Bashing Down Diversity Barriers In Australian Investment Management

Diversity in the workforce happens when employers undertake a proactive strategy to hire people from a broad range of backgrounds, including ethnic, cultural, gender, physical ability, age and background. Evidence increasingly points to the fact that diverse workplaces enjoy a more innovative approach to work and problem solving.

Some of the other advantages are improved communication across different groups within the same organisation and as a result greater productivity and staff retention. Diverse workplaces also resonate with the diverse customer/client base and help organisations to better meet the needs of all stakeholders.

Seems like a no-brainer right? You’d think so, but ongoing surveys and research into workplace diversity show that organisations are still struggling to build workforces which more accurately represent the communities they serve and operate in. The latest research, conducted by consultancy Mercer, reveals astonishing diversity barriers in the Australian investment management industry.

Mercer’s research reveals that inherent bias in recruitment and promotion decisions and workplace culture block opportunities for under-represented talent in the organisation to thrive.

The study was co-developed with 15 Australian asset owners and managers and was based on a survey, focus groups and interviews with, investment managers, employees from neighbouring functions and university students. Diversity was measured across gender, cultural background, age, socio-economic background and educational qualifications.

The study found that exclusionary management practices and a lack of awareness about investment management as a career path among students are among the issues industry leaders must tackle, the study found.

Other findings revealed by the research:

• 76 per cent of investment managers are male,
• 48 per cent are private school educated (compared to the national average of 35 per cent) and 76 per cent of those who completed post-graduates studies completed a Masters of Finance.
• Female investment managers say bias in the recruitment process and career progression is the number one reason for poor diversity while their male counterparts blame parental and care responsibilities for the lack of diversity.
• Female investment managers are up to 30 per cent less likely to be promoted through the ranks and are up to 50 per cent more likely to leave than men.
• 77 per cent of Anglo-Celtic male investment managers feel their manager supports their career ambitions compared to 59 per cent of female investment managers.
• Flexible working is perceived as a career handbrake and 78 per cent of women agree this explains poor diversity.

Mercer Diversity and Inclusion Practice Leader Yolanda Beattie said great work was happening within the industry to tackle the issue, and leaders were committed to doing more to dismantle the systemic structural and cultural barriers that inhibit diversity.

“From a gender perspective, fixing the leaky pipeline by supporting women through critical child bearing years must be a priority. That won’t happen by accident; employers need to intentionally sponsor their talented women if they are to stop them leaving at such high rates,” said Ms Beattie.

Ms Beattie said recruitment processes among investment management organisations reinforce the diversity barriers.

“Employers are fishing from a homogenous pool of well-known candidates. A tendency to hire who you know rather than searching widely for diverse talent is part of the problem. This impacts male and female non-Anglo Celtic aspiring investment managers, and women,” she said.

Student and graduate feedback shows the industry has much to gain from raising its profile among the talent of the future. Less than one in five finance students said they were considering investment management as a career option with women (41 per cent) more likely than men (27 per cent) to report not knowing enough about the industry.

Mercer developed a set of practical recommendations following consultations with leaders within the research participants:

• Develop an inclusive industry-wide employee and career value proposition and promote to diverse talent pools
• Engage portfolio managers more effectively in the problem and solution so they can understand their impact and the personal benefit of being part of the solution
• Embed behavioural expectations into performance expectations and develop talent so they have the self-awareness to adapt and meet the challenge
• Redesign recruitment practices – advertising all roles, cultivate long-term talent pools, recruit for diversity and technical skills by considering what different perspective each recruit brings
• Support underrepresented groups through the pipeline with an industry-wide sponsorship program
• Develop, report, and track progress on company-specific diversity and inclusion metrics.