A new study aims to reframe the global debate surrounding diversity, equity and inclusion in the City of London by focusing less on demographics and more on hiring people with diverse experiences.
The report, published on Monday by the Diversity Project — which focuses on inclusion in the UK’s investment and savings industry — shows that having a wider variety of perspectives, backgrounds and skills can boost performances of investment teams.
The research comes as companies around the world re-examine their DEI efforts amid a crackdown by President Donald Trump. Many companies that work with the US federal government have backtracked on initiatives, wary of financial consequences of carrying on, but businesses in Europe have largely maintained measures amid international pressure.
The study combined first-hand insights with a review of academic literature and found that “cognitive diversity,” which stems from diverse educational and professional backgrounds, as well as demographic characteristics such as age, gender and race, can create substantial value in investment settings if managed effectively.
“It’s intuitive really that if you just hire from one type of group, or one type of person, you can’t produce the optimal team and we saw that obviously in the global financial crisis,” Helena Morrissey, who chairs the Diversity Project, told Bloomberg Radio. “This is actually saying that diversity drives meritocracy.”
Morrissey, who is a director of conservative-leaning GB News and chairs the Eton College Endowment Fund, hopes the work will reset the debate around DEI for Britain’s financial sector. The Diversity Project has attempted to broaden access to careers in finance and to encourage more women to enter the space — but men still make up the overwhelming number of finance workers in the City.
Among the report’s main conclusions is that businesses need to place a greater emphases on inclusion and that businesses cannot simply “add diversity and stir.” Instead, the study suggests firms should cast a wider net when recruiting and frame diversity in the workplace as a driver of innovation as opposed to a box-ticking exercise.
“While cognitive diversity can indeed generate substantial benefits, it is also difficult to manage and must be supported by psychological safety and a culture of inclusion,” said Alex Edmans, professor of finance at London Business School, who conducted the study. “Any organisation that succeeds will enjoy a significant competitive advantage.”
Photograph: Commuters pass the Bank of England (BOE), right, in the City of London, UK, on Monday, Aug. 12, 2024. Photo credit: Jose Sarmento Matos/Bloomberg
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