At City Hive,we know the corporate benefits of a diverse workplace have been proven. Major studies have repeatedly shown that companies embracing the opportunities from diversity outperform. But the financial services industry has work to do.
We want to make sure that every modern asset management firm is familiar with the evidence.
The financial services industry has been singled out as one that performs poorly in the diversity stakes. City Hive is not only campaigning to change this but is actively engaging with individuals,companies and the sector at large through our Academy, events and membership scheme to ensure inclusion is embraced and its benefits reaped.
As far back as 2003, the European Commission reported that companies with workplace diversity policies “identify important benefits that strengthen long-term competitiveness”. Since then, the evidence base behind the claim that a diverse workforce – in all its forms – actually improves performance has grown rapidly.
Consulting giant McKinsey estimated in 2015 that roughly $12 trillion could be added to the global economy by 2025 simply through improving gender equality or as much as $28bn if women were able to play an identical role to men in labour markets.
It is this opportunity which is becoming increasingly important not only for employees but for investors too.
A 2016 study by leading investment bank Morgan Stanley reported there was now a “growing body of evidence [linking]gender diversity to measures of better performance, including return on invested capital (ROIC), return on equity (ROE) and ROE volatility”. It added companies with a diverse workforce could expect to see improved productivity, decision-making and innovation.
This was backed up by Harvard Business Review, which looked at diversity in the venture capital industry. It stated that “the more similar the investment partners, the lower their investments’ performance” because they lack diversity of thought. The research named the 'daughter effect', where the visibility of women helped to increase the number of women hires - even when this was down to the investment partners having daughters themselves. All important to increase representation in the field, where women make up just 8 per cent of US venture capital investors.
Diversity‘s true power is that it begets diversity. The so-called millennial generation, in particular, is more concerned than ever about the culture of the place they work. By embracing all faiths, ethnicities, sexualities and welcoming flexible working practices,companies are far more likely to be a desirable prospect for a diverse range of jobhunters.
What’s more, a report last year by ‘big four’ accountancy giant PwC found there was an increasing reputational risk for those companies failing to address diversity. The pressure has been turned up even more recently, with UK companies now required by law to disclose their gender pay gap and outline proposals for tackling it. This will no doubt involve an overhaul of the methodology used to appoint staff to companies and boards, and City Hive will be at the forefront of helping investment firms do this.
Crucially, companies with diversity of personnel, thought and experience better represent their customers – or in the investment industry’s case, investors.
If you or your company wants to find out more about the benefits of a diverse workforce, get in touch about our Academy programmes, become a City Hive member or read a wealth of studies bolstering our cause here.