Change is coming to Financial Services… and it looks like better DEI!

Do you work in Financial Services?  Well then watch out, because change is a-coming… and it looks like better DEI.

Back in the mists of time (around this time last year, give or take a month) the FCA published a paper on understanding approaches to D&I in financial services.  The FCA reviewed 12 firms across multiple sectors, based on D&I strategies, targets and data used, as well as holding a structured 90 minute interview with a senior leader (plus specialists if desired).

8 of the firms reviewed had large pay gaps and 4, ‘relatively small’ pay gaps (the paper doesn’t give the numerical sliding scale of ‘large’ to ‘relatively small’, which is a shame, because I would love to know what it was!).

What the FCA  found resonates with our experience across all sectors, not just financial services:

• Lots of passion and commitment - hurrah 🙌, but
• Generic strategies, which lacked both a clear articulation of purpose and goal oriented actions – oh… 🫥
• Poor use of any data collected to identify the most important issues – oops… 🤨
• No real measurement to track what was working (and what wasn’t) – oh dear… 😥
• Lack of understanding on the importance of building an inclusive culture versus taking action to measure diversity and address specific issues… crumbs… 😱

Firms were focussed on gender, and increasingly ethnicity, but there was far less focus on other diverse characteristics.

There was also huge focus on making improvements at a senior leadership level… despite data showing that the biggest drop off in representation is at the junior to middle management level.  The problem with this approach is that the obvious solution to improving things at a senior level is simply to poach the existing ‘diverse talent’ (read, in this context, female and ethnic minority talent) from elsewhere, which is obviously not going to have the same lasting impact as sorting out your own structural and cultural issues to ensure an ongoing pipeline of talent that actually reflects our gloriously varied UK society, rather than a specific, privileged and let’s be frank, rather homogenous section of it.

There was also a lack of specific country focus – global DEI strategies are wonderful, but to really get under the skin of the problems, and then solve them, there must be some specific focus on the local market, which reflects its demographic make-up, its culture, and its laws: because otherwise, we circle right back to generic ‘one size fits all strategies’, which in our experience, although they might do some good, don’t really get to the heart of the problem… or solve it.

The FCA reported a ‘compliance based’ approach from some firms, which at mpm included, we tend to refer to as the ‘box tickers’.  That tends to concern us less when it comes to engaging with clients – per our previous LinkedIn post if the reason we get people through the door is because they have to tick a box, that’s ok – as long as we can take them on a journey that leads to the right DEI outcomes (spoiler alert – ticking a box is not one of the right outcomes, it’s just an acceptable reason to get someone in the door in the first place!).

In terms of remedies, there was a heavy reliance on training, information and network or employee resource groups.  In our view, these all have a place in DEI strategies, but as Velma Kelly sings in the musical Chicago they ‘simply cannot do it alone’.  Unfortunately, in our experience these are ‘go to’ initiatives because they are easier and more comfortable to implement than the more difficult and uncomfortable work that requires firms to truly look at the systemic problems in their organisation that are allowing some types of people to flourish, whilst holding others back.

Accountability was also an issue – and particularly in FS, where cash is often King (or Queen) from the firms surveyed, it was hard to winkle out any examples where poor DEI outcomes would result in a tangible adjustment to reward.

Finally, any data collected was focussed on the quantitative and any attempts to measure inclusion were generally limited to staff surveys – which is a great start, but in our experience, nothing beats the addition of good quality qualitative feedback to really understand the employee experience and how it can be improved.  There is also a tangible benefit that comes just from speaking direct to employees – we often receive comments during focus interviews and feedback sessions that ‘even if nothing else comes of this, we really appreciate the opportunity to be heard’ (although we don’t recommend that the work stops with conversations to understand the employee experience, because that risks damaging trust, which can be a very fragile creature at the best of times between employee and employer in the DEI space).

So, that was 11 months ago.  What’s happening now?  Well, in October this year, the FCA published a consultation document Diversity and inclusion in the financial sector – working together to drive change.  Our article on the proposals in the consultation will follow soon, so watch this space!

mpm included focusses on helping companies create lasting and meaningful change in the world of DEI.  If you want to know more about us, click here.

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