If you are reading this, you probably already know that diversity is critical to your AM firm, your funds and your investors. You’ve seen the evidence that diverse firms perform better than non-diverse ones. You already feel the pressure from your investors to enhance management diversity. You understand the importance of diversity to your ESG agenda. And you have seen your end beneficiary demographics diversify and know you need to change in order to reflect their needs and expectations.
You probably also know that – as Asset Managers – you have a unique opportunity to shape markets. Through your investments and your active management, you are able to influence the diversity strategies of the assets in your portfolios. You are able to hold your portfolio companies to account. You are able to channel investments to companies that demonstrate diversity across the organization. You are able to be a real catalyst for change.
Are you ready?
In the face of these pressures and expectations, you may feel that your firm is perhaps not moving as fast on the diversity agenda as you would like. It is probably clear that some biases – conscious and unconscious – still remain in your organization. You may be concerned that you are falling behind investor expectations and competitive benchmarks. And you are not confident that you are practicing what you are preaching on the diversity agenda. So what do you do?
I’m not a diversity and inclusion expert. But I have been working in the Asset Management industry for some time. I’ve worked at the heart of some of the world’s largest and most successful AM companies. And, as a woman, I have witnessed some of the successes and challenges that my organizations, my colleagues and my clients have encountered.
Based on my experience, here are five things I believe Asset Managers could be trying in order to enhance their gender diversity and start breaking some of the biases inherent in the industry.
- Recognize your biases. The first step is to recognize that you and your organization have biases and spend some time identifying what they are. That will allow you to create strategies to help you overcome those biases.
Asset managers often worry that they suffer from ‘group think’, which is a common outcome of homogenous teams. The problem is that humans are inclined to gravitate towards things they know – they are more likely to interview a candidate from their Alma Mater or from their neighborhood. Recognizing this bias allows you to take steps (like, for example, stripping resumes of names, locations or dates) that might improve diversity in the hiring mix.
- Know where you stand. This is really about understanding the size of the challenge and setting the scope of your ambition. The question always needs to be whether you are comfortable with where you stand.
There are many non-financial and ESG indicators you could measure. One way to know where you stand is by calculating your gender pay gap1 (simply put, that’s the difference between the average earnings of women and men in the workplace). In the UK, recent data2 shows a gender pay gap of 26 3percent suggesting women in the financial services sector may be less represented at senior levels in their organizations. Calculating your organization’s gender pay gap, and then setting your ambition based on the relative size of the gap, can help focus your efforts.
- Celebrate success. Positive reinforcement is always better than negative. Showing people what they can achieve, inspiring them, and supporting them in their efforts, delivers better results than mandating actions.
Ultimately, this is about sharing stories that will inspire people to do more. It’s about bringing ideas to life through personal connections. It’s about building from each other’s experiences. And it’s about encouraging people to take positive action. Telling stories and celebrating successes that you want your organization to emulate sets the tone and builds the momentum.
- Make a statement. Set goals and communicate them in order to inspire change and hold your organization accountable. That means making them realistic, measurable and meaningful. And it means taking personal responsibility for achieving your ambition.
If you’re not sure what statement you want to make, there are lots of industry organizations, government agencies and business groups happy to show you the way. In the UK, for example, the Women in Finance Charter4, promoted by the UK Treasury, serves as an industry pledge to improve the gender balance in the AM sector.
- Leadership accountability. Perhaps most importantly, you need to set the right tone at the top. You need to demonstrate that you stand behind the goals you have set, that you encourage people to celebrate success, and that you hold yourself accountable for progress.
The asset management industry has a massive opportunity to demonstrate leadership – at the fund level, the asset level and the macroeconomic level. And we have seen many AM fund managers and organizations demonstrate significant leadership in their efforts to encourage greater gender diversity. Leadership shows your organization, your investors and your stakeholders that you take the issue seriously.
I believe that Asset Managers and AM executives understand the importance and urgency behind improving the diversity of their workforces, management and leadership. And my conversations suggest the vast majority of AM organizations are serious about taking positive steps to break the bias in their organizations and the AM industry.
Now it is time for action. I look forward to celebrating your successes.
1 Addressing the gender pay gap, May 2020 06052020-genderpaygapindustryinitiatives.pdf (investment2020.org.uk) (1.47 MB)
2 Fund Giants Big on Equality Struggle to Fix Gender Pay Gaps, Bloomberg, October 2021, Fund Giants Big on Equality Struggle to Fix Gender Pay Gaps - Bloomberg
3 Gender Pay Gap, Office for National Statistics, 2021, Gender pay gap - Office for National Statistics (ons.gov.uk)
4 Women in Finance Charter, women_in_finance_charter.pdf (publishing.service.gov.uk) (188 KB)