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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Singing from the same hymn sheet is one way to speed up interminable meetings. But groupthink at senior levels can be dangerous. The complacency of the banking sector came crashing home during the 2008-09 financial crisis.
Since then, UK ministers and regulators have pushed large companies to improve diversity. Fairness aside, the aim is to reflect the wider society and reduce risk while understanding consumer needs better. Campaigners have focused on increasing female and ethnic minority representation on boards. They have left class diversity neglected.
Socio-economic background is a greater block to career progression than gender and ethnicity, according to a recent study of nearly 150,000 financial services staff for diversity group Progress Together.
Similar research involving 16,500 KPMG employees showed staff from lower socio-economic backgrounds took nearly a fifth longer to progress to the next level of seniority than affluent peers. KPMG’s efforts to support other groups had paid off. Female or ethnic minority employees in general progressed faster than the firm’s average.
The Progress Together study showed that working-class women can suffer a double disadvantage. They took 21 per cent longer to progress to senior roles compared to a 13 per cent progress gap for men from similar backgrounds.
Lack of talent and low productivity are not to blame, says Nik Miller, boss of the Bridge Group, a consultancy that worked on both reports. A 2018 study of early career lawyers found more state school-educated trainees received the highest performance ratings than those who attended private school.
“Affinity bias” is often the culprit. Senior staff tend to help people in their own image to rise up the ranks. Project allocation can be opaque. It may rely on relationships made through alumni or family networks.
Yet this is not well reported. The Prudential Regulation Authority and Financial Conduct Authority are on a drive to improve diversity in UK financial services firms. Proposals out for consultation include requiring larger firms to report on metrics such as sexual orientation and religion. Reporting on socio-economic background would only be voluntary.
There is a danger in diversity discussions that one metric is played off against another. But class divides must not be left out of the debate.
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