Work is being carried out at more junior levels, from schools’ outreach to the introduction of diverse graduate intake policies. However, at a senior level, the profile of the corporate leader is slow to change.
It may not shock you to learn that the majority of senior leaders in financial services come from higher socio-economic or ‘professional’ backgrounds (defined by the Social Mobility Commission as having a parent employed in a ‘professional’ role when the person concerned was 14 years old). But you might be surprised that the figure sits at 89 per cent. That compares to 60 per cent of partners in the legal profession, for example, and 37 per cent of the UK’s working population as a whole.
When it comes to leadership, the financial services industry is massively out of whack with the rest of the country, and the time is ripe for change. A government-backed taskforce charged with addressing this issue last year concluded that greater diversity in a firm leads to more innovation, productivity and better performance. (See here for an analysis of the business case, led by former chief economist of the Bank of England, Andy Haldane: www.whogetsahead.co.uk/home).
What’s more, if we have diversity of thought at the top, we make better decisions.
The regulators have welcomed these conclusions, and the significance of diversity is now front and centre of the Financial Conduct Authority and Prudential Regulation Authority’s messaging around groupthink and sound decision-making, highlighted in their current consultations.
Who you know
Overall, the proportion of people from higher socio-economic backgrounds working in financial services is 45 per cent. So why are so few people from the 55 per cent majority making it past middle management?
A lot of it comes down to who you know, and fitting in.
Employees from higher socio-economic backgrounds tend to have greater access to networks – people in the financial services sector they already know through friends, family or educational contacts – than their counterparts from working class backgrounds.
They are more likely to understand the unwritten codes around how to operate, what to do and what to say.
Employees from working class backgrounds are 17 per cent less likely to have access to senior sponsors. It is human nature for people to want to support those who mirror us or remind us of ourselves when we were younger.
So, if 89 per cent of senior staff are from ‘professional’ backgrounds, they will seek to champion younger colleagues from similar molds. Employers need to find transparent and fair processes to allocate sponsors, to override that natural tendency.
It is also important to change the processes used in the workplace, to ensure that the visible work that gets noticed by leaders is allocated to staff in a fair and transparent way. Employers can access a greater breadth of talent if they aren’t solely reliant on those with the external confidence to put their hands up to ask for projects – and ask for advice.
We need to make sure we’re spotting talent that is less obvious and may not have as much perceived gravitas. We must ask ourselves: what is our definition of talent? Do we really need someone who can hold the room and speak to 200 people for all jobs? Arguably not.
Taking the first steps
There are no quick fixes to the prevailing situation, but it all starts with leadership, and clear accountability and responsibility are key.
Shifting the dial on socio-economic diversity (or gender or ethnicity, for example) should be treated like any other change management programme: know where you are at the beginning; decide where you want to get to; set an appropriate action plan and budget to get there, and make sure your senior leaders are accountable for it.
At Progress Together, we are working with the financial services industry to bring about the changes needed, and we can help with informative guides, top tips, training webinars and data collection tools. Our member firms are beginning to collect key data on the socio-economic status of their employees, and to set and publish their targets for improvement (rather than quotas) with the aim of evolving the wider sector.
At Progress Together our goal is parity – for the proportion of senior leaders in the industry to mirror the wider workforce. There is a long way to go, but progress has started, and we hope to bring more firms along on the journey.
Progress Together is a membership body committed to increasing socio-economic diversity at senior levels in financial services.
