An independent task force run by the City of London Corporation has found that those from less privileged backgrounds working in the financial services sector take 25% longer to progress in their careers than their wealthier peers despite no evidence of poorer performance at work.
Further, despite only 8% of the UK population having attended an independent school, 16% of workers in the industry had a private school education. Incredibly, the research, commissioned by HM Treasury and the Department for Business Energy and Industrial Strategy, reveals that those from higher socio-economic backgrounds hold almost nine in ten senior roles. In this article, Joseph Lappin looks at how employers can improve the diversity within their teams.
Why are the majority of senior roles in financial services held by those from wealthier households?
We think there are two key reasons for this:
- Unconscious bias. The majority of decision-makers at finance organisations, including those who make key recruitment decisions, are themselves likely to be in senior roles and from wealthier households. Opinions formed about candidates based on first impressions can influence recruitment decisions. Senior managers are more likely to prefer a candidate who looks and talks like them. As a result, candidates from poorer backgrounds are often overlooked for top jobs.
- A disproportionate number of applicants for jobs in the financial services sector have attended a ‘good’ or prestigious school, often an independent school, and studied at a leading university. There is also more possibility that those from wealthier backgrounds will have friends and family working in financial services. As a result, they are more likely to meet the recruitment criteria for senior finance roles and have contacts at employers.
How do we improve diversity?
Over the past few years, many employers, in particular big corporates, have been taking steps to improve socio-economic diversity in the workforce. As a result, unconscious bias training has been rolled out for senior managers. Recruitment targets for those from BAME backgrounds (who are statistically less likely to come from wealthier households than their white peers) have been set at big institutions. And, recruitment processes now often involve reviewing ‘blind’ CVs, and more opportunities are being opened for paid apprenticeships.
However, the lack of socio-economic diversity in the financial services sector remains. Top talent is being overlooked, and employers need to do far more to attract, invest in and recruit candidates from lower socio-economic backgrounds. Employers then need to do far more to help those individuals climb the career ladder.
Not only is having a diverse workforce the right thing to do, but research shows that diverse teams perform better. Employers should, therefore, embrace diversity in their workforces. The Black Lives Matter movement has opened up new channels of discussion over the culture of ‘white privilege’. The recession caused by the Covid-19 pandemic will pose challenges for employers, but they must not hide away from their responsibilities. They must not overlook the positives of having a diverse workforce.
In addition to the steps above, employers can and should take the following steps to improve the diversity of their teams:
- Collect and analyse data on the socio-economic background of staff in order to understand the size of the problem.
- Don’t insist on candidates having a degree from a ‘good’ university.
- Make sure recruitment panels are as diverse as possible.
- Address and discuss possible bias in recruitment decisions.
- Set up a staff Diversity and Inclusion panel to consider company policy and decisions.
- Partner up with charities who work with school children from less privileged backgrounds and offer work experience.
Joseph Lappin was also quoted in Business Advice Magazine on this topic.
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