It’s not often you get more than 200 asset management companies in the same room to talk about diversity, equity and inclusion (DEI), so this opportunity was not to be missed. The participative session at Mercer’s 2021 Global Investment Forums in London yielded a DEI vision for the industry in five years’ time, and included a series of videos from companies with a DEI story to tell as well as students giving their fresh perspectives on the industry as seen from the outside.
This vision itself contained bold statements and personal action plans. We followed up the in-person session with a digital focus group opportunity three weeks later to ensure we made a broader reach to asset management colleagues to ratify the vision and agree priority calls to action.
This article sets out the key messages from these two events, and explores a roadmap for change. We are grateful to everyone who gave their time, thoughtful insights and reflections for the greater good of this industry.
Geeta Aiyer, Founder and President, Boston Common Asset Management
John W. Rogers, Jr., Chairman, Co-CEO & Chief Investment Officer, Ariel Investments
In five years’ time, our business should be meritocratic, transparent and with a great work life balance. All roles in the firm should be accessible for people from all walks of life, and we should have an authentic, collaborative and open culture. Employees should be able to say with honesty “I feel accepted here and part of our company” and “the corporate culture, which is challenging but friendly, is important to me. This culture supports DEI at the core.”
Our business should be trusting, flexible, progressive, fair, purposeful and with room for family life. There should be role models to aspire to and a better distribution of backgrounds that are reflective of society and our customers. Our reputation should stand out as being a safe environment where everyone can thrive. We will have fixed the gender pay gap and ensured that all rewards, pensions gaps and performance programs are equalised and have fair outcomes. This should be a good place to learn that’s fun, where we can enjoy longevity of career and we have broken down the barriers to entry.
“If we as an industry do not come together to define diversity, define what belonging means, come up with a measurement for what success looks like in this space, then clients and regulators will step in and define it for us. We need to come together here.”
A total of 85 participants joined the 45-minute session and shared their thoughts on a strictly confidential AI based digital focus group platform, which allowed people to vote on their favourite comments, and add their own perspectives, in real time. There was a good cross section of people involved:
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We were able to segment responses between groups to establish differences between them, for example gender and ethnicity, because of the demographic data collected above. This is not always possible in a normal employee survey.
87% of participants believe the asset management industry should be a leading light on diversity equity and inclusion, given DEI’s importance to the ESG agenda; yet only 49% of participants believed that all employees, regardless of background, are given the same opportunities to be recruited and hired. Further, only 49% believe that all people regardless of background or personal characteristics are given fair and equitable performance assessments and financial rewards.
Diversity, equity and inclusion (DEI) is seen as important strategically and part of the industry’s ESG agenda – two thirds (67%) of the participants say it is an integral pillar of their company’s ESG strategy, a quarter (25%) says it soon will be. The next step is to ensure this top down commitment, translates into concrete actions and commitment from all levels in the organization, integrating it into every aspect of the operation.
Only 66% believe the work environment is inclusive and only 32% see their organization’s workforce as diverse. One of the biggest challenges to recruitment is a poor perception of the industry forming a barrier to attracting diverse talent. This needs to be addressed by creating more awareness early at schools and universities, role modelling better work-life balance, and unpacking the asset management industry (aiming to build financial wellbeing) from the bad press of investment banking and the financial crisis.
Once diverse talent has been attracted, focus should be on breaking down barriers for them getting ahead. Less than half (49%) believe that all people, regardless of background or personal characteristics, are given fair and equitable performance assessments and financial rewards at their company. The unspoken rules for getting ahead suggest a strong performance driven culture – but also indicate ‘who you know’ and networks are key to your success. These approaches do not work for all (for example working carers) and create an exclusive and divisive, rather than inclusive and belonging culture.
Ways to break down these barriers zoom in on addressing the lack of senior role models, the old networks that continue to be active (e.g. the old boys club, college, etc.) and the culture. This needs to change to creating one where different backgrounds know how to "fit in". More specifically, many see the need to increase the presence of women in senior leadership and investment positions as the single most important DEI metric to improve on.
This question keeps coming up. It came up in both the in person session and the digital focus group and hinges on the emerging social commentary which decries the presenteeism culture of the past.
How to fix it comes in having more senior role models and effective frameworks for flexibility. Senior management need to demonstrate work flexibility; new ways have to be found so that people who do embrace it are not penalised. For example, remote workers will have less FaceTime with senior colleagues as those that are in the office every day and risk being forgotten.
Quotes:
The new shape of work means designing for diversity, equity and inclusion.
When looking at inclusivity, as 84% of men believe their organization to be inclusive, while only 55% of women believe this to be the case. Looking at diversity, we also see a gap but less extreme, as 36% of men believe their organization to be diverse vs 29% of the women.
When asked whether opportunities to be recruited and hired by their company were the same for different backgrounds, women were less convinced (38% agreed) than men (63% agreed). When asked whether all people were given fair and equitable performance assessments and financial rewards, women (28% agreed) were less positive than men (73% agreed).
In terms of inclusivity, 74% of white participants believe their organization to be inclusive, while 85% of other ethnicities believe this to be the case. For diversity, 32% of white participants believe their organization to be diverse vs 50% of other ethnicities.
When asked whether opportunities to be recruited and hired by their company were the same for different backgrounds, white participants were less convinced (51% agreed) than other ethnicities (80% agreed). When asked whether all people were given fair and equitable performance assessments and financial rewards, white participants were more positive (57% agreed) than other ethnicities (50% agreed).
The asset management industry knows where it wants to be in five years’ time and this transformation process requires dedication and commitment from senior leadership. It is possible to craft the journey to excellence over this time frame. Stakeholder pressures are stronger than ever on diversity, equity and inclusion, and its place within ESG progress. While the past decades were characterized by incremental steps, the signs now point to fundamental and accelerated change. A sprint of delivery has begun. Businesses risk damaging their reputations if they do not commit.
The priorities will include:
Making DEI part of the organizational culture, aligning policies and processes accordingly and continuously aligning external and internal messaging
Embed DEI and ESG in the purpose and culture of the organization through active and participative multi-stakeholder interventions, including performance and incentive practices, improved recruitment approaches, tracking promotion and development and employee experience
Activate, engage and enable the entire workforce to live by new standards that enable a good work-life balance
Combine multiple levers and disciplines to transform to the desired state, including sophisticated pay equity programs, fair and inclusive employee benefits and gender pensions gap modelling and remediation
Agree a dashboard of metrics to perform to which will be the measure of success
Calling out progress on the above activities to dispel the current poor perceptions of the industry and attract at all career levels and life stages
“We are all learning. We don't have all the answers and shouldn't be afraid to say so. We are going to make some mistakes along the way but hopefully not punished as we try to improve.”
Africa
