THE BRIDGES THAT NARROW THE DIVERSITY GAP.
Narrowing the gender gap and eliminating ethnic, age and disability related bias in the workplace have met with, at best, only moderate success across the global financial services spectrum. Is a level playing field unobtainable, or is the future brighter than we think? Francesca Carnevale reports.
Diversity/inclusion (D&I) is now a touchstone of the enterprise culture, for good reason. D&I drives firms to adopt better policies that benefit all employees. It encourages a more tolerant and collaborative culture; promotes an improved work/life balance, raises staff retention levels, and spurs innovation say retail investment pressure group PIFMA and think tank McKinsey. Moreover, regulators are now on the case; think the UK Treasury’s voluntary Women in Finance Charter and the UK government’s gender pay disclosure requirements. So is the private sector, with initiatives backed by specialist industry bodies, such as ICMA, Innovate Finance and Tech UK.
With so many initiatives in train, women, minorities, LGBTQ+ and older workers should find themselves in a workers’ wonderland. Sadly, despite the rhetoric, there is much still to be done. The World Economic Forum’s latest data (2019) suggests at best Western Europe won’t close the gender gap for another 61 years, at today’s rate of change. Not as bad as North America (165 years) or Asia-Pac (171 years), but time’s clearly a bandit as far as diversity and inclusion is concerned.
Downstream, the numbers are barely better. Women account for only 14% of enterprise executive committees; they earn only 18% of computer science bachelor’s degrees in the US (barely up from 13.6% in the 1970s); and only 22% of artificial intelligence (AI) professionals globally are female. Moreover, research by online professional talking shop LinkedIn this year found, for instance, that in AI there are no signs that the gender gap is closing. Upside, the numbers suggest men and women are adding AI skills at a similar rate; the downside is that while women are not falling behind, they are not catching up.
In financial services and fintech, it adds up to no change. Worse, cautions Tim Dinsdale, CTO Europe at OpenFin, “we have actually gone backwards. The percentage of women qualifying with computer science degrees has gone down since the 1980s [37% at the time]. This translates directly into hiring data. It doesn’t yet show us the subsequent promotion or retention numbers. Achieving gender equality is urgent, rather than a badge of honour.”
There are other nuances too. LinkedIn found in general, women with AI skills are more likely to work in the use and application of AI, with common positions including data analytics, research and teaching. By contrast, men typically work in the development of the technology itself, which is reflected in the skills they report, such as deep learning and neural networks.
Talk the talk
One issue is the language of compliance. Much of the debate has homed in on value in equality. However, highlights DiverCity podcaster and financial services influencer, Julia Streets, the big kahuna is the enterprise value that diversity brings. “There is a new appreciation of what large spectrum diversity can bring – inclusive of race, age, LGTB as well as gender – to business. For the first time, there are five generations of experience in the City, with a measurable impact on corporate culture, innovation and sustainability,” says Streets.
Even so, acceptance of D&I is not ubiquitous across financial services. Clearing and settlement services rank highly in the equality stakes. The Options Clearing Corporation (OCC), for instance has five female directors out of 20 seats and 33% of the clearer’s officers are women, some way above the norm. Explains John Davidson, OCC’s CEO, “The products that institutional investors, pension funds, mutual funds, exchange-traded funds need, [require…] a whole variety of different approaches. Those different approaches are most available if you have a diverse number of perspectives in your organisation.”
By contrast, private equity and hedge funds exhibit a lower propensity for change. Elsewhere, there are significant stirrings in both venture capital and, in particular, asset management. Why so? The business case for change is irrefutable, explains Frédéric Janbon, CEO of BNP Paribas Asset Management (BNPP AM), who believes that the financial community is “now at a crossroads”, and a new direction of travel includes D&I.
This year BNPP AM initiated a Global Sustainability Strategy, supported by three E pillars: equality, the environment and energy transition; including a firm commitment to include more women on its executive board. The initiative is one of the levers it uses to engage new customers and retain the best talent. As Janbon explains, “It reflects our increased ambition and outlines a blueprint to mainstream sustainability in all that we do, through our investment processes, but also engaging with our staff, companies, policymakers and wider society. This is central to our firm’s strategy and our ability to deliver sustainable, long-term investment returns for our clients.”
OpenFin’s Dinsdale runs with the theme, underlying Janbon’s view that ultimately what’s good for the diversity goose is particularly good for shareholders. “Recruiting and training is very expensive for big knowledge economy firms,” he says. “Employee churn is bad for shareholders. Companies have a commitment to their investors to attract and retain as much talent as possible; and that absolutely includes a genuine commitment to D&I. If a company is not serious about gender equality, they are more likely to promote the same kind of people that are already in power.”
Dinsdale adds that this “can be very detrimental because it can exclude talented employees who do not fit into this box and consequently leave. The fact is that the more opinions you bring to the table, the more likely you are to uncover the right solution to a given problem. I have seen this many times in organisations. If your employees have identical life experiences, you are not achieving the best outcomes.”
The next stage
All well and good; though as Janbon highlights, we are at a nexus. In the UK, government infers British workers will get priority on public procurement projects after Brexit. An attendant danger is the bias will filter down to other business segments as public procurement projects cover a broad range of gender-lite industries such as construction, engineering, financial services and capital markets, let alone fintech. It is a potential problem not only in the UK long term, but also Europe and North America where nationalism is on the rise. Can these trends trump the gains to date made in a meaningful drive for D&I?
Influencer Streets remains upbeat. Competition for business and talent, she believes, will temper any dampening tendencies. Moreover, she thinks it will inevitably widen the search for new and old talent outside the traditional confines of financial hiring, revitalising both industry and regions across countries. “Schools and universities are where the search begins. Groups such as Innovate Finance are already opening dialogue across the country to begin to tap into this wellspring of talent. I’m hopeful for both the near and long term.”
Ultimately, maintains Streets, the onus is on the D&I community itself to help leaders hire. “They are the key to success and need to demonstrate the sustained economic value of diversity and inclusion to the board, shareholders and the company at large. It’s about culture and leadership. If D&I professionals are proactively delivering value across the enterprise and if performance is baked into their hiring managers’ scorecards, then the benefits of diversity and inclusion will be valued as a both commercial and organisational imperative.”