How to ACT Guidance Challenge

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01. Pillar goals

Culture is the foundation on which firms stand and the right people are an essential ingredient. Therefore, the way the firm invests in and values people is central to success of the business and a good culture. Increasingly, stakeholders want more visibility on how this is enacted. Firms should anticipate potential and existing employees, clients and other stakeholders having questions about their approach and how they ensure that policies are equitably applied and doing the intended job.

02. Investing in and valuing people

Ensuring that policy coverage is extended to all staff, that best practice is being pursued and that uptake is being measured and monitored.

03. Question set

Are the DEI policies communicated to all staff?
How often is the DEI policy reviewed and approved at Board or Management level?
Does the Firm measure the uptake of DEI-related policies?
Where does the firm measure the uptake of policies? Multi-select: A Board or management dashboard; an employee dashboard; via engagement surveys; via diversity data collection; via training uptake and attendance; via ERGs (informal measurement); via uptake of other DEI initiatives; via mandatory policy acknowledgement; other (specify); we do not measure uptake
Select the types of training or programs that are offered by the Firm to employees related to DEI: Multi-select (Internal mentoring scheme, External mentoring scheme access, Coaching, Skills development, Leadership training, Returner programs, Retention programs, Unconscious bias?
Describe any initiatives that the Firm has that supports equal participation and equal performance/bonus incentives.
What practices does the Firm take during promotions to ensure an equitable process?
Does the Firm conduct periodic reviews of the hiring process to provide insight into whether recruitment efforts promote diversity?
a.Explain how the Firm conducts periodic reviews of the hiring process to promote diversity.

04. What we expect to see, and why

Enabling regular communication and access helps to normalise any relevant policy and it’s provisions.

Firms can consider how readily they share information with existing and potential employees. It is good practice to offer information to all staff before they need to ask for it. It is an inclusive stance that creates a level playing field, with consideration of neuroinclusive practices. It heads off situations where individuals feel like they are highlighting an area of sensitive personal need, such as having to ask for details of parental leave policies. It also enables higher uptake.

The effectiveness of any policy is dependent on high-level sponsorship, acceptance, enactment and usage. Usage is particularly important; it demonstrates that the actions covered by the policy are normal. This challenges stereotypes and accepted behavioural constraints, for example, presenteeism due to not taking personal or sick leave. Role modelling should be by all senior staff, including the accountable executive.

An absence of DEI-related provisions within policies over time may lead to challenges from staff or stakeholders.Firms that have no provisions will be at risk of staff attrition, particularly as staff needs (and wants) are changing. Other stakeholders will increasingly have questions, such as how the firm is:

Tracking culture-relevant data;
Setting norms for inclusive practices;
Ensuring access and equity in hiring, management and retention practices;
A level playing field for employees that will support the creation and maintenance of cognitively diverse teams.

Stakeholders are interested in actions that support improved outcomes in investment practice and client delivery. Being able to questions on how the firm’s approach shapes culture may result in mandates being won or lost, as increasingly clients are looking at long-term relationships built on trust and alignment.

Most stakeholders recognise that change requires time, so where there are gaps, being able to demonstrate that commitments are being established, and that internal conversations are underway, is an important signal.

Uptake signals access

The aim of measuring policy usage is not the target itself, but to help shed light on whether the policy is fully accessible. Managers can provide summary data, which, reviewed alongside the development and support offered, can help identify retention gaps or barriers to participation.

Training and development is a core plank of creating more effective teams and investing in people. It should, therefore, be accessible. Managers, as part of ongoing assessments, should help to design individual programmes. Good process such as tracking metrics and applicability criteria should circumvent any potential bias in how the issuing manager assesses and allocates, to and guard against more insistent employees getting more opportunities for growth or to demonstrate leadership behaviours.

05. How to get there

Alongside access to standalone DEI policies or those with DEI content should be the requirement that all staff have reviewed and accepted them. Staff competency should be clear, so the execution of roles and responsibilities relating to culture or the approach to DEI includes:

Understanding and applying key concepts;
How to embed and share information across the business; and
Access to mechanisms that allow staff to participate in, improve on and report concerns.

In order to ensure that policies are doing the intended job and apply to all staff, they will need timetabled, periodic reviews at intervals appropriate to the organisation. For example, a light-touch oversight annually, then an in-depth review every three years, which incorporates feedback from internal channels (line manager conversations, for example) and forums (ERGs, etc).

It is advisable to seek staff input or feedback on what works. This doesn’t mean every suggestion has to be implemented. Rather, effort should be made to understand the drivers of requests. This can result in a different solution that better fits the needs of the employees and the business. In general, people want recognition and progression.

Because the practical outcome of a policy review through a culture and DEI lens should be a workplace that is more engaged and effective, it is something that is recommended for all firms.

06. ACT insights: equal participation and performance reward

Firms have are more likely now to recognise that employees need a mixture of financial and non-financial measures to be engaged in achieving high performance. These relate to individual performance, but also the team structure and overall firm approach. Adding a lens that considers equity of approach and transparency helps with overall employee engagement. It suggests reward structures are fairly applied and opportunities to progress are open to anyone who meets the requirements.

How firms report supporting equal participation and equal performance:

Variable compensation structures, which can include performance elements and collaborative rewards
Long-term incentives
Profit sharing, partnership and employee share ownership
Pay equity audits
Industry benchmarking for compensation
Gender balance targets
Living hours and living wage
Inclusion training with related goal setting
Clear goal setting process, transparency and equitable approach that enables everyone to be able to succeed

Even though individuals want to be rewarded for their achievements, for a team to thrive there has to be collaborative work that may not be directly tied to performance outcomes but should nonetheless be recognised. This ensures that there is not a gap between stellar performers that are benefiting from team structures but not building them, and those that provide solid foundations for success. Linking inclusion training to performance reward can emphasise this.

Transparency around performance requirements, such as enabling flexibility around working hours and addressing presenteeism culture, also supports sustainable team contributions.

Some firms operate incentives using a partnership structure that enables equity acquisition or other employee share ownership schemes. This aims to increase employee engagement and loyalty, but should be monitored to ensure that the offer is equitable and open. If individuals or groups perceive these incentives are not available on an equitable basis, it will lead to disengagement and attrition.

Pay equity, benchmarking and audits help to both calibrate the level of compensation in comparison to the market, but also to ensure balance between types of team member. This can include gender or ethnicity pay gap reviews. It can go alongside monitoring of team composition to ensure that recruitment and progression practices are reaching out to diversity of talent.

Firms may consider targets for more balanced representation within certain teams and/ or roles, alongside pay gaps monitoring and reporting. This send signals to employees that efforts to address gaps are considered important - but they also need to be underway to avoid breaching trust.

Monitoring pay equity

Effective monitoring of pay equity can be an indicator of overt or hidden discrimination in the way that different groups of employees are treated. Large gaps should be investigated and monitored, rather than accepting that a gap is always likely to be present in a particular area. Such gaps generally arise from unequal starting positions.

Many firms have salary banding linked to a competency framework for some if not all roles. This approach will enable flexibility that accounts for experience, performance and certain market characteristics when hiring into roles. Firms should take steps to look at value equitably across candidates and recognise that pre-existing bias may mean candidates have previously been prevented from gaining experience that they would normally need in order to progress.

These practices should be accompanied with ongoing review of development and progression across the business to ensure that people are moving upwards equitably. This is in addition, as noted above, to monitoring for differing interpretation of roles, and variance in discretionary rewards that can cause pay gaps to emerge.

07. Uptake of policy and training

Firms may not formally be measuring policy uptake or there may be barriers at a very granular level. A starting point is to ask managers to provide light-touch feedback on what they have seen happening and requests that have come from staff.

Alternatively, the firm can do a periodic audit across a fixed time period, including via an employee survey or anonymous feedback. This will help to see practice across the business and what policies are most valued and working. More formal or comprehensive logging can be developed, if helpful – the goal being to understand that uptake is not limited to certain categories of staff.

If the firm has the resource available, uptake measured at group or firm level at a total or demonstrate what policies employees find most accessible and useful. Putting this data next to employee engagement data that asks about the quality and applicability of policies will round off the picture. It will ensure that not only are policies available but that staff feel able to request accommodations or benefit from their provisions.

There is no magic formula for developmental training, however there should be information gathering on what to provide, as well as what works. It is helpful to consult with employees on both the types of support they would like, as well as the needs they are aiming to meet, and understanding that knowledge of professional development offerings and what they are for will be varied across staff. They may ask for the items they see as most visible or desirable.

An established training schedule, including for new starters, helps create a transparent and equitable base for everyone to start from. Categories that can apply to all staff in the same way as health and safety or compliance would include general knowledge of DEI policies, company values and employee expectations, or training in identifying and reducing or eliminating bias.

Other programmes will be for selected groups with particular functions, including but not limited to managers (for example, professional development, progression and pay), recruitment practice and client relationships. While internal training may be the most appropriate process for most staff to understand the specifics of the company values and approach, there are obviously many additional providers that can support on specific topics and provide educational opportunities to engage staff. Ideally, opportunities should be available for all employees to support cultural belonging and ensure all staff are able to contribute.

Common programme offerings include:

mentoring (which may be peer-to-peer, reverse mentoring, mentoring circles, across teams, via external peer firms or external to industry, to name a few)
coaching and skills-based programmes
Training targeting specific moments in a career, including those returning from extended leave or career breaks
Transition moves across the organisation to new functions or teams
Development for those with leadership potential, and
Enhanced value but without significant progression (likely focused on retention).

Often, firms will have developed some kind of leadership track or training but this will be limited in application, and bias may already have affected who is recognised as being on that track. There is much more that can be offered to provide more enrichment within a role or level, without having to promise progression.

Mentoring is often asked for, but it can also be a catch-all because the indiviudal doesn’t know what specific support to ask for, and can also be a more general request for an employee to get more specific management attention and feedback.

“There is no magic formula for developmental training, however there should be information gathering on what to provide, as well as what works”

Good managerial training is a channel to enable equitable application policies as well as access to training and development.

At the very simplest level, a good manager will understand the different needs of individuals on the team as well the benefits to the team from supporting members to be more effective. Being a good manager is not a given, however, and many managers are placed within the role as a way to progress rather than this being the desired career pathway. Management training should include ways for the manager to improve engagement with their employees. This should deliver on a firm-wide way of recognising talent and development needs.