An In-Depth Look at Social Mobility and Diversity in the Financial Industry
In today’s society, the question of social mobility and diversity has gained significant attention. The impact of social background on an individual’s opportunities and success is a growing concern, particularly as the COVID-19 pandemic has exacerbated existing inequalities. In the United Kingdom, the Financial Conduct Authority (FCA) has recently released a consultation on diversity and inclusion in the financial industry. While the FCA’s proposals focus on characteristics protected by the Equality Act, such as gender, race, disability, and sexuality, there is a notable absence of strict proposals on social class.
The Importance of Diversity and Inclusion
Diversity and inclusion are not only moral imperatives but also essential for business success. The FCA recognizes this, stating that diversity and inclusion “protect against groupthink” and ensure “a broader talent pool.” Research has consistently shown that diverse teams are more innovative, make better decisions, and achieve better financial performance. By embracing diversity in all its forms, companies can tap into a wealth of ideas, perspectives, and experiences that can drive growth and success.
However, achieving diversity and inclusion is not without its challenges, particularly in industries like finance that have traditionally been dominated by individuals from privileged backgrounds. The report “Shaping the Economy” highlights the disproportionate impact of socio-economic background on an individual’s path to success in financial services. Working-class women, in particular, face a double disadvantage, while women from ethnic minorities and lower socio-economic backgrounds face a triple disadvantage.
The Role of Socio-Economic Background
Socio-economic background intersects with all other diversity-related challenges. Students from lower socio-economic backgrounds who achieve top degrees are still less likely to secure top jobs compared to their more privileged counterparts with lesser qualifications. This demonstrates the need for initiatives that make it easier for individuals from all backgrounds to access and succeed in high-level careers.
upReach, a social mobility charity, has been helping undergraduate students from lower socio-economic backgrounds obtain and excel in high-level jobs. By partnering with employers in the City and offering support like socio-economic data, upReach is addressing the issue of social class in the workplace. Other companies can learn from their example and take steps to bridge the socio-economic gap.
How Companies Can Drive Change
Companies play a crucial role in promoting social mobility and diversity. Here are several practical steps that financial firms and other organizations can take to create a more inclusive and accessible working environment:
- Offer financial support for job interviews and work experience: By covering travel and accommodation costs for candidates from low-income backgrounds, companies can ensure that financial constraints do not hinder talented individuals from accessing opportunities.
- Provide fair and paid internships: Many internships in the finance industry are unpaid, making them inaccessible to those who cannot afford to work for free. Offering a decent salary for internships can attract individuals from diverse backgrounds and provide them with valuable industry experience.
- Implement admissions frameworks: Admissions frameworks, similar to those used in educational institutions, can help assess candidates based on their potential rather than just their previous experiences or connections. This can level the playing field and increase the chances of hiring talented individuals from underrepresented backgrounds.
- Address class gaps in pay and promotion: Companies should review their salary and promotion policies to ensure fairness and address any discrepancies based on socio-economic background. This includes offering equal pay for equal work and implementing transparent promotion criteria.
Measuring Socio-Economic Diversity
One challenge companies face in promoting socio-economic diversity is measuring it effectively. However, there is a straightforward question that can provide valuable insights: the occupation of the main breadwinner at the age of 14. This question, endorsed by organizations such as the OECD, the Social Mobility Commission, and The Sutton Trust, can help identify individuals from lower socio-economic backgrounds and inform diversity initiatives.
The FCA acknowledges the value of this question in their diversity and inclusion proposals. Therefore, it would be logical for the FCA to require large financial firms to report on socio-economic background as part of their mandatory reporting on diversity and inclusion metrics.
Conclusion
As society becomes increasingly aware of the impact of socio-economic background on an individual’s opportunities, it is crucial for companies, particularly those in the financial industry, to prioritize social mobility and diversity. By embracing initiatives that address barriers faced by working-class individuals, companies can tap into a wider talent pool and create a more inclusive and innovative workplace.
While the FCA’s consultation on diversity and inclusion falls short in explicitly addressing social class, it presents an opportunity for companies and organizations to go beyond the bare minimum and champion socio-economic diversity in their own practices. By taking proactive steps to bridge class gaps, measure socio-economic diversity, and implement policies that promote inclusivity, companies can make a tangible difference not only in the lives of individuals but also in their own long-term success.
Summary:
The Financial Conduct Authority (FCA) has recently released a consultation on diversity and inclusion in the financial industry. While the proposals focus on characteristics protected by the Equality Act, such as gender, race, disability, and sexuality, there is an absence of strict proposals on social class. However, achieving diversity and inclusion is essential for business success, and research shows that diverse teams perform better. Socio-economic background intersects with all other diversity challenges, making it crucial for companies to address social mobility. Companies can drive change by offering financial support for job interviews and internships, implementing admissions frameworks, and addressing class gaps in pay and promotion. Measuring socio-economic diversity can be done through a simple question about the occupation of the main breadwinner at the age of 14. By prioritizing social mobility and diversity, companies can tap into a wider talent pool and create a more inclusive and innovative workplace.
—————————————————-
| Article | Link |
|---|---|
| UK Artful Impressions | Premiere Etsy Store |
| Sponsored Content | View |
| 90’s Rock Band Review | View |
| Ted Lasso’s MacBook Guide | View |
| Nature’s Secret to More Energy | View |
| Ancient Recipe for Weight Loss | View |
| MacBook Air i3 vs i5 | View |
| You Need a VPN in 2023 – Liberty Shield | View |
Unlock Editor’s Digest for free
Roula Khalaf, editor-in-chief of the FT, selects her favorite stories in this weekly newsletter.
The writer is chief executive of upReach, a social mobility charity
Choose your parents wisely, because the decision “becomes more and more important.” The quip was tweeted by Paul Johnson, director of the Institute for Fiscal Studies, as his think tank published a sobering report on social mobility last month.
Since the pandemic highlighted – and exacerbated – inequality in the UK, the barriers faced by working-class young people have become a priority. The idea that it is in the national and economic interests to break “class ceilings” is gaining ground, notably in last week’s speech by Labor Party leader Sir Keir Starmer, who underlined his own working-class origins. So the absence of strict proposals on social class in a new Financial Conduct Authority consultation on diversity and inclusion will surprise some in the City of London.
The FCA unambiguously states that diversity and inclusion are regulatory concerns and proposes measures focused on characteristics protected by Equality Act. This excludes socio-economic background but covers gender, race, disability and sexuality. Rightly, the FCA suggests mandatory strategies, data collection, target setting and progress reporting on these issues for large regulated firms.
These reforms are not only morally right, but also good for business: they “protect against groupthink” and ensure “a broader talent pool,” as the regulator said last month. But the FCA should go further and also commit to making information on socio-economic context mandatory.
Social class intersects with all other questions. Students from lower socio-economic backgrounds who earn a top degree are even less likely to get a top job than a more privileged peer with a score of 2:2. One solution is to make it easier to access a good career. Each year, upReach helps 3,000 undergraduate students from lower socio-economic backgrounds obtain, and then succeed, high-level jobs, including in City businesses. Our network of employer partners is vital – and some already publish socio-economic data.
Evidence of social class in the city is highlighted in “Shaping the Economy,” the latest report from Progress Together, chaired by former Mayor Vincent Keaveny, and The Bridge Group. The study reveals that “socioeconomic background is more likely to impact a person’s path to success in financial services than gender or ethnicity.” Worryingly, working-class women appear to suffer a double disadvantage, and women from ethnic minorities and lower socio-economic backgrounds a triple disadvantage.
It’s scandalous. The business case for tackling the problem is compelling, both at a business level and for the UK economy. Rationally, companies should hire people with the greatest potential for excellence. But some business leaders have been strangely slow to cast a wider net. Paying travel and accommodation costs for job interviews and work experience, offering a decent salary for internships and using admissions frameworks are trivial investments that can offer a huge return if companies then find talent in previously unexplored demographics and geographies. Companies also need policies to address class gaps in pay and promotion.
Some managers still don’t know how to measure socio-economic diversity. But the OECD, the Social Mobility Commission and The Sutton Trust agree on the best question to ask employees: the occupation of the main breadwinner at the age of 14. It’s easy, and the FCA mentions it in its proposals. The regulator should therefore follow the evidence and its own logic and make class reporting mandatory for all large financial companies.
Contrary to what Johnson says, children cannot choose their parents. But let’s make sure that employers in our most lucrative sectors don’t miss out on the best talent by choosing too few children from working-class backgrounds.
—————————————————-