COO Magazine Q2 2024

Balance the workforce, balance the books

Clare Stephens

VP, Diversity, Equity and Inclusion

Clare Stephens is the Vice President of Diversity, Equity and Inclusion at NTT DATA UK&I. Clare has over 18 years’ experience working across European consulting services, HR programme management, talent acquisition and business partnering subject matter expertise, with the past eight years focused on leading Diversity and Inclusion programmes.

Clare drives transformation by devising and implementing results-oriented solutions that align with the organization’s overarching vision and growth objectives. Clare’s vision at NTT DATA revolves around advancing DEI through an inclusion-led approach that harnesses the collective strength of diverse communities within the company. This ethos is encapsulated in NTT’s DEI narrative, “Creating Inclusion Together.”

Jo Bevan-Taylor

Head of Industry Consulting, Banking and Financial Markets

Jo is the Head of Industry Consulting, Banking & Financial Markets at NTT DATA UK&I with a focus on driving industry wide innovation.With over 15 years of experience, having originally trained as a Barrister before working in Children’s Social Care in safeguarding strategy focussed on projects to support the most vulnerable in society.

Jo transitioned her career into Consulting and then Banking working in both UK based and Global banks. Within Banking Jo has maintained a focus on diversity, equity and inclusion and has continued to work on and lead initiatives focussed on improving services for vulnerable customers.

Over the last year, focus has been increasing at pace on Diversity, Equity, and Inclusion in Financial Services.  On the 25th of September 2023, the FCA and PRA both released consultation papers containing complimentary proposals to boost diversity and inclusion in financial services with the goal to support healthy work cultures, reduce groupthink and unlock talent.

The FCA has reiterated a firm position that non-financial misconduct such as sexual harassment, a behaviour that disproportionally affects women, can pose a risk to healthy firm culture – and by virtue negatively impact robust governance, decision making and risk management.

These proposals have changed how people in the city talk. Previously diversity efforts have been met with a wry smile and a flurry of DEI training and check boxes, but now with the FCA and PRA strengthening and clarifying their position, especially on non-financial misconduct, it has prompted more serious and sobering commentary.

Haven’t we come a long way in the last decade?

The last decade has seen a broader focus on improving underrepresentation of women on boards (not just financial services). Initiatives have ranged from strategies and guidance through to cold hard law.

The alarming need for change, highlighted in the May 2018 press lease from the Hampton-Alexander Review Team, set out the 10 worst explanations for not appointing women to FTSE350 company boards. These included “There aren’t that many women with the right credentials and depth of experience to sit on the board – the issues covered are extremely complex” and even more stark ‘We have one woman already on the board, so we are done – it is someone else’s turn’.

Since 2018, amongst Brexit and a pandemic, slow progress has been made. In financial service, the average proportion of women holding senior management roles was at 35% in 2022, up only from 27% in 2016 [link]. The Sexism in the City Report validates the existing problem in the city and that a lack of attention on true cultural change has enabled shocking behaviours such as bullying and sexual harassment to continue without impunity.

How do we drive positive change in culture?

A wide range of information has been published over the past few months, from the regulatory consultations and the Sexism in the City report to the report of the Inclusion at Work Panel.

Thematically, they are all aligned. And the underlying message is clear: seismic cultural shifts in financial services institutions are needed, and a focus on diversity and inclusion is no longer optional. What is less clear is how to make a leap, rather than yet another incremental step forward. We believe a holistic approach is needed – one that doesn’t separate diversity initiatives from business success. We’ve defined foundational five pillars to support that approach:

1: Overtly link parity and inclusion to financial performance

A recent study by BlackRock emphasises that gender balanced workforces outperformed peers. Studies have consistently show that a diverse workforce is twice as likely to meet or exceed financial goals.

As much of the research shows that financial services not only still lack parity at leadership levels but also throughout nearly every layer, and that there remain cultural issues that are driving women out, firms need to start making a baseline assumption that profitability potential is artificially capped, and competitive edge stifled.

This is a difficult mindset and message especially to shareholders and investors. But one that will start to drive top-down cultural change where parity, diversity and inclusion are seen as the backbone of profitability and business success.

2: Data, data, and more data

It’s encouraging to see a focus on quantitative data collection from The Inclusion at Work Panel. Their approach is simple. Use data and evidence-based approaches to understand organisational level diversity, the firm specific challenges being presented and measuring the effectiveness of interventions and outcomes.

There is increasing clarity in messaging that following social and political trends is likely to have little impact if they aren’t relevant challenges to an organisation, so interventions must be specific to issues being experienced and raised by employees. We advocate taking that one step further and align those interventions and outcomes to financial performance to start to make that direct link for employees and leadership.

It might sound controversial but empowering leaders to stop ineffective or even performative DEI practices and invest in only those that are demonstrably effective in improving diversity is a must.

To shift culture and mindset in financial services it is essential to demonstrate tangibly that financial performance is directly linked to enhanced diversity.

3. Prioritise employee experience as a key transformation driver

McKinsey in their Women in the Workplace 2023 report highlight that the biggest barrier to women advancing in their careers is the broken rung – the first critical step up to a manager in an organisation. The report states that for every 100 men promoted from an entry level role to a manager, only 87 women were promoted, and this continues and compounds at each step up.

The broken rung has many causes – from pregnancy and maternity leave, disabilities and women’s health issues to inflexible work pattern plus alpha male behaviours driving aggressive and exclusive cultures that quite frankly, exhaust women and drive company and career exits prematurely.

Redefine your employee experience aligned to the culture you want, not the culture you have. Consider whether working patterns are ‘default male’ in style. Interrogate whether group think is stifling innovation and whether employees are enabled through structures and environment to speak-up, be listened to and taken seriously – is diversity of thought encouraged? If not, prioritise and invest in a major transformation programme and operating model overhaul aligned to transformation for other strategic business goals. The ROI will be huge.

4: Sweat the small stuff

Leaders need to sweat the small stuff to drive a cultural shift. Not only does a cultural vision need to be set and communicated but actions need to align to words. We agree that a zero-tolerance approach should be taken to bullying and harassment but not all discrimination or exclusion is so overt and ignoring ‘office banter’ designed to other, exclude or make women uncomfortable is a recipe for escalation.

Be aware of how employees behave and make an honest assessment about whether it aligns to your cultural goals. If it does not, call it out and make clear that change is afoot. Just because an issue feels small, doesn’t make it immaterial.

5: Make DEI everyone’s responsibility

The regulators are making clear with proposals such as linking DEI to remuneration and including diversity in SMCR regime that they see this as a leadership responsibility.

Given, the potential financial gains (as much as 33% EBITDA) why wouldn’t you treat inclusion and parity as your most important financial performance indicator and embed in all employee performance management. Incentivise the right behaviour at all levels of the organisation and start fixing that broken rung.

By virtue of treating diversity as a core strategic pillar to business success you will, with little effort, embed regulatory requirements in your business that yield positive financial performance, a competitive edge and most importantly, that much needed cultural shift.

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