Financial and professional services companies should ensure at least 50% of senior leaders come from working class or lower socio-economic backgrounds by 2030. The target has been set by the City of London Corporation, which oversees work in the capital’s Square Mile.
A report published by the Corporation-led Socio-Economic Diversity Taskforce found that while around half of all employees in the sectors were from backgrounds classed as non-professional, only 36% of them have risen to senior level. They were also found to progress 25% more slowly than their peers, and get paid on average £17,500 a year less.
The report commits to review progress towards the 50% target in 2025. By 2030, all organizations in both sectors will be expected to gather data on the socio-economic backgrounds of their staff. And the report suggest regulators set mandatory targets for boosting working-class representation in senior roles.
Vital to act now
Taskforce chair Catherine McGuiness said she was “not expecting our output to be comfortable reading, nor our recommendations to be universally acclaimed”. But, she said: “It is vital that UK financial and professional services firms act now to enable talented people to rise to the top whatever their background. We need to break the ‘class’ ceiling – removing unfair barriers to progression is not only the right thing to do, it will enable firms to boost productivity, retention levels and innovation.”
Former Bank of England chair Andy Haldane, who co-chaired the Taskforce, said: “We cannot grow as a country unless people grow. For too long, personal growth has been constrained by people’s socio-economic background. Today’s recommendations signal a break from the past, with financial and professional services playing a leading role in unleashing the potential in people, organizations and the economy at large.”
The Taskforce worked with more than 100 representatives of the sectors to compile the final recommendations. The report comes weeks after thinktank the Social Mobility Foundation (SMF) identified a class pay gap in professional and managerial occupations. Professor Sam Friedman – whose book The Class Ceiling, written with Dr Daniel Laurison in 2019. was one of the first to research the class pay gap in the modern economy – said class had been “completely absent from equality and diversity agendas. It’s now something that is key to discussions”.
Diversity and talent
The SMF found only three companies currently gather data on socio-economic background, with two in financial services – the three are PwC, KPMG, and law firm Clifford Chance. PwC UK chair Kevin Ellis told The Guardian why his firm viewed addressing the class issue as vital for the business. “We’ve got 46,000 clients from all kinds of backgrounds, geographies, and unless we represent our clients we’re irrelevant. So it’s really important that we have a diverse workforce. Alongside that, if you’re trying to be a magnet for talent, you’ve got to make sure that you don’t exclude the talent you’re trying to attract.”
Bringing issues around class onto the diversity and inclusion agenda poses unique challenges for regulators. Attitudes to class and the discussion of it differ widely just between the UK and US as, for example, something this piece from the Harvard Business review alludes to. Plus there is a tendency to equate progress – and also definitions of intelligence – with class, which automatically defines successful working class people as middle class because of the success they have achieved.