Fortnightly financial five minutes #31 Sophie Hulm
Nigel Yeates, Communications and Stakeholder Business Partner, speaks to Sophie Hulm, Chief Executive at Progress Together about socio-economic diversity, the culture of the financial services sector and priorities moving forward.
Progress Together identified a gap in the UK financial services sector. Please tell us about the organisation and what your role involves.
Progress Together is a not-for-profit membership body which aims to level the playing field across UK financial services. We know that employees from working-class backgrounds progress 25% slower than peers but with no link to job performance.
Progress Together has over 40 members, representing a third of the UK financial services workforce. They come together to share what works and, importantly, what doesn't work in boosting socio-economic diversity at senior levels. We provide a safe environment to benchmark anonymously against peers, as well as guidance on how to collect workforce data on socio-economic background, and importantly we share insights on which interventions work and what good looks like.
While employers are going to great lengths (justifiably so) to diversify junior talent pipelines, we know that promotions and senior roles are all too often awarded to individuals who fit the mould or have established connections. Employers are missing out on high-performing talent.
What do you see as the key current challenges? Does the financial services sector's culture need to evolve?
Data is the key challenge, which is why we support our members with this. An asset manager told us they had seen a fourfold increase in enquiries from investors about socio-economic diversity in the last 12 months. Workforce socio-economic diversity fits squarely within the ‘S’ of ESG (Environmental, Social and Governance) and supports the new Consumer Duty regulatory requirements as identified in the FCA Consultation Paper on diversity and inclusion.
Both the FCA and PRA are clear that cognitive diversity across senior management and on the board is required for sound decision making. But without a complete data set, stakeholders, including the regulators and investors, will not have sufficiently good-quality data to track and monitor diversity and identify the risks this represents.
We know that a diverse range of voices at the top table can have a positive impact on company culture. Having role models at the top from similar backgrounds can help build a sense of inclusion and belonging. Companies that are mindful of this and want to develop a positive culture are already working with Progress Together. But to create a truly competitive sector where a positive culture maximises productivity, more firms need to join them.
FSCS started collecting data on our staff's socio-economic backgrounds and progression in early 2023. How does public sector organisation data gathering and reporting compare to industry?
We know that financial services has the highest class paygap of all sectors and that the public sector has the eighth highest. If you haven’t read The Class Ceiling by Sam Friedman and Daniel Laurison, I highly recommend it.
In terms of data collecting and reporting, the public sector is bound by the Equalities Act, but socio-economic background is not a protected characteristic, so public bodies in England are no more likely to collect this data than any other sector. However, when we look at other regulators, we can see that the FCA publish their workforce representation as well as their Executive Committee.
For its regulated firms, the Solicitors Regulatory Authority has mandated the collection of socio-economic data since 2013 and data is reported in almost 100% of cases. Mandating data collection for this length of time has supported the interventions needed to improve the socio-economic diversity of the sector. Law is the best-represented sector in the Social Mobility Employer Index Report 2023.
The Institute of Chartered Accountants in England and Wales has been collecting socio-economic data for probate services since March 2015. In its report ICAEW Probate Diversity Statistics 2023 (pdf 0.76MB), only 6.3% of respondents answered ‘prefer not to say’ to the socio-economic question ‘thinking back to when you were aged about 14, which best describes the sort of work the main / highest income earner in your household did in their main job?’.
In September 2023, you produced a report that is the largest study into socio-economic diversity and progression in financial services in the world. What were the headlines and how does this inform the sector in terms of next steps?
Our report, ‘Shaping our Economy’, which surveyed almost 150,000 financial services employees, revealed that socio-economic background has a greater impact on career progression than gender or ethnicity. Our report also showed that women face a double disadvantage, progressing 21% slower than their peers from more advantaged families, and that 20% of senior employees attended an independent school – more than triple the national average of 6.4%.
We repeatedly hear personal stories from financial services employees who started out in working-class families, on council estates, in single-parent families and who attended state schools, who have struggled to reach their potential. This is not because of a lack of talent. There’s a combination of reasons.
- Networks. People from higher socio-economic backgrounds (for example, their parents were bankers or lawyers) are more likely to have access to professional-level contacts. People with links in the sector can often be given opportunities such as introductions, internships and career advice unavailable to others.
- Insights and role models. People from working-class backgrounds (for example, their parents were electricians or receptionists) are more likely to lack insight into business behaviours, the university application process, the breadth of careers available and the understanding of unwritten codes.
- Culture. People from lower socio-economic backgrounds often feel they have to conform to a company’s dominant culture in order to ‘fit in’. For example, employees from lower socio-economic backgrounds speak about being unable to join in with conversations about skiing trips, golf, private schooling or university experiences. They often feel that their accent can hold them back, with 23% reporting anxiety over their accent in the workplace and 21% feeling that it affects their chance of career progression. There is a perception within the industry that opportunities are based on polish rather than potential.
- Processes. If companies operate via a maze of opaque practices and processes around work allocation, promotions and access to sponsors, people from lower socio-economic backgrounds can feel like they are kept in the dark about how to progress and how to gain the experience they need to move up.
All of these barriers contribute to the perception that people from lower socio-economic backgrounds do not ‘fit in’. The recommendations for employers are included in our report (pdf 3.07MB).
To offer solutions to these problems, we have launched a toolkit, which offers our members a step-by-step guide to building a more socio-economically diverse workplace. There is a public (slimmed down) version on Progress Together's website. The toolkit includes templates and how-to guides on all aspects of the diversity journey, from talent acquisition and collecting data to influencing leadership and measuring impact.
What have been your organisation's biggest achievements so far and what are your top three priorities for 2024?
We launched Progress Together just over a year ago. We now have 30% of the UK financial services workforce represented across our membership and it’s growing all the time. My brilliant team have worked hard to provide our members with numerous opportunities to work together across the sector, including a calendar of workshops, webinars, and peer-to-peer networking. I’m really proud of everything they and our members, including FSCS, have achieved. Not least, our latest data report, mentioned above. Authored by our data partner, the Bridge Group, it is the largest dataset on socio-economic diversity internationally.
Over the coming year, our priorities are to 1) launch our first Progression Awards to recognise employers who have made an impact, 2) recruit more non-London based members, as well as those from the wealth management, investment banking, private equity and fintech sub-sectors, 3) build up insights on ESG to help our diversity and inclusion contacts get internal buy-in.
And finally, on a more personal note, a question we ask most of our guests: if £10,000 landed in your lap tomorrow, what would you do with it?
I would re-wire our house. A critical but boring way to spend money.
Thanks very much Sophie, we look forward to seeing your work evolve and coming on that journey with you.
For more information on what FSCS protects, see our What we cover page.
The content of any discussions shouldn't be taken as an indication of future FSCS policy positions. The views expressed by guests are their own and don't reflect the views of FSCS.
At FSCS we're on a mission to achieve an equal experience for all staff. As part of this, we became a member of Progress Together on 1 November 2022.
We would love everyone to dedicate a regular extra five minutes to check their financial products and services are FSCS protected.