How to build an effective diversity and inclusion strategy - learnings from Legal & General

Profile picture for user Madeline Bennett By Madeline Bennett July 8, 2019
Summary:
Diversity and inclusion policies matter - and so does the practicality of putting them into real-world action.

Legal and General

You’d be hard-pressed to find an organisation (in the Western world, at least) which doesn’t list diversity and inclusion (D&I) as a priority. However, while it’s one thing to express an interest in hiring and retaining a more balanced workforce, actually achieving this is a huge challenge, as evidenced by the lack of diversity across most workplaces.

Legal & General Investment Management (LGIM) started its own D&I journey several years ago, and has set itself some aggressive targets to work towards. At the recent Women of Silicon Roundabout event in London, the firm outlined the different elements it is focusing on, what has worked well and the potential pitfalls to avoid.

Colette Comerford, Head of Inclusion & Culture at LGIM, noted that in most organisations, it’s usually one person who sets the wider D&I ball in motion, and that could be someone in HR, someone having a conversation about gender, or someone from the leadership team talking to customers.

One challenge here is ensuring the person who kicks off the conversation is someone who can influence change and get their voice heard. And here’s where it’s important to focus on the business case for D&I. According to Comerford, the benefits should be clear: attracting, engaging and retaining diverse talent, driving better business performance and innovation in your teams, enhancing client relationships and having a positive impact on society.

But for those wanting more hard facts, there’s plenty of evidence around. Comerford pointed to the latest McKinsey & Co Delivering through diversity report from 2018, which shows that companies in the top quartile for gender diversity on the executive team were 21% more likely to outperform in profitability. Add in ethnicity and cultural diversity as well, and firms are 33% more likely to see an increase of profitability. The report also revealed that LGBT people are 70% more likely to leave their current job if they are still in the closet at work in the next three years.

On a wider economic scale, McKinsey predicted that if we achieved gender equality in the workforce, GDP would increase by 10% by 2030, equal to $12 trillion. Comerford added:

There's enough evidence out there really. If your starting point is, you put your hand up and someone says go back and get the evidence on why should we do this, there’s plenty out there to look at. But most companies now, for purposes around having a positive impact on society, then it just feels like the right thing to do to better effect society and drive better performance and give more back to your customers as well.

Behaviors

For LGIM, once it had decided to focus on D&I, there was a lot of explicit discussion about culture, with the tone set by the leadership team. This included committing to increasing the diversity of its workforce and building an inclusive culture that encourages people to be the best they can be.

LGIM has three behaviours, which underpin the business - be straightforward, be purposeful and be collaborative; along with a set of key values - trusted, listening, embrace change, diversity and learning:

The behaviors are set by the leadership team, and it’s really important that they're demonstrating those on a day to day basis.

Once all that was in place, the firm began an HR project around the policy process, covering direct hiring, people development, rewards and recognition, equal pay and the gender pay gap.

It also looked at the working environment and flexibility in the workplace. Comerford said that while in the past that would particularly have focused on women, now the business wants flexibility to create a healthy environment for all employees, wherever they're working, to perform their best work.

LGIM organised its D&I strategy into four key areas: leadership-led; increasing cognitive diversity; increase brand recognition; and build inclusive culture.

To achieve the leadership-led aspect, the business set specific targets linked to pay. Diversity is about 40% of the performance target for leaders, and executives have to demonstrate the agreed behaviours and values. Comerford explained:

When you go to performance reviews, where you set your objectives at the start, they're set against the three behaviours. But what you're also looking at is measurable metrics, have we changed the dial on our commitments, gender diversity, particularly at those senior levels. Have we given people opportunities to go on a talent plan, are they progressing? As they go through end of year performance, those are the sorts of core discussions about how did your behaviour set the tone and follow that through, not just about what the profitability of the company is.

You can't just say, 'I did my ten things in my job, and actually I behaved atrociously'. You put in actual evidence around what did I do to be positive in diversity. So it could be in parts of your day role, but also in terms of getting involved in network groups or through recruitment.

LGIM set itself a public target of women representing 30% of executive roles by 2021, and 50/50 balanced representation roles by 2020. Comerford noted:

I think in terms of having 50/50 across all the levels is going to be tricky, but we've got a 30 percent commitment anyway. Internally we're still aiming for 40 percent but we still want to push beyond that.

Comerford doesn’t expect LGIM to get criticised for not achieving the 50/50 target, especially as the firm is working on other areas like closing the gender pay gap and responsible investments:

For us as a company, we don't invest in companies that do not have gender diversity in the leadership team. So last year we voted against 108 companies and used our voting to push back and say you are the people that can make the change here, not just government commitments or industry commitments. We as investors choose not to do this because the evidence going back to the business case says that if you have this, you have a healthy environment.

LGIM has also launched a fund that will only invest in companies that have gender diversity on the leadership team.

The increasing cognitive diversity pillar of the D&I strategy covers how to attract and retain diverse talent across gender, ethnicity, different backgrounds and different levels of education.

Talent development is crucial here. HR should be having conversations with managers to check if they’ve overlooked anybody who could be on a succession plan, breaking this down by part-time staff and age along with other minority groups. The key is to steer managers away from just hiring and promoting who they feel comfortable with:

You have to be really vigilant in trying to build in mechanisms through the data, through those conversations in terms of drawing out what decisions are they making. It's that unconscious bias but actually in some ways it's conscious decision making.

Comerford added that a lot of job descriptions have masculine language, which could be pushing away certain people, while career sites featuring predominantly white men need to change to reflect the environment.

Firms also need to be ready to deal with negative language around D&I initiatives leading to recruitment and promotions for the sake of achieving targets, which isn’t the right approach in Comerford’s opinion. She said a number of organisations and mentors are grappling with this view, and the way to overcome it is to create the right environment and flexibility, and make sure the benefits are being offered to everybody.

Networking

Networks are another key factor in supporting D&I, as these are how people connect to one another and help build an inclusive culture, said Comerford: 

They let people talk about things that might be holding them back or where they might be able to move forward in their careers.

LGIM established seven D&I network groups: Gender, Family, LGBT, Ethnicity/Race, Socio-Economic Mobility, Neurodiversity, and Health and Wellbeing. These all started at the same time, and are championed by a different member of the leadership team, who each stepped forward as they identified with those particular teams. Comerford advised:

It's really important to get people who are passionate about the agenda, who feel they can really drive change, and who will work with other leaders as well.

The network groups help LGIM on the brand recognition aspect of its D&I strategy in creating ambassadors for each community. The groups each have their own objectives, for example ethnic representation has increased within the business over the last few years so the Ethnicity/Race group’s role is now around mentoring those people and how to get them to the next level.

The Socio-economic Mobility network came out of an awareness there aren’t enough people in the business from different backgrounds, so it centres on reaching out to young people and those based outside of London.

The Family network brings all the groups together, reflecting modern family life that includes single parenting and same-sex parenting, childcare, flexibility and elderly care. Comerford explained: 

They're able to tackle the potential barriers there have been from the past, and think about how do we change that using digital and the locations and the geographies that we're in.

And for individuals working at companies yet to prioritise or vocalise on D&I, Comerford said that even shifting small workday habits has a benefit:

Sometimes we just genuinely pick the people that we like or feel comfortable with having lunch with but we should actually disrupt that a little bit sometimes and ask, who else can I ask to join me for lunch and bring in more people. This is where you create that sense of belonging, comfort, safety for people, it brings in different backgrounds and gets different viewpoints.

My take

LGIM’s approach should provide a useful framework for any business wanting to implement or expand its own D&I strategy. While the scope of the firm’s project could be off-putting to some, hopefully there’s something in here that sparks enough interest to at least begin a conversation – and you can always start small and pick just one of the above aspects.