Diversity: delivering excellence for the future

Speaker: Nausicaa Delfas[1], Executive Director of International
Event: City and Financial: Women in Finance 2019, London
Delivered: 6 June 2019
Note: this is the speech as drafted and may differ from delivered version

Highlights

• Diversity is about delivering excellence, for business and for the UK as a whole.
• We are making progress, but there is further to go.
• We need to think carefully about how to deliver change in our organisations: it’s up to us as leaders to foster an inclusive culture fit for the future.

I am delighted to be here today supporting this Women in Finance Summit 2019.

Preparing for this event has made me reflect on my own experiences of diversity overall – from starting off as a trainee lawyer in the City, to working in different roles at the FCA, most recently as Chief Operating Officer, and now as Executive Director of International.

It is clear to me that we are making progress on gender diversity. There are undoubtedly more women in senior positions, in law firms, and more broadly in financial services than there were in the early 1990s when I started work.

This is due to a variety of factors – both in the workplace and in society more broadly – including the Government’s Women in Finance Charter, the focus on the gender pay gap and changing attitudes over the last 3 decades. The introduction of new technology has also played its part.

However, there is still further for us to go in financial services. Currently women hold only around 17% of approved positions across our regulated firms and around 25% in Senior Manager functions. Executives in these roles have the greatest potential to cause harm to a firm’s customers or the markets in which it operates. So, diversity within this population is important.

Today I will cover:

• why diversity overall is important.
• how the FCA is approaching this, as a regulator, as an employer and as a public body.
• what we should all do to really make it happen.

Ultimately, it is up to us all in this room, as leaders, to work together to ensure diverse and inclusive cultures – in our workplaces and in wider society.

Why is diversity important?

To me, diversity is about developing excellence for the future. The world of work is changing – the jobs of tomorrow have not been created today – and so it is ever more important, in financial services and more broadly in our economy, that we are able to tap into and develop the best talent to help us meet those challenges.

We need cognitive diversity in our businesses. People who have different thinking styles, who can offer unique perspectives to problem solving, to avoid group think and foster innovation. And this can positively impact your bottom line.

And it is fair that everyone should have the chance to develop and succeed, whatever their social background, gender, ethnicity, or protected characteristics, according to their talents and ambitions. This is a matter for the workplace, and has to start before that, from education. As part of our Executive Committee ‘outreach’ programme, I have visited schools in Newham, local to our new building in Stratford, that are preparing their pupils for Russell Group universities and apprenticeship schemes. And I know that there are many others doing the same. With a more diverse entry level workforce coming in, it is up to us as employers to make this change really bear fruit in the workplace, to ‘make it happen’.

So how are we approaching this as a regulator?

As a regulator

In my current role, when visiting the US and other countries, I am often asked: ‘After Brexit, will we still have access to the diversity of talent – the human capital - in the UK that we have now?’ That’s one of the UK’s greatest strengths.

From the FCA’s perspective, through our preparations on Brexit, we are working with the Government to ensure that the UK remains open for business - and I am confident we will continue to attract a diverse range of talent, to keep London as a pre-eminent global financial centre.

Of course, this is not something for the regulator alone, but it is something we all need to stay focused on, now and in the future.

In terms of conduct in financial services, diversity remains a key supervisory question for the FCA: at authorisation interviews, in supervisory assessments, and in consideration of what drives culture.

We expect firms to foster healthy cultures where staff are committed to preventing harm to consumers and markets, where the best talent is retained and where the best risk decisions are taken.

We look at how a firm’s culture is shaped by drivers such as incentives and remuneration, training, leadership, governance arrangements, purpose, diversity and inclusion.

A culture that pursues diversity is one that will have wider benefits for an organisation, and its customers – one that is open minded, and aspiring to improve.

An emerging theme in the last year or so has been non-financial misconduct, such as serious personal misbehaviour, bullying, sexual discrimination or sexual misconduct in the workplace. This type of serious misbehaviour is toxic to a working environment and can lead to bad outcomes for customers, staff, stakeholders and the firm. In our view, tolerance of this sort of misconduct would be a clear example of a driver of unhealthy culture. This area clearly requires management attention and a broader change in the firms’ mindset.

As an employer

As an employer, we are committed to having a diverse and inclusive culture. At the FCA, we were one of the first groups to sign the Government’s Women in Finance Charter, and this year, the FCA was named one of The Times Top 50 Employers for Women.

We have set ourselves challenging targets:

• 45% of our senior leadership team to identify as female by 2020, and 50% by 2025, and for 8% of our senior leadership team to identify as Black, Asian and Minority Ethnic (BAME) by 2020, rising to 13% by 2025.
• As at 31 March 2018[2] we have 39% female representation and 5% BAME representation in our senior leadership team. In my own Division, we have a 50:50 split of men and women overall, and in management positions.

The use of targets themselves can be controversial, though more accepted now - certainly no-one, neither women, BAME nor anyone else, wants special treatment – they want to progress on merit. But my experience of targets is that they are not about special treatment – rather they keep our minds focused on whether we are making progress, and demonstrate a clear commitment to address these issues and to move forward.

Since 2017, we have been reporting on our gender pay gap, which is currently 21.2% (median) and 18.5% (mean). The real value of gender pay gap reporting is that it shines a light on the disparity between men and women at different levels of organisations. It is a useful tool to make us all think more deeply about why those disparities exist, and what we can do about them.

As a public body, we must comply with the Public Sector Equality Duty, which means looking for ways to eliminate discrimination, advance equality of opportunity and foster good relations between people with a protected characteristic and those without – both within the FCA and in the way we regulate.

We remain focused on wider diversity issues, to really develop an inclusive culture - such as disability and social mobility: in 2018 we were placed at 34 in the Social Mobility Index top 50 for our first year of participating; won the ‘Business Disability Forum Smart Award for workplace adjustment innovation of the year’ for achieving an office move of 3,500 employees which took into account all different types of disability; and last year we were joint winners of the Women in Finance Employer of the Year Award 2018.

How do we ‘make it happen’?

All of us here agree with the aspiration to make further progress – but how do we as leaders influence this change to ‘make it happen’?

This was a question I was grappling with as Chief Operating Officer at the FCA a couple of years ago. My concern was that it would be easy to continue to talk about it. But what would we all do differently the next day, and the day after that, to make it happen? We needed something simple that people could remember and sense check themselves against.

As a result, we launched a ‘positive action framework’, covering the end to end employee life cycle, with just 3 priority call outs:

1. Recruitment – requiring diverse lists for all recruitment, and diverse hiring panels.
2. Work allocation and career development – guarding against unconscious bias, building up expertise across a broad range of people, so that key projects are more evenly spread, according to experience and ability, to help them to progress;
3. Role modelling – the feedback on this is that it makes a huge difference. Progress reinforces progress. And I have found mentoring and reverse mentoring to be beneficial, to both parties in better understanding different perspectives.

Building on this, we have embedded within our leadership teams the use of data, and a dashboard on diversity and inclusion, to really measure what is happening, what is working and what is not – keeping our actions evidence based and outcomes focused.

At the same time, we took advantage of the move to Stratford to consider how we could use new technology to change the way we worked as an organisation, which has also made it easier for people to work flexibly.

Looking specifically at women – how can we progress further in future?

Much has been written about barriers to progression: family responsibilities falling disproportionately to women, or prejudice in the workplace.

What I have noted over my career is that society is changing, and the expectations of men and women, in terms of family or other responsibilities and work are changing.

Male colleagues with school age children want to be there for important events – exams, sports, concerts – just as much as women. Some men are starting to take advantage of shared parental leave, or part time or flexible working. Or people have other caring responsibilities, such as elderly parents, and want some flexibility to be able to handle their career with these responsibilities.

On this subject, only recently, there were 2 comments that struck me:

• One was from a woman in a financial services firm at a conference: ‘It is inspiring to see that women can succeed – I thought family life would be in tatters.’
• And another, a highly successful man said to me: ‘I’ve packed it all in – it was 24/7 – I wanted to see my children grow up’.

Well, these confirmed for me that it is really up to us to build sustainable and healthy working practices – and to make them more neutral to gender.

This is much easier to achieve now with technology, enabling people to work agilely, and better manage their working day.

We need to be flexible, to reflect changes in life stages. Life is not static.

There is no real silver bullet, no ‘one size fits all’, but for a healthy, diverse and sustainable workforce, as leaders we need to think about how people can balance personal responsibilities (whatever they are), with a demanding career.

To my mind, by doing this, it will make a significant difference in keeping top talent in the workforce – whatever their gender, characteristics or background - and positively impacting our cultures, and bottom line.

Conclusion

• Diversity is about delivering excellence, for business and for the UK as a whole.
• We are making progress, but there is further to go.
• We need to think carefully about how to deliver change in our organisations, taking account of how society and the work is changing.

We all have the power and insight to address these issues and ensure that the best talent can continue to thrive.

It’s up to us as leaders to foster an inclusive culture fit for the future.