Financial services could meet their DEI ambitions faster with better change management

By Michelle Meakin, Business Services Director at business agility experts, Agility in Mind

It has been two years since the world watched in horror as the events surrounding the murder of George Floyd unfolded. A surge of outrage and worldwide protests, many under banners emblazoned with the now-iconic slogan of movement ‘Black Lives Matter’, fuelled the growing shareholder activist movement. The result was that companies of all sizes were finally prompted to make better decisions that fell in line with the social justice and ESG ideals close to many shareholders’, customers’, and employees’ hearts.

And yet, after promises from these organisations to do and be better, frustratingly many are failing to enact the cultural and operational changes they pledged at the time. Agility in Mind recently conducted an audit of the FTSE100 which found that despite nearly all (99%) having an inclusive mission statement, merely half (48%) have only one or fewer positive DEI initiatives. This falls to a negligible 4% which offer a substantial neurodiversity initiative.

This comes as the Financial Conduct Authority (FCA) implemented requirements for listed companies to report against targets for female and ethnic minority representation on boards and in exec management. And in the midst of ‘the great resignation’ and the ongoing war for talent, the audit exposes that the FTSE100 companies which are performing worst in terms of DEI are also the ones with the lowest Glassdoor scores – of the 16 companies with a score of 3.5 or less, 13 offer no DEI initiatives.

At the heart of this issue for financial services organisations – and, indeed, many other sectors – is that they are largely not agile enough to enact change at scale; the correct change management processes are simply not in place. However, the tools to achieve this are far more accessible to managers than widely believed.

Business leaders explore the roadblocks

To explore the disparity between intention and action in DEI further, we spoke with 250 UK business leaders and found that almost a third (30%) believe a lack of understanding of diversity initiatives’ importance holds them back from having the desired impact. Over a quarter (26%) believe a lack of awareness regarding how companywide change can be implemented is the key reason behind the mixed success of these initiatives.

Leaders of financial services firms emerged as some of the most committed to improving diversity and inclusion within their sector, with 30% professing a desire to enable this change whilst recognising that it can only be achieved step by step. They were second only to the healthcare sector in which 33% of bosses responded in this way.

As these leaders recognise, building a truly diverse and inclusive culture is laden with challenges. However, the audit also reveals that many well-intentioned leaders have pledges and goals to reach it. What we are seeing is that most are struggling to enact the type of top-down organisational change that is required to be successful – and that the pace of real action even amongst public-facing companies is very slow.

An agile framework for change

To enact successful organisational change, business leaders must take the time to design an inclusivity infrastructure that can boost retention by keeping staff happy and aligned with organisation growth. Key to this is creating a positive culture which improves productivity and performance as it scales. Managers struggling to implement these changes can follow a simple step-by-step process based on the principles of business agility. Core to this is remembering that your organisation is unique, so merely copying others will not necessarily achieve the outcomes that they want to reach.

Leaders should begin with inclusivity in mind, bringing a diverse set of views from across the organisation into a multidisciplinary team managing change. This is important because managers simply don’t know what they don’t know and, by bringing in different perspectives, can make sure they only enact change which is beneficial for everyone it affects.

Once this team is in place, the next step is to set out the characteristics of the organisation you want, sharing a clear vision for the future. Teams can then work towards these forward-thinking milestones incrementally, taking small steps that achieve real change and are always aligned with the vision.

Key to success is iteration, ensuring that lessons are learnt at each step and, even more importantly, that these lessons are shared across the organisation. By making change visible, teams are encouraging discussion and, ultimately, buy-in, also allowing everyone to see the progress the business is making.

Our research shows that financial services is an area which is leading the way in terms of attitude to change and recognition of how this change is enacted. However, there is still work to be done in making this change meaningful and realising the many commercial benefits of diversity. If leaders are able to support their efforts with the right business and change management processes, they will move far beyond warm words and increasingly frustrated stakeholders.