Increasing Diversity within Financial Services Organisations
The times we live in, and the way that the financial services (FS) industry operates, are changing rapidly. As business practices move towards a more digital mindset, traditional providers are becoming increasingly at risk of losing business to exclusively FinTech companies (already in the UK, 63% of newcomers have taken some 14% of total banking and payment revenues) – in other words, it’s more crucial than ever to either get with the times, or risk dropping out of the race completely. This looming presence is flanked by more stringent cyber regulations, as well as a shift in consumer demands and expectations, as technology advances.
One way in which companies are looking to engage in today’s unpredictable market is by introducing a more diverse range of talent into their workplaces. As leaders look for a wider remit of skills from new hires, the process becomes less about who you are – your background and reputation – and more about what transferrable skills you can bring to the business, and how well you can adapt.
PwC’s annual global CEO survey found that “nearly three-quarters of FS industry leaders […] have a strategy to promote diversity and inclusiveness (59%) or plan to adopt one (14%)”. Especially given today’s political climate, it’s no longer acceptable to ignore the fact that minorities have historically been marginally underrepresented at higher levels.
The industry has seen a shift in gender diversity in the past 15 years, with an FCA study finding that female management representation in major financial institutions has grown by 9% on average, with the highest share of female senior managers being in investment management institutions (up to 40%). This varies widely, however, and with brokerages at the lower end of the scale, representation is still as low as 3% in some businesses.
Across the board, ethnic diversity within FS organisations still needs a lot of work. This year’s Parker Review found that nearly 60% of the firms it reviewed did not yet meet the target of having at least one director of an ethnically diverse background on their board, and within FTSE 100 companies, just 9.7% of directors were people of colour.
It’s time to make a change – business leaders aren’t just losing out on skills, they’re missing the opportunity to bring in top talent and new perspectives, something which has unmeasurable benefit to an organisation’s success in the long run.
So how can you make a difference?
Improving diversity shouldn’t just be about ticking boxes and filling quotas. It requires positive institutional change at all levels, and this has to start with buy-in from the top. CEOs, founders, board members, senior management; everyone needs to actively be willing to commit to the cause in order to achieve mutual benefit.
Once buy-in is achieved and the company is ready to start making steps in the right direction, organisations should be able to trust that their recruiter is as responsible as they should be when it comes to diversity. At Rutherford, we know that our clients and their needs are diverse, so we reflect this when choosing suitable candidates.
Finding diverse talent is just the first step to transforming a business, though; the real work comes when organisations use this talent to restructure from the inside. Providing ongoing training and development to all employees encourages employee mobility, and although the change may be steady, dedication to fostering diverse talent will ultimately end up in better representation at senior and board level.
If you’re still wondering ‘Why should I bother?’, well, the results speak for themselves. According to a long-term McKinsey study, companies with top quartile diversity* on their executive boards generated ROEs that were 53% higher on average than companies in the bottom diversity quartile. EBIT was also 50% higher for diverse companies.
Increasing diversity isn’t just good business sense, it’s good people sense. By encouraging new perspectives, new ideas, and new skills at all levels, organisations are well-placed to thrive in today’s competitive market.
Do you have diversity on your agenda?
If you’re looking to hire, Rutherford is your first port of call. As part of our commitment to making a positive change within FS, we offer a diverse shortlist service to all clients that is an accurate representation of our diverse and highly skilled society.
* determined by taking data of women and foreign nationals on senior teams