Why a more diverse banking culture is vital, and how this can be achieved
Investor, author of ‘About Damn Time’ and founder of Backstage Capital Arlan Hamilton once said on the subject of diversity, “It's not about “helping” founders, it's about fuelling an untapped ecosystem so that you may be lucky enough to reap the rewards in years to come.”
Let’s start by exploring some of these rewards. A study from Harvard Business Review found that diverse companies had a 19% higher innovation revenue. The same study states that ethnically diverse companies are 35% more likely to outperform, while gender-diverse companies are 15% more likely to do so1.
According to a recent PwC Global survey, 85% of financial services CEOs said that promoting inclusion and diversity helps enhance business performance. Other research, meanwhile, supports the business case for inclusive cultures that lead to increased profitability and creativity2.
So how can firms begin to recruit in a way that ensures a more well-rounded workforce?
A report from EY says that firms must reconsider and rebuild their hiring practices. “Many firms already do this, including by requiring diverse candidates be interviewed for every open position, setting targets, such as hiring 40% female associates in a given year, and expanding interviewing channels to include, for instance, HBCUs (historically black colleges and universities).”
Recruiting, the report continues, is complicated by the current lack of diversity in the industry. This means that every firm trying to build diversity in its middle and senior levels is competing for the same pool of talent. “One way around this is to broaden the qualifications to include diverse candidates from fields other than finance. There is some evidence that this is happening; executives at firms we spoke with said they are increasingly willing to hire at more senior levels from different channels… for instance, consultants and insurance companies3.”
A diversity audit is another strong option, especially one that looks beyond the numbers and takes a close look at data, policies, processes, and the current culture within your organisation. Initial steps could include examining industry benchmarks for diversity and conducting an anonymous survey that collects key demographic information about your workforce as well as opinions. Depending on your own budget and bandwidth, you might consider outsourcing the diversity audit to an external agency.
To quote Hamilton once more, “If you haven’t hired a team of people who are of colour, female, and/or LGBT to actively turn over every stone, to scope out every nook and cranny, to pop out of every bush, to find every qualified underrepresented founder in this country, you’re going to miss out on a lot of money when the rest of the investment world gets it.”