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July 20, 2016

The Future of Diversity in Banking

Diversity is key to the future of the banking industry. Diversity includes an attitude of open-mindedness, and a willingness to value the contributions of employees regardless of their background and lifestyle. There should be training to encourage openness towards different ideas and diversity in thought. This also means a specific focus on gender, race, disability, age and social mobility etc. 

Diversity is key to the future of the banking industry. Diversity includes an attitude of open-mindedness, and a willingness to value the contributions of employees regardless of their background and lifestyle. There should be training to encourage openness towards different ideas and diversity in thought. This also means a specific focus on gender, race, disability, age and social mobility etc. 

Almost a third of board directors at FTSE100 banks are women, compared to just over a quarter of FTSE 100 companies overall. A report released in November 2015 praised the banking industry for its efforts to improve diversity but cautions that there is still more to do. In particular, the British Banker’s Association (BBA) paper highlights that 31 per cent of board directors at FTSE 100 banks are women, compared to 26 per cent for FTSE 100 companies overall.

The business case is not just a financial one but also being able to provide a better service to the global customer base and instil a corporate culture that welcomes new ideas. Optimisation of diversity provides the best commercial impact so that banks are more adaptable to new situations and opportunities.

However, the report also warned that although many banks had launched notable diversity-boosted initiatives, the perception of the sector being bias towards white, male employees still existed and there had been limits to how people were held accountable for their approach to diversity. Anthony Browne, Chief Executive of the BBA, remarked that the report was a positive sign that “the days of the old boys’ club in banking are numbered”, but also added: “Work still needs to be done to increase the number of female senior managers and address the problem of the corporate pipeline. Diversity is more likely to be achieved if there are internal consequences for not trying to improve it. Our industry intends to lead, not to follow.”

Race diversity still appears to be the elephant in the room and is nearly 20 years behind gender. According to the Spencer Stuart Board Index 2015 report, racial diversity in UK boardrooms are at 1998 levels of gender equality, with less than 2 per cent of British directors from FTSE 150 from a Black, Asian and Minority Ethnic (BAME) background. This is a big problem because it is depriving British business of creativity, innovation, insight, experience, all of which could be making British companies a lot more money.

What else can be done to bring more diversity and business success to the banking sector?

Exercise more action and less talk. The danger with talking about your commitment to diversity is that talking about it can feel the same as doing it, you feel good about it, but nothing actually changes as a result, or at least not at a pace which is satisfactory.

Talking about diversity may in fact make things worse: recent studies indicate that diversity initiatives seem to do little to convince women and ethnic minorities that companies will treat them more fairly, while making white men believe that they themselves are being treated unfairly. There should be an increased engagement of male diversity champions so they feel part of the diversity initiative. The best route is to go ahead and act rather than to keep talking about what you are going to do. Communication through demonstration is the best form of showing your commitment to diversity.

It’s 2016. Your board director list on your company website, your boardroom picture in your annual report, your media coverage cannot, and should not, depict your board line-up as all white men. This is an issue everywhere and the solution is simple. Change it. When you know you cannot release that all-white-male board to the press, you have to change the composition of your board. Do not appoint one female or ethnic minority director to your board – appoint several. The optimum number of ‘different’ directors for a board is three or more, because then there are enough of you to be seen and treated as the norm, you will feel supported and more able to contribute freely.

Innovation, disruption and cutting-edge business thinking is the result of different perspectives coming together in a constructive creative manner to get to a far better place. Hiring practices need to be improved and other sectors such as law are considering (i) CV-blind policy for job interviews; (ii) “unconscious bias” training; and (iii) beginning with the end in mind. When this is achieved, you are helping yourself, your organisation, the industry and inspiring a different mix of people to believe that one day they too could be sitting in a bank. The results are that you do better business and make a lot more money.

It has become clear that diversity makes good business sense. The McKinsey & Company report ‘Why Diversity Matters’ was launched in January 2015. Results showed that gender-diverse companies were 15% more likely to outperform and for ethnically diverse companies this was 35%. It is also paramount in demonstrating that fair representation and equal access are necessary for the Banking sector. It needs to reflect the diversity of people and culture in order to achieve greater success.

Leaders need to get behind the business case for a more diverse and inclusive working environment for everyone. Diversity and Inclusion should not be about cherry-picking one group for success. It is about removing the barriers to success for everyone to enable a successful banking industry in the future.   

Scholarship

The ‘Miranda Brawn Diversity Leadership Scholarship’ provides the next generation of BAME leaders with greater access to educational and career opportunities via funding, work experience and mentoring.  The aims are to help to increase race diversity and equality within Britain’s workforce. The Bank of England has a similar initiative to help increase race diversity in Banking.

For more information visit: http://bcaheritage.org.uk/black-cultural-archives-announces-the-miranda-brawn-diversity-leadership-scholarship/


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