Smarter use of data and avoiding "confirmation bias" will help financial services companies properly integrate diversity and inclusion best practices when winning and retaining talent, rather than simply ticking boxes, the CEO of Fitch Learning said May 20.
As diversity and inclusion draw more attention from the public and governments, there is a risk of companies focusing on ticking just another "key performance indicator" box rather than achieving true cultural change in their organizations, Andreas Karaiskos said at the City Week 2019 conference in London.
Everybody appreciates that diversity is now part of the dialogue and the U.K. government is trying to shape the narrative around gender diversity in particular, which is positive, he said. But creating a truly diverse organization requires companies to understand why diversity matters for their business and for society in general.
Avoid box ticking
In a long-term shift toward inclusivity and diversity in the financial sector, there are a few key steps that organizations and governments could take in the short term, Karaiskos, who heads up the Fitch unit that specializes in financial services training, told S&P Global Market Intelligence on the sidelines of the conference.
Firstly, it is important to keep the issue on the agenda, which is a challenge in itself given a slew of other concerns such as Brexit, global trade tensions and conflicts in the Middle East, he said.
Also vital is to embrace role models of people and organizations that have succeeded through diversity. The media and government have a role to play in promoting these positive stories, which will help make diversity and inclusion a mainstream topic, according to Karaiskos.
Commercial organizations should understand, measure and then communicate the benefits of a robust diversity strategy to their business. Understanding the commercial drivers behind having a diversity strategy, and avoiding the box-ticking exercise, should be a priority for companies, he said.
In terms of measuring success, there is a broader conversation to be had around data and how that is used to create a more diverse and inclusive culture, Karaiskos said.
An enormous amount of data on human resources, learning and skills development is being captured globally across sectors, but a recent Fitch Learning report suggests that companies are not quite sure what to do with it.
"The data analytics story needs to progress so that we can measure the benefits of diversity," Karaiskos said. In financial services, data is now used as a stick, rather than a tool to analyze trends and draw conclusions about potential future improvements.
In financial services, the data should be used to understand how decisions are being made, and to identify critical skill gaps and how to fill them, he said, adding that diversity is part of that narrative.
Breaking with the old
Historical recruitment patterns in financial services have created a confirmation bias that organizations need to fight against, Karaiskos and fellow speakers said during the panel discussion.
The growing skills gap, driven by, among other things, stronger competition from technology companies, creates an opportunity for financial services employers to break with their traditional models of recruitment and the typical pool of candidates, the panelists said.
"We have to change the way we think about this ... and it is not only a question for the industry but also for universities," said Linda Yueh, an economics professor at the London Business School.
An organization needs to push for diversity at every step of the recruitment process, from a candidate's selection all the way through to their evaluation and comparison at the end, according to Russell Higginbotham, regional president of EMEA at Swiss Re AG. Creating a diverse team takes time and does not come easily, he said.
Challenging an organization's thinking can sometimes make a company take a U-turn and select people they would not have before, Higginbotham said.
At Swiss Re, there was a case where the traditional recruitment company scoring model showed a male candidate as better for the position than his female competitor. But in the follow-up blind assessment done at the firm, everyone voted for the female candidate, Higginbotham said.
In the short term, companies need to push harder and, when selecting candidates, "think more broadly and not be set in whatever stereotyping you might be used to in your industry."