In a recent speech delivered at the Ethnic Diversity in the City and Corporate UK Summit, Georgina Philippou (senior adviser to the FCA on the public sector equality duty) provided some interesting insights into how the FCA is using diversity and inclusion to evaluate the culture in the firms it regulates, and the steps the FCA is taking to lead by example.
Ms Philippou remarked that a "healthy" financial services industry needs diversity and inclusion to run through all its regulatory processes and that whilst this is a shared responsibility, "the FCA has an important responsibility both to lead by example, and to use our regulatory powers, hard and soft, to advance the agenda."
While acknowledging that there is "no one size fits all" approach to a firm’s culture and that it is not appropriate for the FCA to be prescriptive, she noted that the FCA uses four key drivers to assess a "healthy culture" in firms:
- a meaningful purpose;
- an appropriate governance structure to facilitate good decision making;
- effective leadership including the tone from the top; and
- people policies that incentivise behaviours which create an inclusive environment.
What particularly resonated with me was the observation that employees need to feel safe to "speak up" in an organisation; but it is absolutely incumbent on leaders to "listen up" too – and to take decisive and firm behaviour. This is critical to demonstrate a firm’s true commitment (beyond merely "window-dressing") to diversity and inclusion, and to enable employees to feel confident to bring their "whole selves" to work.
In the same way that the FCA evaluates a firm’s commitment to responsible market conduct and systemic change by reference to its response to any regulatory breach, Ms Philippou observed that a firm's response to employees speaking up will be key to determining whether colleagues will feel safe to speak up again, and a measure of its attitude to diversity and inclusion.