Different socioeconomic backgrounds are a key source of diversity of thought, but also intersect with many other diversity traits. The worlds of business and finance cannot achieve true diversity without taking it into account.
Read this article to understand:
- Why it makes sense to recruit top talent from across society, rather than competing with blue-chip companies to hire from a narrow pool of like-minded candidates
- The challenges of combatting a deep-seated desire to conform, which leads to a tyranny of ‘fit’, a misrecognition of merit, and a tendency for social class to be self-sustaining
- How we can start cracking the ‘class ceiling’ to make financial professions more socioeconomically diverse and inclusive
Leave three Englishmen in a room and they will invent a rule that prevents a fourth joining them
Julian Fellowes’s 2004 novel Snobs1 hilariously depicts the inner workings of the British upper class. Along the way, it provides excellent insight into all the small ways through which its members recognise and accept each other – typically at the exclusion of everyone else.
Satire aside, big business and finance are not so different from the world Fellowes describes. Research commissioned by the City of London Corporation in November 2020 found that 89 per cent of senior-level employees in financial services were from a higher socioeconomic background as judged by parental occupation.2
Yet socioeconomic diversity is only just starting to be considered as part of companies’ diversity and inclusion (D&I) initiatives, both because it is a less visible trait than gender or ethnicity, meaning it is easy to overlook, and because – shockingly – discrimination based on class tends to remain socially accepted to this day.3
There is, however, a strong case for finance and other elite professions to become more socially inclusive.
Being civilised makes moral and commercial sense
“In a civilised society, there should be no link between educational opportunities and family income, so that all young people are given the chance to fulfil their potential regardless of their family background, school or where they live,” notes Lee Elliot Major, professor of social mobility at Exeter University and former CEO of the Sutton Trust.4
D&I cannot be resolved without taking socioeconomic diversity into account
Mirza Baig, global head of ESG investments at Aviva Investors, adds that, since there is no link between a person’s talent and their socioeconomic background, employers are likely to hire a much stronger set of candidates if they look at those with the highest potential across a wide social spectrum.5
Additionally, because socioeconomic diversity intersects with so many other diversity traits, D&I cannot be resolved without taking it into account, ensuring one characteristic is not promoted at the expense of others.
Constructive conflict and missed opportunities
In her book Wilful Blindness, award-winning chief executive and author Margaret Heffernan wrote:
“Fostering diverse groups that can, and do, look for and debate problems is the job of governance bodies. In this issue, nothing less than the legitimacy of business is at stake.”6
Baig adds that, more broadly across organisations, individuals from lower socioeconomic backgrounds are not only cognitively more diverse due to their different experiences, and thereby able to generate constructive conflict, but also tend to be more resilient, innovative and proactive.
That's the missed opportunity we suffer because we don't really embrace socioeconomic diversity
Randall Peterson, professor of organisational behaviour at London Business School, also argues that, while we remain short on data, diversity delivers very specific outcomes and processes that benefit organisations.
“There's a reason why a lot of the Fintech for mobile phones came out of Africa and not here,” he explains. “Those people had real insight into how average people are banking but we didn't because we aren't diverse enough in our own banks. That's the missed opportunity we suffer because we don't really embrace socioeconomic diversity.”
However, changing hiring practices to broaden the talent pool and transforming company cultures to foster constructive conflict is fraught with difficulties.
A complex challenge
Citing academic studies, Heffernan noted: “We conform because to do so seems to give our life meaning. This is so fundamental a part of our evolutionary make-up that it is strong enough to make us give the wrong answers to questions, and strong enough to make us disregard moral lessons absorbed since childhood.7
This has three consequences. Firstly, corporate D&I initiatives can make people feel exposed, when what they want is to blend in. “When you’re from an ethnic minority, you’re already incredibly visible. D&I initiatives can intensify that feeling of being different,” says Vaidehee Sachdev, people pillar lead and senior impact analyst at Aviva Investors.
Secondly, managers often feel irked by those who express different viewpoints, which in large part explains their tendency to hire, sponsor and promote those most like themselves, and put unconscious pressure on dissenters to conform.
Thirdly, people from different backgrounds who make it in elite professions tend to shed their identity to fit in.
Class tends to be self-sustaining
Sam Friedman, sociologist and co-author of The Class Ceiling, explains this can create a sense of guilt or betrayal about abandoning their origins, which can partly explain why people from working-class backgrounds are not clamouring for promotions and leadership positions. “And so, decisions to stay where they are, to not migrate to London for example, are more complicated than simply a lack of ambition or confidence,” he says.
Peterson adds this is reinforced by the fact social groups tend to be self-sustaining. Rising inequality has only added to the separation between classes, as phenomena like postcode wars for good schools and rising house prices have increasingly made people physically ghettoised, drastically reducing the opportunities for interaction and familiarity.
Our desire for conformity, enhanced by a greater lack of familiarity across social classes, means that in professions dominated by high socioeconomic individuals like finance, the self-presentational baggage or cultural capital of a privileged class background becomes a dominant behavioural code we unconsciously tend to misrecognise as merit, intelligence and sophistication.8
Data, definitions and direction
Support for greater social mobility is also hindered by a lack of clear and simple definitions around socioeconomic status itself, how to measure socioeconomic diversity in the workplace, how to make a formal business case for it and what actions are necessary.
We need more and better data. We need to give it time and attention
Peterson adds that, in the UK, specific initiatives were stopped, and the government has hardly collected any data in the last 30 years. “And, of course, because it can be hard to define, a lot of companies also didn't collect data because it wasn't required, so we have surprisingly thin data,” he says. “We need more and better data. We need to give it time and attention. Otherwise, everybody has their own point of view and there's very little to call to action.”
“We haven't set out on the journey and that's the problem,” says Peterson. “First of all, collecting data and committing to making a change would be a huge step forward. As we struggle to make the change, we will learn along the way.”
In a recent Investment Week article, James Whiteman and David Aujla, co-leads of the Diversity Project’s social mobility workstream, say a good starting point is to ask the four key questions suggested by the Social Mobility Commission in their Toolkit9 for employers: main household earner parental occupation at age 14; type of school attended at age 11–16; free-school meal eligibility; and highest parental qualification.10
Think about talent differently
As for new recruits, Whiteman and Aujla recommend 80 per cent of firms’ intern and graduate intake should be from state schools, which still allows for over-representation of privately educated graduates of just under three times.
To achieve this, Elliot Major says the basic elements involve including socioeconomic diversity in the D&I strategy, gathering data, and setting up formal networking groups and mentoring programmes. But to take it to the next level, firms must tackle the ‘three Ts’: talent, targets and top. Targets are self-explanatory, and by top, Elliot Major means obtaining crucial C-suite buy-in to change the company culture. But, for him, talent comes first.
Organisations and hiring managers need to think about talent in different ways
“Organisations and hiring managers need to think about talent in different ways; that means thinking about apprenticeships as much as graduates,” he says. “We should challenge ourselves more on how we describe and, more accurately, assess the skills we need for different jobs. Instead of using middle-class proxies of competence articulacy, we should try harder.”
Recruitment efforts should also push back against ‘degree inflation’, include outreach programmes to educate a wider audience about careers in finance, ban unpaid internships that discriminate against those who cannot afford to work without a wage, and broaden internships and apprenticeships to include more front-office roles that are more likely to lead to senior positions later in people’s careers.11,12
All these efforts must take intersectionality into account, to avoid any unintended consequences of silos and deliver the greatest support to the most disadvantaged.13
Misrecognition of merit also affects the promotion process. Paul Ingram, Kravis professor of business at Columbia Business School, recommends promoting people from across departments, as these tend to be stratified according to social class.14
Formal mentoring and sponsorship are crucial, giving employees an advocate who will fight their corner and put them in front of the right people.15 “It’s not just the promotion opportunities; it’s the type of work that gets allocated,” adds Whiteman. “If you give someone a high-profile project and they manage to deliver it, it can catalyse their career. But there can be unconscious bias in who managers select for a project.”
Whiteman also says career progression is linked to creating a company culture that delivers the right support and allows people to feel included. Friedman urges policymakers to take direct and urgent action to tackle the class ceiling and believes class pay-gap reporting should become mandatory.
Now it's more about inclusion and diversity rather than simply fitting in
For Peterson, inclusion entails looking at two problems. The first is fighting prejudice. The second is figuring out how to help people succeed without giving up who they are.
“Ten years ago, there was an assumption people would be shoehorned into a middle-class culture,” says Elliot Major. “The debate is more interesting now; we are challenging cultures so they become more inclusive of people from different backgrounds. It is more about inclusion and diversity rather than simply fitting in.”