OPINION: Here’s what to do about diversity and inclusion fatigue in finance

by Grace Lordan and Lutfey Siddiqi | London School of Economics (LSE)
Wednesday, 6 October 2021 11:37 GMT

ARCHIVE PHOTO: The financial district is seen shrouded by haze in Singapore September 18, 2019. REUTERS/Feline Lim

Image Caption and Rights Information

* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.

Based on interviews with 35 senior leaders in Singapore who expressed concerns about perceptions of tokenism and insincere virtue-signalling for the sake of visual superficial diversity

By Dr Grace Lordan, Founding Director of The Inclusion Initiative (TII), Director of the MSc in Behavioural Science and an Associate Professor in Behavioural Science at the London School of Economics and Political Science, and Lutfey Siddiqi, Visiting Professor in Practice at LSE IDEAS and a co-investigator at LSE Inclusion Initiative (TII).

Our new study demonstrates that well-meaning diversity and inclusion policies in financial services firms are failing to achieve their desired impact. Based on interviews with 35 senior leaders in the finance sector in Singapore, and behavioural science insights, we believe that there are three sets of actions that might turn the tide of apathy.

The pivotal role of leadership in a cross-cultural setting

Inclusiveness as a style and form of leadership has to be deliberately honed. Leaders who may have been promoted on the basis of their core technical expertise would benefit from training in inclusive practices. This is especially important when the team is culturally, cognitively and linguistically diverse.   

“We have policies and guidance on how to get people into the room. However, once in the room, we don’t know how to ensure that people are heard.”

This quote from one of the executives that we spoke to highlights the role of leaders as tone and climate setters who give permission to diverse voices.

The onus is on the chair to allow for all colleagues to contribute. As a female executive commented, “as the only woman at the meeting, if I know that the others have reached consensus, it’s easier for me to hold back my views.

The chair must also pay attention to the ‘communication illusion’ when a team discusses amicably together, but each persons’ takeaway is different. Little things such as voicing their opinions after everyone else or ensuring that conversations do not cascade into groupthink can have an outsized impact.      

The need to design deliberate processes to counter known biases

A hallmark of behavioural science is the identification and labelling of biases that we have in different situations. The process of hiring, appraising and promoting staff can display symptoms of some known biases. It is prudent to pre-design processes in order to subvert that.

Ideally, firms should hire only on the basis of skills, ability and talent. However, some rely on signals and proxies that they incorrectly perceive to be correlated with these attributes, to the exclusion of more deserving candidates. Confirmation bias is the tendency to seek out evidence that confirms our gut instincts on who is right for the role. Those instincts are in turn driven by what ‘type’ of person has historically held that role.

Solutions may be found in hiring from outside familiar networks and making the recruitment criteria more task-based rather than credential-based.  

When it comes to progression and promotions, it is important to ensure that everyone has equal access to opportunities. The biases of familiarity that pull towards ‘someone like me’ can be strong. And it might simply be tempting for the unguarded manager to give the promotion to the last person who asked for it! We recommend that leaders are trained for and encouraged to periodically audit how they distribute opportunities.

Employee ownership and engagement are a prerequisite

Several respondents have expressed concerns about perceptions of tokenism, insincere virtue-signalling, or compromises in quality for the sake of visual superficial diversity. Leaders must link engage with D&I initiatives authentically and address these concerns head-on. They could do this effectively by linking inclusion to their corporate vision and purpose, and their organisation’s impact on society at large. 

 Diversity and inclusion are not cost-free.

Inclusion can appear to slow things down, at least in the near-term. For example, ensuring a diverse slate of candidates for a new hire or having a decision scrutinised from an expanded set of perspectives could come with commercial trade-offs. Leaders must acknowledge trade-offs where they exist and affirm a clear preference in those situations. 

They could also invest in gathering data and engage in storytelling about specific instances where inclusion has resulted in better solutions, better well-being and better outcomes for clients. Crucially, they could garner buy-in by allowing local staff to co-create solutions that work in their contexts.

Conclusion

A positive bandwagon in the pursuit of inclusion is now underway across global financial services. This is complemented by a greater consideration of environmental, social and governance (ESG) factors in overall decision-making. In order for this to gain momentum and durability, corporate cultures should foster a journey of enquiry, experimentation and effectiveness-testing.

We want to hear from you: what critical stories and perspectives are missing from our coverage of systemic racism around the world?

Your responses to our short survey will help shape our reporting.

You can submit your response anonymously. If you provide an email address, we may follow up with you for more information. Any information you share with us will remain strictly confidential and will be used only in accordance with our Privacy Statement.