In its latest review of corporate governance, the Financial Reporting Company said that UK listed companies are failing to live up to their diversity promise and treating reporting on their culture and strategy as a “box-ticking exercise.”
This comes after findings from the City of London Corporation published recently revealed that nine in ten senior roles in financial services are held by the wealthiest third of households.
“We think there are two key reasons for the majority of senior roles in financial services being held by those from wealthier households,” he said, citing two main areas.
The majority of decision makers at finance organisations, who make key recruitment decisions, are themselves likely to be in senior roles and from wealthier households. Opinions formed about candidates based on first impressions can influence recruitment decisions.
Senior managers are more likely to prefer a candidate who looks and talks like them. As a result, candidates from poorer backgrounds, lose out.
Diversity, or the lack of it, means that those from the wealthiest households are more likely to attend a good school, often an independent school, and attend a good university. They are also more likely to have friends and family working in financial services. As a result, they are more likely to meet the recruitment criteria for senior finance roles, have contacts at employers, and be more likely to apply for vacancies than those from poorer backgrounds.
Over the past few years many employers, in particular big corporates, have been taking steps to improve socio-economic diversity in the workforce. Unconscious bias training has been rolled out for senior managers; recruitment targets for those from BAME backgrounds (who are statistically less likely to come from wealthier households) have been set at big institutions, recruitment processes often involve reviewing “blind” CVs; and more opportunities are being opened for paid apprenticeships.
“Not only is having a diverse workforce the right thing to do, but research shows that diverse teams perform better,” Lappin said. “Employers should therefore embrace socioeconomic diversity in their workforces. The Black Lives Matter movement has opened up new channels of discussion over the culture of ‘privilege’ and employers should be encouraged to do more to diversify their teams.
The recession caused by the Covid-19 pandemic will pose challenges for employers but they must not hide away from their responsibilities.”
What can employers do?
In addition to the steps above, employers could take the following steps:
- Collect and analyse data on the socioeconomic background of staff in order to understand the size of the problem;
- Don’t insist on candidates having a degree from a ‘good’ university;
- Make sure recruitment panels are as diverse as possible;
- Address and discuss possible bias in recruitment decisions;
- Partner up with charities who work with school children from less privileged backgrounds and offer work experience.”
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