This article was also published as a Guest Viewpoint in IPE’s June 2023 magazine.
Promoting inclusiveness and diversity within organisations is key to discovering their human capital potential, but fostering a culture of continuous improvement in this area is seen as critical if this is to be fully realised. The new DEI Data Survey – a joint initiative between the Thinking Ahead Institute (TAI) and the Investment Association (IA) – aims to provide a more comprehensive data-driven understanding of the DEI landscape within the UK investment management industry, to support current efforts and provide a launchpad for progressive organisations.
It is often said: ‘What gets measured gets managed’ and many organisations have applied this core principle to gain deeper insights into their business, operating and investment models. But the reality is that we often measure what we do because we can and therefore miss the critical corollary: ‘We can measure more than what we do’. Never has this been more relevant for leadership teams that want to bring out the best of their human capital; understand their workforce to improve employee experience; and drive more effective decision-making through the power of diverse and inclusive teams.
The rise of superteams
Over the past decade there has been a shift of power from the individual to the collective. As an industry, we used to be obsessed with stars: the star trader, the star fund manager or the key advisor. But increasingly we have shifted our dependence to a more robust model – to the team and its collective intelligence, where the whole is seen as greater than the sum of its parts. Teams are now considered the primary unit of value creation within organisations.
But there are certain teams, through combining diverse and talented individuals with strong culture and good governance, that are highly innovative and can ‘get in the zone’ by delivering not just exceptionally strong results, but also exceptionally rewarding experiences. At the Thinking Ahead Institute, we call these superteams and have worked with a number of investment organisations to move their teams from ‘good to great’. At the core of these teams is the talent that drives them and so it is critical for leadership to focus on the often untapped contributions of individuals in the room but also the important dynamics of teamwork and team thought.
We can do more on measuring DEI
The importance of organisational diversity and inclusivity is now seldom contested. Numerous studies have shown that teams with a variety of backgrounds, experiences, ages, ethnicities and education levels surpass their counterparts in decision-making, innovation, and overall business success. WTW’s most recent analysis of over 1,500 investment strategies found that investment teams in the top quartile of gender diversity outperformed the bottom quartile by 45 basis points per annum in terms of net excess returns. Having a more equitable, diverse and inclusive workplace supports and is supported by an effective culture, which is also critical for organisations to stay competitive in a constantly changing environment. Whereas business strategy can be mimicked culture is unique. Indeed, culture is the single most unique competitive edge that an organisation can have.
However, progress in achieving DEI goals has been uneven across industries, including asset management. Our research shows that only 42% of managers have measurable objectives in their DEI policy and only 25% link leadership remuneration to relevant KPIs. Additionally, our roundtable survey of asset owners on this issue, showed that 78% believed that the current pace of action on inclusion and diversity in the industry is ‘too slow’.
Introducing the DEI Data Survey
To make progress, we believe there should be an acknowledgement of disparities throughout the sector, quickly followed by continuous and ambitious data collection and analysis exercises. This would shed light on the UK’s current DEI landscape and establish benchmarks that facilitate the measurement of progress over time. This approach also aligns with the FCA’s efforts to drive more accurate and consistent data collection in the sector.
The TAI / IA DEI Data survey is structured with all this in mind. It encompasses key metrics such as workforce diversity, representation at various levels of seniority across gender and ethnic diversity but also include less referenced areas such as caring responsibilities, socio-economic background and neurodiversity, as well as inclusion initiatives and employee sentiment. These are key to ensuring that multiple aspects of an employee’s whole self are appreciated while adding richer and deeper textures to the diversity discussion.
What are the objectives of the survey?
The survey has three main assessment objectives: data maturity, data actionability, and data availability.
The first objective is to gauge the maturity and robustness of the organisation’s DEI data collection process. This involves assessing the progress made in developing a comprehensive process and framework for collecting, analysing, and utilising data. For example, the survey aims to provide insights into data-collection methods, frequency, consistency, and responsibility, while also highlighting challenges and benefits through the process.
The second objective is to evaluate the extent to which diversity data collection informs the organisation’s DEI strategy and policy – that is, how effectively the organisation leverages this information to shape its DEI initiatives. This includes how the organisation sets diversity targets, strategic goals, and implements programs as well as assessing the level of awareness and commitment to using DEI data.
Finally, the survey aims to examine the data-availability perspective of the organisation. It seeks to determine whether the organisation’s data-collection efforts align with its DEI objectives. This assessment helps identify any potential gaps or areas for improvement in data-collection practices with the aim of effectively recalibrating the purpose of DEI strategies.
Transparency, accountability, and collective action
Transparency and accountability drive change. The aggregated data and insights derived from the final report will enable firms to benchmark their progress, identify areas for improvement and amplify their impact as a united front committed to ultimately driving meaningful change in the DEI space. By trying to establish a standard set of core data and metrics, the report also acts as a practical toolkit for firms developing a reporting-data framework on an annual basis, enabling them to track their progress over time and hold themselves accountable for their DEI commitments.
We highly encourage organisations to participate in this data collection effort to help develop a collective understanding of the industry’s current DEI landscape. This shared knowledge will enable firms to learn from each other, adopt best practices, and collaborate on initiatives that promote diversity and inclusion. A rising tide lifts all boats, but we can also help to build better boats.
Achieving organisational goals
Our work with investors often points to goals of an effective DEI strategy comprising three key aspects:
- Developing the diverse array of the people that make up the organisation (structural diversity)
- Treating people fairly and with respect and decency (equity and inclusion)
- Leveraging diversity for business success by harnessing the power of collective intelligence (cognitive diversity).
And it is with this in mind, that, together with the IA, we structured this survey. We believe the outputs will help organisations achieve these, all of which lead to a stronger value proposition for shareholders, employees, clients and the wider society.