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Workplace diversity – feedback from the latest Women in Finance Charter report published in March 2021

The Women in Finance Charter, launched and run by HM Treasury, has now been up and running since March 2016.  From that standing start it now has over 400 signatories – including 18 BSA members and the BSA itself, the newest 28 signatories to be added include two BSA members – Scotwest Credit Union and the Swansea Building Society.  Collectively these 400 plus financial services firms have over 950,000 employees.

It is entirely understandable that people hold diverging views on the efficacy of Charters in general – with some seeing them as agents of change or at the other end of the spectrum just a means of virtue signalling.  However, what this Charter has clearly done is to focus minds and change the nature of conversations, not only about gender diversity in senior roles – the purpose of the Charter - but more broadly across all forms of diversity. 

All businesses are looking to grow or hire the best talent they can to deliver their chosen strategy.  There is a raft of research that demonstrates that companies that have diverse leadership – be that gender, ethnicity, social background, age and other characteristics reflected in society – are more successful.  There is validity in the argument that being diverse is the right thing to do, but an argument based on business success and reflecting customer base or community are perhaps more compelling.

It is also clear that diversity – particularly in senior leadership positions is high on the agenda of our regulators.  Nikhil Rathi, CEO of the FCA spoke powerfully at the launch of the Charter’s Annual Review and did not mince his words in terms of expectations.  The title ‘Why diversity and inclusion are regulatory issues’ was something of a give-away.  I was particularly struck by these words:

"Ultimately, improving diversity and inclusion is both a matter of fairness and a crucial way to strengthen consumer outcomes."

And in terms of holding firms to account:

"As part of our work on wholesale banking culture, we introduced 5 conduct questions to help focus minds of senior managers on conduct risk. I would like to see this expanded – and a sixth added – for all firms: is your management team diverse enough to provide adequate challenge and do you create the right environment in which people of all backgrounds can speak up?

"This is much broader than representation. It is about a firm’s culture. Not just in relation to diversity, but inclusion, too. Do people feel comfortable in the work environment such that they can demonstrate, share and bring to bear their diversity of experience and background?

"In the years ahead, if we don’t see improvements in diversity at senior levels and better answers, we will also consider how to best use our powers. This is something we will consider over the next year, in work led by Georgina Philippou, until recently the FCA’s Chief Operating Officer.

"There are supervisory tools we can draw on. For example, I want to consider whether the diversity of management teams – and the inclusivity of the management culture they create – could be part of our consideration of senior manager applications."

The Annual report from the Charter does not make light of the challenges inherent in achieving and maintaining diversity.  Of the 209 Charter signatories analysed for the report, which included the BSA and some Members, just over 35% have met their targets for female representation in senior management, and a further 36% with targets that have future deadlines said they are on track.

Three out of five (62%) firms either increased or maintained their proportion of women in senior management during the reporting period.  However, amongst the 81 signatories scheduled to have met their target by this review, 44 had not done so, although 35 came close with the realities of Covid-19 and related recruitment and promotion freezes being one of the reasons given for the near-miss.  At the other end of the spectrum, an additional 19 firms had opted to increase their target – having met the first one they set.  

Two-thirds of signatories are working to try and quantify and qualify the impacts of Covid-19 on women in their workforce. Many are running employee surveys, offering support via network groups, adapting flexible working, focusing on wellbeing and adding indicators to diversity data dashboards.  It will be interesting to see how the hybrid working models being considered by many firms affect women specifically, and the ability to have and hold a more diverse workforce.  

Signatories still place the greatest emphasis on changes to recruitment practices to push towards their targets from blind CV’s; a requirement on head-hunters to provide diverse lists and or using gender neutral language, offering flexible working or simply having a longer window available for candidates to apply.  Many are also increasing their focus on building internal talent pipelines something that in our sector the Loughborough MSc programme has contributed to – the next Cohort will be recruited to start in October 2022.  

Firms are also using data to improve accountability and quantify the impact of actions, as well as to understand the diversity of their current workforce, although for 99 of the 209 firms that data extended to gender and no further.  Of the remaining 110 firms 62 collect data on ethnicity; 59 on sexual orientation, 49 on disability or long term health issues; 35 on gender identity and fewer gather data on age, faith, nationality, socio-economic background, neuro-diversity and carer status.

Whatever your view on workplace diversity the debate is very much live and present.  If you are a BSA member we run a workplace diversity & inclusion working group – contact hilary.mcvitty@bsa.org.uk if you are interested in joining.

For further information:

Women in Finance Charter Annual Review March 2021

Women in Finance Charter signatories

Nikhil Rathi speech – Why diversity and inclusion are regulatory issues

Posted by Hilary McVitty on 25 March 2021