Following moves to enhance greater gender and racial diversity in financial institutions, the sector is being called upon to boost socio-economic diversity in the boardroom.
In a report, the City of London Corporation-led Socio-Economic Diversity Taskforce has set a sector-wide goal of at least half of senior leaders in the UK financial services sector being working class or from an intermediate background by 2030
The report reveals that while around half of all employees in the sector are from these backgrounds, they progress 25% slower than their peers.
And only 36% of working class and intermediate employees have climbed the ladder to senior levels.
Furthermore, such employees are also likely to get paid up to £17,500 less per year – with a zero link to job performance.
The taskforce’s report therefore outlines a pathway for firms to level the playing field and boost representation in senior management in the sector.
The target of boosting this level to 50% of senior leaders by 2030 will be reviewed in 2025 to ensure it remains representative and achievable.
By this time, the taskforce expects all organisations in the sector to have started to collect data on the socio-economic background of their employees, which will provide a better-informed baseline.
The report also includes recommendations on how regulators, sector bodies and government can support and incentivise employer action on this journey.
Chair of the City of London Corporation-led Socio-Economic Diversity Taskforce, Catherine McGuinness, said: “It is vital that UK financial and professional services firms act now to enable talented people to rise to the top whatever their background.
“We need to break the ‘class’ ceiling – removing unfair barriers to progression is not only the right thing to do, it will enable firms to boost productivity, retention levels and innovation.”
Membership body
The taskforce is also calling for UK financial services firms of all sizes to a to join a newly launched membership body, Progress Together.
The body is the first to focus on progression and retention to improve socio-economic diversity at senior levels in the financial sector.
Co-chair of the Socio-Economic Diversity Taskforce and chair of Progress Together, Alderman Vincent Keaveny, added: “Socio-economic diversity is key to all sectors. It is vital that firms take action to create a more equitable pathway to the top for people from all backgrounds.”
In addition, the taskforce has published a separate report – the first of its kind – looking at the business benefits of increased socio-economic diversity at senior levels in financial and professional services.
The report looks at ways increased socio-economic diversity, particularly at senior levels, can have positive benefits on productivity, innovation, talent, inter-sectionality and license to operate.
For example, there is evidence that the profits of organisations focusing on socio-economic diversity are 1.4x higher than their competitors.
Co-chair of the Socio-Economic Diversity Taskforce, Andy Haldane, said: “We cannot grow as a country unless people grow. For too long, personal growth has been constrained by people’s socio-economic background.”
The report was produced after research, an industry-wide consultation, case studies from leading employers, and recommendations from organisations including the Social Mobility Commission, Social Mobility Foundation, Sutton Trust, Social Mobility Business Partnership, and Bridge Group.
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