Time for change
The conversation around diversity and inclusion (D&I) is not a new one. And yet, excessive time spent studying and talking about what the problems are only delays change and results in lost generations of opportunity. The time for action is now, and conversations across the board need to start moving from ‘how do you see the problem?’ to ‘what are we actively doing today to solve it?’
We brought together 25 D&I leaders from organisations of all sizes to discuss their visions for the future, common stumbling blocks, and how we can support each other to make this vision of equality a reality.
What D&I initiatives can I implement in my business?
There’s no one-size-fits-all approach for D&I. Where large organisations may have large spending pots, for start-ups and scale-ups, competing budget priorities mean it’s often hard to implement large-scale projects. But regardless of size, so long as actionable steps are put in place at all levels and a percentage of the organisation’s budget is dedicated to ensuring this can be executed, true D&I is an achievable goal.
Government legislation is also an effective way of driving change within larger organisations. One example of this is affirmative action planning, something which is mandated in the US for organisations who have over 50 employees and specified federal ties.
An affirmative action plan (AAP) is a written document which outlines an organisation’s specific plans and data on representation within the workplace, including information on how many colleagues are hired, how many leave, a target growth rate for improving D&I and the plan to make this happen. Currently, the US law surrounding AAPs only measures three strands (female, Black and Hispanic employees) but the scope for expansion of this legislation is promising, and certainly something that other countries and organisations would do well to adopt in the near future.
To encourage buy-in past implementing formal policies and a D&I officer, another initiative many organisations are setting up are employee networks (also known as affinity or employee resource groups). Usually run voluntarily by employees, these provide a safe space for their peers to openly discuss thoughts and experiences around D&I, among other topics. Not only have networks been shown to increase employee retention rates and make organisations more desirable, with the right backing from HR and the executive board (such as rewards or incentives for those involved) they can provide highly beneficial insights in all areas, from D&I to business growth and customer relations.
What has been done so far to improve D&I?
Across the board, progress has been made towards improving demographic diversity (gender, race, ethnicity, age, religion, sexual orientation, neurodiversity etc.) but there’s still a lot to be done. Here are some positive examples given by our panellists:
Women in Finance Charter – over 330 financial firms across the world have pledged to promote gender diversity by committing to implement four key industry actions.
After hitting its goal of achieving a minimum of 30% female representation on FTSE 100 boards, the 30% club has now expanded its 2023 targets to include there being “at least one person of colour on every FTSE 350 board […] with half these seats going to women”.
In October 2020, Legal and General told FTSE 100 organisations that they will vote against those who fail to diversify their leadership teams by 2022. They will openly vote against re-election of chairman or head of nomination committee if this is not met.
The Diversity VC Standard is an assessment and certification process that sets a benchmark for best practice within VC and sends a signal that a fund follows best D&I practices to the rest of the ecosystem. With more funding, this could be extended to start-ups and scale-ups to better support D&I as they grow and give them more exposure.
The Investor Leadership Network is currently building a dashboard that allows people to mentor and coach each other. This has a lot of promise for fund/project managers who aren’t ready for institutional capital and perhaps don’t yet have a board of directors but have a lot of potential. With the right attention, this project could help people to get to board level more quickly.
The Private Equity Women Investor Network (PEWIN) has recently announced plans to expand its US-based Project Pinklight – an accelerator program designed to help women launch their own private equity funds – into London. The project helps female founders to give and receive assistance with upfront capital to get off the ground.
Investment firms including KKR, TPG and Goldman Sachs have programs which involve office hours for advice and a ‘big sibling relationship’ where they take on an advisory role and lend their name for fundraising – some seed capital needs to be used, but this is not always easy to get in the first place, so smaller organisations could do with more support in this area.
Many organisations, including La Fosse Associates, are also now including socio-economic factors in their D&I plans. Our coding academy futureproof was founded in 2018 to tackle the diversity issue within software engineering, and uses a free-for-students policy to provide equal opportunities and focus on applicants’ individual ability rather than their ability to pay.
What are the hurdles faced when trying to achieve D&I?
The consequences of not focusing on D&I are clear: continued employee tribunals, continued BLM protests, and general injustice and imbalance across the world.
And yet, when budgets are tight, D&I initiatives are often the first thing to come under scrutiny for being a ‘nice to have’ rather than an essential function. Even tech giant Google has recently been accused by employees of reducing their internal D&I training team, leaving vacancies unfilled, and cutting back or dropping some programmes completely.
D&I is not simply an HR/CEO/board-level responsibility – although they are responsible for setting tone, every employee is responsible for ensuring D&I. Approximately 50% of D&I best practices are not directly related to diversity, but are practices desired by everyone, such as fair treatment and organizational flexibility.
Currently, there is no consistent measurement system for data regarding the D&I process. This makes it hard for judges to compare when one organisation has data and others don’t, and in most cases, the one with auditable data will win
Whether conscious or unconscious, bias exists everywhere. According to blind hiring organisation FairHire, 20% of 540 UK female BAME jobseekers surveyed altered their name in applications and almost all who changed their name reported a higher level of call-backs from potential employers – unconscious bias training can help us to eliminate this.
Differences in legislation (such as LGBT rights) between countries can make it difficult to implement a cohesive strategy.
There are a lot of barriers in the way for people from diverse backgrounds hoping to start a VC organisation or fund. Founders are expected to have tens or hundreds of thousands of pounds readily accessible, as well as the ability to relocate, which simply isn’t viable for a lot of people.
How can we close the D&I gap?
Successful D&I initiatives are not ‘pet projects’ to be put on the backburner, they are long-term, targeted campaigns which include every single leader and hold people personally accountable for meeting objectives. To see results, programs must be connected and aligned at all levels, and also require organisations to invest in doing it properly. D&I results require passion – individuals at all levels need to have the right mindset and be personally committed to achieving positives and contributing towards fighting injustice. As one of our panellists asserted, ‘diversity shouldn’t be a layer on top or a topic of the week, it should be baked into the DNA of the organisation’.
For the final part of the event, attendees were given a hypothetical scenario: with £100,000 and a 12-month window, what can we do to close the D&I gap?
One of the difficulties in finding talent is that firms often seek highly experienced candidates who are well-established names within their industry. Expanding the pool of candidates to be considered doesn’t necessarily require capital, but instead is dependent on networking and open-mindedness on the part of employers. Organisations should be agile and willing to give opportunities to people without previous board experience, whether it be nurturing internal talent or looking for external candidates with an ambitious mindset.
Create a database of corporate leaders willing to take board seats within VC-funded organisations. This could also be reversed, giving scale-up leaders the opportunity to sit in on board meetings and gain valuable experience.
Develop a database of diverse corporate executives and match people from different backgrounds with people at scale-up/start-up businesses to help them develop with D&I in mind. Increased effectiveness could be achieved by pairing people by sectors or specialisms.
Implement a reverse mentoring scheme whereby executives from diverse backgrounds mentor leadership teams on the benefits of having a diverse executive team. This could be executed within or across sectors.
Establish the UK’s first D&I talent investor, funding the program through corporate sponsorship and family capital. Corporates would make a commitment to contribute X% saved from postponing, cancelling or modifying graduate schemes (and the like), with family capital using the broader momentum behind impact investing to entice investment.
Rather than simply recruiting and promoting people in their own personal likeness, leaders should focus on competency-based hiring. Why do you want to hire someone diverse – what soft skills like growth mindset and innovation are we assessing, and what does ‘good’ or ‘excellent’ look like in these areas? Having data and a scoring mechanism could help shift the dial, but it’s up to business leaders to evangelise and bring everyone along on the journey.
Final words from our event chairs
“D&I leadership and sponsorship has come a long way in the last few years. Today’s executive leaders need to do whatever they can to ensure that in 20 years we are not having the same conversation. We hope this event provided impetus and insights into how we can collectively work together to close the D&I gap.” – Sunil Jindal
“In order to create change we must be bold and decisive. We must stop talking about stats and the issues we have in our society and hold everyone accountable to create change now, not in 10 years’ time. It was a delight to work with our amazing speakers on this event and thank you to everyone who attended.” – Sean Kiff