Ahead of the ABI’s "Diversity Summit: Urgent Action" on 12 October, and to mark the publication of the ABI's own 2021 Diversity and Inclusion Data, Yvonne Braun, Executive Sponsor for D&I , writes about the urgent need to create a workforce that reflects the customers we serve and a culture that enables everyone to thrive.
The insurance and long-term savings industry has made some tangible progress with aspects of diversity and inclusion over the last few years with latest figures showing that women held 29% of Board roles in 2020, up from 25% in 2019. Initiatives like The Women in Finance Charter, signed by us and 43 of our members, have been helpful in driving progress, so too has the Hampton-Alexander review which has driven up the representation of women in FTSE 350 boards from 9% ten years ago, to 34% today. Given that women make up half of the population, this is self-evidently still pretty modest, but it’s a start.
But when it comes to wider diversity, especially ethnic diversity, and socio-economic diversity, our twin focus for today, the picture is bleak. The most recent available census data from ten years ago tells us that in total, 13.8% of the UK population was from a Black, Asian or Minority Ethnic background. 8% of the population were Asian / Asian British and 3% were Black / African / Caribbean / Black British. The data obviously out of date but unfortunately, we’ll have to wait for the initial findings from this year’s census until next March, and for the full findings until March 2023.
If we now compare these figures to our sector - Black, Asian and minority ethnic employees make up 10% of people at entry level, but at Executive and Board level this drops steeply to just 2% - so again we find ourselves unreflective of the UK population as a whole.
This is also reflected in the findings of the Sir John Parker review published in March this year – almost a fifth of FTSE 100 boards still lacked any ethnic minority representation, even though some progress had been made. There are also only five non-white FTSE 100 chief executives, one fewer than last year, and only two non-white chairs and four in a chief financial officer role.
And talking about B. A. M. E. employees hides that black people are even more underrepresented. In fact, according to a report from the London School of Economics published earlier this year, Black women are the least likely to be among the UK’s top earners compared to any other racial or gender group, and according to a survey published yesterday, the careers of black women in big tech, finance and professional services stagnate as they are trapped in a “mirror-tocracy” where they feel they need to change their persona to mirror the company culture. This must be another area of focus for the sector.
So we are looking at a senior management in financial services that is almost entirely middle class, and even if there are more women or people from minority ethnic backgrounds in senior positions, we’re still unrepresentative of the population as a whole, unless there is change.
When we look at socio-economic diversity, the picture is just as concerning. Research by the Bridge Group shows that nine out of ten senior roles in financial services are held by people from higher socio-economic backgrounds as defined by parental occupation at age 14, but this group makes up only one third of the UK working population. The report also shows that employees from lower socio-economic backgrounds progress 25% slower than their peers, with no link to performance. This progression gap increases to 32% when considering those from disadvantaged socio-economic backgrounds who also identify as Black. It’s almost as if there is a funnel where senior positions and the associated rewards end up disproportionately with those from more privileged backgrounds.
So we are looking at a senior management in financial services that is almost entirely middle class, and even if there are more women or people from minority ethnic backgrounds in senior positions, we’re still unrepresentative of the population as a whole, unless there is change.
So what is happening to change that, and what more needs to happen?
Most fundamentally, we need to collect data. We can only manage what we measure, and currently there are some big holes in the data we have available about our workforces. The insurance and long-term savings sector is an industry that’s extremely good with data. We therefore need to apply the same forensic approach to diversity and inclusion data, so that we are clear about our baseline and then can drive progress from there in much the same way as we would drive business targets.
For a start, we need to move on from the umbrella term BAME and collect more granular data that can tell us what’s really going on with different groups. We also know that not enough socio-economic data is being gathered, with less than 10% of our member firms currently asking their employees about this.
Happily, this is increasingly an area of focus for our members and the sector. The importance of collecting data was also highlighted by the FCA, BoE and PRA in their recent discussion paper on diversity and inclusion, to which the ABI and many member firms have responded. The taskforce for increasing the socio-economic diversity at senior levels of the financial and professional services sector, commissioned by Government and led by the City Corporation, and of which I’m proud to be a member, is also focusing on collecting data as a key enabler.
We then need to look at practical actions to drive progress, and evidence of what actually works, and we should share what works and our learnings across companies and between sectors.
For example, the Behavioural Insights team have demonstrated that evidence to show that unconscious bias training actually changes behaviour or improves workplace equality remains elusive. More worryingly, some studies have even identified potential back-firing effects when participants are exposed to information that suggests stereotypes and biases are omnipresent and unchangeable, or when they react against mandatory training.
Instead, the BIT say firms should invest time and resources into other initiatives which show much more promise and have better evidence of efficacy. For example, anonymising CVs, changing the language used in job adverts and job descriptions, and using structured interviews. At the ABI, we use a recruitment tool called BeApplied which anonymises candidates and removes CVs from the shortlisting process, so it is name-blind and highly structured. We have made some headway in hiring more diverse candidates since we started using this tool. We have also thought carefully about whether roles need a university education and have removed this requirement from our job descriptions and advertisements, again opening ourselves up to a wider pool of people.
Senior accountability is also really important. The latest Business in the Community Race at Work survey, with data from across the UK working population, shows only 44% of employers have a senior leader acting as a Diversity and Inclusion sponsor. Our latest ABI data shows a much more positive picture for our sector. As of last year, 94% of Insurance and Long-Term Savings firms had an Executive Sponsor for Diversity and Inclusion.
"Meaningful change can only be secured by first winning hearts and minds."
This is a great step in the right direction, but of course this sponsorship needs to translate into action and drive meaningful change. Sharing good practice and learnings of what works is also critically important and backing individual initiatives to make headway in getting a more diverse intake. For example, together with a number of our members, we are backing the 10,000 Black Interns initiative, which seeks to support 10,000 paid internships over 5 years in 24 sectors, with over 700 companies.
Meaningful change can only be secured by first winning hearts and minds.
It’s all very well to gather data about ethnicity and parental occupation, but what do we do if people don’t want to disclose this information? I think the narrative and the wider culture of companies is crucial here, and this is where inclusion and psychological safety become critical. If companies create cultures where there is not just diversity but also trust and inclusion - where people can be fully themselves, this will create happier and more productive workplaces, as well as attracting the best talent. That requires having skills like empathy, and leaders at all levels to lean in, ask questions, and try and understand the person in front of them. Getting this right would stop the exhaustion so many people feel by trying to conform to dominant cultures.
And this is a far wider issue than people from ethnic minorities or from lower socio-economic backgrounds. We know that neurodiverse people and people with disabilities are struggling to be recruited and yet have many skills that could benefit our sector. We also know that anyone with caring responsibilities and who does not have access to flexible working struggles to progress. As a result our sector is missing out on talent and is not benefitting from the innovation and creativity that comes from having a diverse workforce.
We need to create a culture that welcomes all, where employees can be themselves and where they can contribute fully. This needs a major long-term programme of cultural change that is properly resourced, planned, measured and monitored and championed by senior leadership. We at the ABI are committed to working with all of our members and stakeholders across business, Government and regulators to deliver meaningful and lasting change.