To improve diversity within the investment industry, we need to re-write the recruitment manual. 

 

It is no surprise that the investment and asset management industry has a diversity and inclusion issue, and despite the issue thankfully rising up on the agenda, women, ethnic minorities and other diverse characteristics remain underrepresented across the industry – especially within senior functions. 

“Women, especially women of colour, are more likely than men to have been laid off or furloughed throughout the pandemic”

Whilst these problems are not exclusive to the finance industry, and are instead reflective of deep-rooted issues in wider society, there are still issues we need to address in order to contribute to wider change. Women, especially women of colour, are more likely than men to have been laid off or furloughed over the last year (1), and that many mothers (two in five), have considered taking a back step in their careers due to the challenges in juggling parenting and remote working throughout the pandemic. 

According to a McKinsey study, more than 27 percent of companies put all or most of their diversity and inclusion projects on hold as other priorities came to the forefront when COVID-19 hit (2).  Whilst this is morally and commercially wrong, it also limits a businesses capability to bounce back from the crisis as ultimately they’ll lose out on fresh ideas and perspectives, as well as damaging the talent pipeline for the future. 

Consider a recent study from Boston Consulting Group in 2018, to which they demonstrate that companies with more diverse leadership teams tend to be more innovative, are better at commercialising new ideas and ultimately increased their revenue (3). The study highlighted that the more diverse a business (race, gender, social class, sexual orientation, neurodiversity) the greater the impact on the business and the better the revenue. 

Businesses that fall behind with their DE&I projects, will struggle to attract new talent and customers. 

The investment industry needs to ensure that their teams have a range of skills and perspectives required to build sustainable, resilient and forward-thinking businesses that will continue to thrive as we move into the future. To ensure this happens, businesses need to focus heavily on their DE&I policies and projects. 

Those in senior positions certainly have a responsibility to ensure this happens within their businesses, but it’s equally as important that everyone within the industry makes an impact and champions diversity, equality and inclusion, whilst challenging outdated practices. 

Furthermore, businesses may also find themselves on the wrong-side of regulation. In March 2021, Nikhil Rathi, Chief Executive of the FCA, said “firms that fail to reflect on society run the risk of poorly serving diverse communities…at that point, diversity and inclusion become regulatory issues”.

Rewriting the recruitment manual. 

Whilst it’s understood that there is no overnight fix to improving DE&I within the industry, there are key initiatives businesses need to be taking with both entry/junior hires, through to making mission-critical hires into senior leadership teams. 

    1. Improve access at entry level.
      This is typically where many businesses start their DE&I projects, by improving access at entry/junior level, such as internships or early-career programmes. These should be created to also reach people who had previously been made to feel like a career in finance wasn’t for them.

 

    1. Stop hiring carbon copies of employees who leave.
      One of the main reasons our industry remains overwhelmingly white and male, is that the industry has continually sought to fill senior vacancies at speed by recruiting staff with a similar profile to previous incumbents. This approach may make things a little easier in regards to finding a quick hire to fill the vacant position, but it lacks ambition, significantly narrows the field of potential candidates and you may lose out on experience/perspective.

 

    1. Write more inclusive job advertisements.
      Job advertisements are reflective of your business and should be written with care. You should approach your job advertisements as you would approach client material, or your own websites front-page. In some cases, a job advertisement is someone first judgement of your business, it’s culture and hiring practices – it’s important to get this right. We would recommend that you reconsider stating a set amount of years/experience within the industry/role or using biased language within the copy. Whilst it’s important to hire the right person, it’s also key to remember to not filter out candidates who are perhaps more junior and ready for the step-up. The language used within a job advertisement is also crucial. Academic research shows that certain words with masculine associations – such as “competitive” or “assertive” – are off-putting to women.

 

    1. Partner with only recruitment agencies who will add to your DE&I policies.
      Another important consideration is the partner you use to help you recruit. Collaboration with external agencies and headhunters is likely to be necessary, especially when it comes to filling senior or confidential positions. When working with such firms, businesses should apply the same rigour as they do when engaging with the boards of the companies they invest in. Just as you would carry out due diligence on your clients to ensure they are meeting financial, environmental, social and governance criteria – you should also choose recruitment partners that share the same values, as reflected in their DE&I policies. Headhunters will often refer to a ‘book of candidates’ that they have existing relationships with, and whilst some of these candidates may be suitable, they should also be encouraged to look beyond the usual faces in assembling a diverse and inclusive shortlist.

 

    1. Engage with candidates early on the in the process.
      It’s important to engage with candidates early on the in the process, before interviews begin. Unfortunately, we find that many highly qualified minorities, including female candidates have dropped out of the process early on – this could be due a sense of loyalty to their existing employer or concerns about changing jobs during the pandemic (not surprising when you consider the recent and increasing challenges with juggling childcare and remote-working). The goal here is to make sure candidates feel comfortable moving forward.

 

    1. Diversify the hiring panel.
      Either consciously or unconsciously, hiring panels will look for a cultural fit when carrying out interviews. A diverse panel helps to mitigate this bias, and instead works towards hiring someone who ‘adds’ to your culture as opposed to just ‘fits’.

 

    1. Run strength-based interviews.
      A strength-based interview encourages candidates to speak about their skillsets, motivations and interests. When done correctly, this will open up a discussion to give both parties a better sense of the talents, perspectives and values a candidate could bring to the business. Further adjustments can make interviews even more inclusive; providing questions in advance can be beneficial to neurodiverse candidates for example. 

 

Rethinking Recruitment 

Thankfully, more and more people within the industry are recognising the need to shift towards a more progressive culture within the industry. It’s important that we’re asking tough questions and challenging the status-quo – only then we will begin to see drastic improvements in the diversity, equality and inclusion within the industry. A good place to begin this journey is to rethink your recruitment practices. 

If you’re looking to recruit into your business and are looking to learn more about how we can help you with your diversity, equality and inclusion recruitment practices – please do get in touch by emailing info@victoria-recruitment.co.uk.


References

    1. https://www.mckinsey.com/featured-insights/diversity-and-inclusion/women-in-the-workplace
    2. https://www.ft.com/content/49bf68bc-a785-4b59-8149-292de991a396
    3. https://hbr.org/2018/01/how-and-where-diversity-drives-financial-performance

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