Women now account for a third of financial sector board roles, read the headlines earlier this month, after New Financial published its latest report.
Its paper, which provided a five-year review of the government's Women in Finance Charter, provided cause for optimism and concern. On one hand, it found that representation on boards has increased 39% between 2016 and 2021. Yet, the fundamental fact that women made up only 32% of board members at financial services firms in the UK was hardly a cause for jubilant celebration.
A bit like the arrival of the long-awaited ‘Freedom Day', the moment fell flat. In reality, it was a reminder of how much progress is still to be made in improving diversity in the finance sector.
Of course, this is an issue that extends well beyond gender, with the underrepresentation of ethnic minorities another critical problem. Indeed, one of the more comprehensive studies in this area back in 2018 (by research firm Randstad) revealed that fewer than one in ten management jobs in the UK's financial services industry is occupied by a professional from an ethnic minority background.
Progress is needed, and at a faster rate
The need for progress - and at a faster rate than has been achieved over recent years - was underlined in early July, when the Prudential Regulation Authority, Financial Conduct Authority and Bank of England announced they would be delivering a jointly authored Discussion Paper exploring "diversity and inclusion in the financial sector".
Again, the news evoked a mixed response in me. It should be welcomed, certainly insofar as these are three of the UK's most influential and important financial institutions. However, the continuing need, even in 2021, for formal reports into diversity drives home the message that more must be done.
There are many reasons people would offer as to why representation among women and ethnic minorities must be improved. Some would point to the economic benefit and how it can boost businesses' profits. For me, though, it is about recognising the much more fundamental truth that we, as business leaders (regardless of sector), must strive to create working environments that best support employees and ensure equal opportunities, both to get through the door and climb the ladder.
How to foster diversity within a business
This begs the question, then, of what action can be taken.
There are countless human resources experts who are far more qualified than me in offering practical advice. For example, employers can receive anonymised CVs, or ensure they interview a minimum number of people for a role, including diversity targets. Further, they can implement ongoing HR processes - like allowing staff to issue anonymous complaints about discrimination or colleague behaviour - and also arrange regular internal meetings to discuss diversity and how best to support employees.
In truth, at Market Financial Solutions (MFS), we were fortunate to start from a diverse base, with women and ethnic minorities among the business's founders and its leadership team from day one. Today, we have 50 employees, and while a slight minority (42%) are women, they do make up 62% of the management team. Moreover, in total 42% of our current staff are from ethnic minority backgrounds - including founders, directors and senior managers.
The benefits have been vast. Ultimately, we have an environment wherein all team members, regardless of their backgrounds, feel supported and are able to be comfortable in themselves. Improved productivity or employee retention are simply indicators that the culture is correct.
We consciously look to foster that culture through our own initiative. For instance, although it might sound simple, we make an effort to celebrate a wider range of religious holidays as a team, like Ramadan and Diwali, not just Christmas. We are conscious of the language that is used, ensuring sensitivity to words or phrases that have the potential to alienate or offend employees. And we collectively celebrate all our successes, both those achieved as a company or by an individual.
During the pandemic, the diversity of our team has shone through and it has meant we have approached the challenges presented by Covid-19 with a variety of perspectives and different ideas. It has also helped us better communicate with different clients and investors by giving us a broader perspective to understand other people's decisions.
Uniformity can be damaging to businesses, narrowing their views and resulting in a stale, exclusive culture. The financial services sector - or, more aptly, financial services companies - must take it upon themselves to tackle this trend and to do more to create the right structures and cultures that will foster diversity.
Once in place, my experience is that diversity helps generate more diversity, which will ensure we work in a progressive and inclusive industry.
Tiba Raja is an executive director at Market Financial Solutions (MFS), one of the UK's leading independent bridging lenders.