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By Jeannette Lichner

Former Non-Executive Director of the Financial Conduct Authority

Have you ever felt excluded?

That’s often the first question I ask when I speak with an audience about diversity and inclusion. The response is typically a roomful of raised hands.  The reasons of course differ – being a woman, being a person of colour, being homosexual. And for some, they remember not being in the popular crowd at school.  

There are many aspects of diversity that are difficult to measure. For example, disabilities that are not visible. We struggle to measure inclusion, so we never really understand how people are feeling, and what is making them feel excluded. Sometimes it has nothing to do with gender or ethnicity but something less visible, something to do with their socio-economic background.

Socio-economic diversity is particularly difficult to define and hence tackle as it covers many different underlying characteristics. We often think of it as defined by senior school type (private vs state), university education or not, or the government measurement of your parents’ employment when you were 14. Whilst those are measures, in the real world the biases that are inherently socio-economic related include accent, geographic location (the north-south divide), way of dressing, and even how you hold your knife and fork. In my experience, we have to work hard to notice and address our biases that have socio-economics at the root.

So why should socio-economic diversity matter as much as the areas we have been focusing on – gender and ethnicity?

There are three main reasons:

First, the financial services industry is important to the UK economy as a whole and it needs to be an engine for the continued growth of the country. The biggest driver of change is our people. By building greater diversity of thought, and bringing in people from an even broader range of backgrounds, we will increase our ability to hold a mirror up and challenge our thinking. That will enable us to create more products and services that will be useful to the customers we serve.  

Second, being able to understand the needs of, and communicate with your customers, is important if you are going to serve them well and retain them Do you have people who can ‘connect’ with clients, who have common lived experiences? 

Third, there is an intersection between gender, ethnicity and socioeconomic diversity – when tackled simultaneously the benefits expand geometrically.

In my nearly 40 years in the UK financial services industry, I have seen many changes across all aspects of the business, including the types of people the industry attracts and retains. Whilst we need to continue delivering on our gender and ethnicity agendas, maybe the time is right for us to also focus more keenly on socio-economic diversity. The data that is collected on this, shows that people from less advantaged families are not represented in financial services, and even when they do join, they often drop out within five years. We also see that people from lower socio-economic backgrounds progress 25% more slowly than their peers. We know that for any type of diversity, if employees do not see people who look like them succeeding they are unlikely to join an organisation.

So what can organisations do?

• Consider your organisation from a socio-economic lens. Ensure you have people that ‘match’ those communities and understand the needs of those communities.
• Develop additional support to ensure employees who come from disadvantaged backgrounds can succeed and flourish in your firm. 
• Collect and share stories about your leadership team. There is an assumption that people in those roles come from a certain type of background. That is simply not true. My own background is a case in point – my parents immigrated to the USA in 1955 with nothing. My lived experience of having very limited financial resources influenced my career including how I think about vulnerable customers.
• Review attraction, retention and promotion processes, looking for what is working well in terms of diversity and what is not. Consider how you track employees’ progress and how opportunities are allocated. What we want is for everyone, despite their socio-economic background, to have the opportunity to maximise their contribution to your firm and the industry. 

Ultimately, we all will benefit if we know how we are doing in terms of socio-economic diversity. We also need to know if our actions are delivering the diverse results we want. We are a data-driven industry so we will want data around this.  

The Financial Conduct Authority, where I was until recently a Non-executive Director, recently published a DE&I consultation paper which addresses socio-economic diversity and suggests elective data collection. Progress Together is currently preparing a submission calling for socio-economic diversity to be a mandatory requirement for data collection among financial services firms. 

My question is why aren’t firms doing this already, of their own accord, as it makes business sense from a customer and employee perspective? Why should regulation be required? 

Because when people from all backgrounds are given the opportunity to reach their maximum potential, that’s when we will get the growth we need in this country. We mustn’t miss that opportunity.