as their white colleagues.
Consultancy company McKinsey has conducted its own research into the business benefits of improving diversity. Its study found that companies in the top 25% for ethnic diversity were 33% more likely to achieve above average profit, while more ethnically diverse boards were 43% more likely to outperform on profits.
However, to talk about economic prosperity or companies’ performances within such a context can seem somewhat reductive. Indeed, boiling down a complex issue like diversity into charts about potential profits overlooks the fundamental societal need to create more inclusive workplaces.
Inclusive cultures
At Market Financial Solutions, we are extremely proud of our diversity. We have 50 employees, 58% of which are men and 42% are women. Yet the latter make up 62% of the management team. And, what’s more, 42% of our staff are from ethnic minority backgrounds — including founders, directors and senior managers.
The benefits cannot be measured in profitability or output. But it is evident within our business. For one, having a diverse team made up of people of different genders and from different backgrounds has made us more resilient – we have a multitude of strengths and skills to call upon, which has enabled us to find creative solutions to problems when they arise, not least during the pandemic.
Further, a fundamental goal of any business (financial services or otherwise) must be to create a culture and workplace where all employees feel comfortable and supported. That might mean allowing flexible hours for parents needing to drop-off or collect children from school, or enabling celebrations of a wider range of religious holidays as a team — like Ramadan and Diwali, not just Christmas.
Employees must have the freedom to properly express themselves, rather than feeling they have to conform to a status quo or, worse yet, hide certain elements of their lives. The language used and policies set by an organisation must support this, while creating different frameworks so team members can speak openly about concerns or present new ideas should also be encouraged.
Staff retention, employee satisfaction, productivity, profitability – as noted, there are many benefits that can be drawn from having a more diverse business. Ultimately, however, it is a question of leaders creating businesses and fostering cultures that people will want to work in, regardless of their gender or ethnicity.
The financial services sector must strive to do better. Committing to charters or contributing to new reports cannot be dismissed as a PR exercise – these initiatives have a role to play. However, the bottom line is that employers have to invest a great deal of effort and thought to fast-track progress.
We all have to consider and then reconsider how best to support our staff in a way that embraces and encourages more diverse teams. We should set our own goals and have honest conversations with employees about what more can be done. We can learn from peers but, crucially, we cannot afford to become complacent – there is a long way to go before financial services can claim to be a diverse sector, and it is an issue that has to remain a priority for all businesses in our industry.
