Inclusion essential to achieve true diversity

The investment management industry must put more emphasis on inclusion if efforts to accomplish true diversity are to pay off.

Inclusion — accepting how individuals choose to identify and ensuring that people from different backgrounds feel that they are included and truly belong — is of increasing importance in money management.

To truly achieve inclusion, leadership within money management should promote psychological safety, encourage employees to bring their full selves to the workplace and consider creating a "social chair" role to sit alongside existing chairmen in meetings and make sure all participants are given the opportunity to have their voice heard.

The suggestions and recommendations were made by senior women from across the global money management industry, brought together by Pensions & Investments for a diversity roundtable on June 3.

"A strong company culture really has to put a lot of emphasis on inclusion," said Tia Counts, London-based managing director and chief diversity officer at MSCI Inc. "They have to be intentional about helping managers better understand what inclusive behaviors look like. You have to be intentional on trying to find a better way to measure whether the employees feel that inclusion is at the top of mind of management, whether they feel that they belong. All of these are just so important."

In fact, inclusion is so important that when you get that "part of the story wrong, or you don't pay attention to it, I believe that you will find that any material gains you've made in terms of representation and numbers will be undone," Ms. Counts said.

The need to improve inclusion is an area of focus for Willis Towers Watson PLC's Thinking Ahead Institute, a non-profit research network. The institute has looked in-depth at so-called T-shaped people and teams — having a mixture of subject depth and subject breadth, according to the institute — that contributes to cognitive diversity and helps to create super teams. For those teams, "diversity is very much at the core," said Marisa Hall, co-head of the Thinking Ahead Institute in London.

To build those teams, employers need to have a framework for inclusion and trust. Part of that means looking at how decisions are made and the beliefs behind such decisions.

"So to build these better teams, diversity is one part of the puzzle, but you also need to bring about inclusion. You also need to bring around ... that rigor and that scaffolding to make the team stronger," Ms. Hall said.

Making staff feel truly included and that they belong to a firm is no easy feat — it means looking beyond hiring and bringing staff into a firm and thinking about how internal meetings are run, for example.

"Do we create spaces within our own meetings where people are allowed to disagree, where the chair isn't the person that's doing all of the talking, where we start with the more junior people first, where we think about ... do we need a technical chair alongside a social chair who is able to kind of track and make sure that everybody's voice is heard?" Ms. Hall said.

Companies need to be open-minded, listen to and understand people, as well as achieve a "psychological safety that people can share their experience," added Margaret Franklin, Toronto-based president and CEO at the CFA Institute.

The CFA has done a lot of work on gender diversity, for example. It launched its "women in investment" initiative seven years ago, and one of the things executives talked about was "visibility is validity. If I can see it, I can imagine it. And so part of, I think, what will be the next generation's thinking is when do people start to make decisions around their careers?" Ms. Franklin said.

CFA data show that about 75% of women's decision-making on careers happens between the ages of 18 and 25, "which means we have to start presenting our industry as a viable, productive, noble, creative space to attract … the diverse talent we want" early on, she said. "People don't see themselves in the industry. They continue to see a reasonably homogeneous, exclusionary industry. I think we have to all do a lot of work around that because ... if we look at the data of what millennials are looking for, (they want) companies with purpose and values," Ms. Franklin said. Emerging, young talent will "challenge senior leadership to think very differently."

That presents an opportunity, particularly in the post-pandemic world. "Nobody has a playbook for return to work. … It creates an interesting opportunity to revisit so many things. And if there's one benefit of the pandemic … it has made us all more human to each other. And what we've lacked in person has probably created greater accessibility for a greater group of people for inclusion," Ms. Franklin said.

Some managers have already made serious moves. "Inclusion is a big thing within our organization," said Lily Burkhart, New York-based global head of diversity, equity and inclusion and talent management for asset and wealth management at J.P. Morgan Chase & Co.

In fact, J.P. Morgan Asset Management CEO George Gatch's "mission" is to be the most diverse and inclusive money manager in the industry. And everyone plays a part. "It's not just the senior leaders, it's not managers, it's every employee because … your everyday interaction with other employees is what makes the place … inclusive or not," Ms. Burkhart said. "We're just holding everyone accountable to create an inclusive environment."

Among the firm's summer analyst interns, more than half are female and, in the U.S., more than half are also ethnically diverse. For its full-time analyst graduate hires this year, more than 50% are female and more than one-third are ethnically diverse, Ms. Burkhart said. "So it's really promising," she added.

Recognizing the need for inclusion is one thing — assessing, measuring and reporting on it is another.

The CFA Institute sees understanding of inclusion as being in its infancy. It's different to diversity because with diversity "you can hit your metrics pretty easy, and they're quantifiable and readily accessible measurements. But for inclusion, it's really … much harder," Ms. Franklin said.

While it's often said that what gets measured, gets managed, it's also true that what gets measured matters. "But also measuring something like culture and inclusion (is) a tricky thing," MSCI's Ms. Counts said. "There is no metric that will give you the answer of how you're doing on that."

But one thing that does tell you a lot about a company's culture and inclusion is employee engagement.

"There are several ways that many companies will measure engagement, and they'd do this either through employee engagement surveys, which are periodical or annual," and another way is to see whether employees participate in employee or business resource groups, Ms. Counts said. These "can often form the foundation of the company culture, where the employees get together and think about the issues that matter to them as groups, singularly, or at an intersectional basis," she said.

Ms. Counts said she cannot stress enough the importance of such groups, finding them to be "a fundamental and having a pulse on how the company feels, how the people in the building actually feel — whether they feel that they are empowered to speak up, which is what all good employers want their employees to feel," she said. These employee resource groups can also show whether employees have a sense of belonging and "whether they're able to bring their full selves to work."

J.P. Morgan sees inclusion "as having empathy and trust … Those are the two core factors we see that would build and that would make someone feel like they're included vs. not," Ms. Burkhart said.

In the wake of George Floyd's killing last year, shootings in the U.S. and the rise of antisemitism in some parts of the world, the firm makes sure to give employees the opportunity to tell their story, share experiences and what they go through. "We encourage (the) building of allyship through listening and feeling empathy for others and hearing their experiences," she said.

Encouraging executives in management positions to hold talking sessions has also helped, but they should not be "event-driven. They should just happen." Employee retention is one way that JPMAM measures the impact of its inclusion efforts, Ms. Burkhart said.

Companies can also look at the people in senior leadership positions, consider why employees may not have been promoted after a number of years and also start at the very beginning of the talent pipeline, working with schools and universities, community-based organizations and charities to help build up diverse talent from a young age, the Thinking Ahead Institute's Ms. Hall said. It's akin to sports teams, which will nurture talent from a young age. "The NBA doesn't just kind of wait until somebody turns up and says, OK, right, you're going to be the next LeBron James — actually they're going into those schools and … colleges and they're nurturing that talent," Ms. Hall said.

Managers need to be smarter about recruitment: "We're incredibly innovative when it comes to investment ideas, (but) we need to be smarter when it comes to people. And I think with all the great minds that are operating in our industry, we can definitely do it. It's just we need to have the will to," she said.