How to ACT Guidance Pillar 3: Challenge
01. Investing and valuing people
Culture is the foundation on which firms stand and the right people are an essential ingredient. Therefore, the way the firm invests in and values people is central to success of the business and a good culture. Increasingly, stakeholders want more visibility on how this is enacted. Firms should anticipate potential and existing employees, clients and other stakeholders having questions about their approach and how they ensure that policies are equitably applied and doing the intended job.
02. Challenge
Ensuring that policy coverage is extended to all staff, that best practice is being pursued and that uptake is being measured and monitored.
03. Question set
Are the DEI policies communicated to all staff?
How often is the DEI policy reviewed and approved at Board or Management level?
How does the Firm monitor and evaluate pay equity?
If there are no provisions related to DEI within the Firm’s policies, does it intend to address that?
a. Explain what the Firm intends to include regarding responsibilities linked to DEI targets, objectives, and goals as part of job descriptions for its employees.
b. Explain why the Firm does not intend to include responsibilities linked to DEI targets, objectives, and goals as part of job descriptions for its employees.
Does the Firm measure the uptake of DEI-related policies?
a. How does the Firm measure the uptake of policies (for example,disaggregation by protected characteristic, level or length of tenure, and at what stage of employment)?
Select the types of training or programs that are offered by the Firm to employees related to DEI: Multi-select (Internal mentoring scheme, External mentoring scheme access, Coaching, Skills development, Leadership training, Returner programs, Retention programs, Unconscious bias?
Describe any initiatives that the Firm has that supports equal participation and equal performance/bonus incentives.
What practices does the Firm take during promotions to ensure an equitable process?
Does the Firm conduct periodic reviews of the hiring process to provide insight into whether recruitment efforts promote diversity?
a. Explain how the Firm conducts periodic reviews of the hiring process to promote diversity.
Describe one of the Firm’s external hiring goals for people from under- represented groups e.g. according to gender, disability, neurodiversity, ethnicity, age, etc., and how progress is measured
a. Are senior management or the CEO briefed on progress towards hiring goals for under-represented groups?
Describe the employee benefits offered by the Firm.
a. Does the Firm intend to offer benefits that promote employees’ general wellbeing and flexible work-life balance?
04. What we expect to see
Enabling regular communication an access to policies is an important elements of normalising them.
Firms can consider how readily they share information with existing and potential employees. It is good practice to offer information to all staff before they need to ask for it, to avoid situations where they feel like they are highlighting an area of sensitive personal need, such as having to ask for details of parental leave policies.
The effectiveness of any policy is dependent on high-level sponsorship, acceptance, enactment and usage. The latter is particularly important as it demonstrates that it is normal to partake in the actions that policies make space for – challenging, for example, presenteeism. This is a role not just for the accountable executive but for any senior staff.
If the firm has not included DEI-related provisions within its policies, it should expect over time to have challenges from staff or stakeholders as to why. Firms that have no provisions will be at risk of staff attrition, particularly as staff needs (and wants) are changing. Other stakeholders will increasingly have questions, such as how the firm:
is tracking diversity data;
setting norms for inclusive practices;
ensuring equity in hiring, management and retention practices;
Demonstrating a level playing field for employees that will support the creation and maintenance of cognitively diverse teams.
These stakeholders will be aware that good practice here will support improved outcomes in investment practice and delivery for clients. A failure to be able to answer questions on why practices exist may result in mandates being lost.
Most stakeholders recognise that change requires time, however, so even if there is not full policy coverage, being able to demonstrate that commitments are being established, and that internal conversations are underway, is an important signal.
Measuring policy usage is not for a particular target to be achieved but to help shed light on whether the policy is actually accessible for everyone who wants to make use of it. This data, even if more limited to a summary from managers, can be compared to the other development and support offered to people. This can help identify retention gaps, for example, or barriers to participation.
Training and development is a core plank of creating more effective teams and investing in people. Manager and individual input will help to create the people needs assessment but this should also be reviewed to ensure it is similarly accessible to all. There may be bias in who gets access to opportunities from the issuing manager or due to individual employees being more insistent.
05. How to get there
Standalone DEI policies or those with DEI content should be the requirement that all staff have reviewed and accepted them. Staff competency should be clear, so the execution of roles and responsibilities relating to culture or the approach to DEI includes:
Understanding and applying key concepts;
How to embed and share information across the business; and
Access to mechanisms that allow staff to participate in, improve on and report concerns.
In order to ensure that policies are doing the intended job and apply to all staff, they will need timetabled, periodic reviews at intervals appropriate to the organisation. This could mean a light-touch oversight annually, with a more in-depth review every three years, which incorporates feedback from internal channels (line manager conversations, for example) and forums (ERGs, etc).
Consulting staff on what works is advised. This doesn’t mean every suggestion has to be implemented; it helps to understand the drivers of requests, and that can result in a different solution that better fits the needs of the employees and the business. Because the practical outcome of a policy review through a culture and DEI lens should be a workplace that is more engaged and effective, it is something that is recommended for all firms.
06. Monitoring pay equity
Effective monitoring of pay equity can be an indicator of overt or hidden discrimination in the way that different groups of employees are treated. Large gaps should be investigated and monitored, rather than accepting that a gap is always likely to be present in a particular area. Such gaps generally arise from unequal starting positions.
Many firms have salary banding linked to a competency framework for some if not all roles. This approach will enable flexibility that accounts for experience, performance and certain market characteristics when hiring into roles. Firms should take steps to value equitably across candidates and recognise that pre-existing bias may mean candidates have previously been prevented from gaining experience that they would normally need in order to progress.
These practices should be accompanied with ongoing review of development and progression across the business to ensure that people are moving upwards equitably. This is in addition, as noted above, to monitoring for differing interpretation of roles, and variance in discretionary rewards that can cause pay gaps to emerge.
07. Uptake of policy and training
Firms may not formally be measuring policy uptake or there may be barriers at a very granular level, so as a starting point can ask managers to provide light-touch feedback on what they have seen happening and requests that have come from staff.
Alternatively, the firm can do a periodic audit across a fixed time period, including via an employee survey or anonymous feedback. This will help to see practice across the business and what policies are most valued and working. More formal or comprehensive logging can be developed, if helpful – the goal being to understand that uptake is not limited to certain categories of staff. If the firm has the resource available, uptake measured at group or firm level at a total or demonstrate what policies employees find most accessible and useful. Putting this data next to employee engagement data that asks about the quality and applicability of policies will round off the picture. It will ensure that not only are policies available but that staff feel able to request accommodations or benefit from their provisions.
An established training schedule, including for new starters, helps create a transparent and equitable base for everyone to start from. Categories that can apply to all staff in the same way as health and safety or compliance would include general knowledge of DEI policies, company values and employee expectations, or training in identifying and reducing or eliminating bias. Other programmes will be for selected groups with particular functions, including but Good managerial training is a channel to enable equitable application policies as well as access to training and development. At the very simplest level, a good manager will understand the different needs of individuals on the team as well the benefits to the team from supporting members to be more effective. Being a good manager is not a given, however, and many managers are placed within the role as a way to progress rather than this being the desired career pathway. Management training should include ways for the manager to improve engagement with their employees. This should deliver on a firm-wide way of recognising talent and development needs.
Common programme offerings include mentoring (which may be peer-to-peer, reverse mentoring, mentoring circles, across teams, via external peer firms or external to industry, to name a few), coaching and skills-based programmes. Others may target specific moments in a career, including those returning from extended leave or career breaks, those moving across the organisation to new functions or teams, those with leadership potential, and those needing enhanced value but without significant progression (likely focused on retention). Often, firms will have developed some kind of leadership track or training but this will be limited in application, and bias may already have affected who is recognised as being on that track.
There is no magic formula for developmental training, however there should be information gathering on what to provide, as well as what works. It is helpful to consult with employees on both the types of support they would like, as well as the needs they are aiming to meet, and understanding that knowledge of professional development offerings and what they are for will be varied across staff. They may ask for the items they see as most visible or desirable. Mentoring is an oft-requested facility that can be extremely useful if well- deployed. But a request for mentoring can also be a more general request for an employee to get more specific management attention and feedback.
While internal training may be the most appropriate process for most staff to understand the specifics of the company values and approach, there are obviously many additional providers that can support on specific topics and provide educational opportunities to engage staff. Ideally, opportunities should be available for all employees to support cultural belonging and ensure all staff are able to contribute.
“There is no magic formula for developmental training, however there should be information gathering on what to provide, as well as what works”
08. Further resources and ideas
Davis and Company accessed July 2022. How to effectively communicate with employees about diversity, equity and inclusion
Chartered Institute of Personnel and Development, 2019. Diversity management that works: An evidence-based view
https://www.cipd.co.uk/Images/7926-diversity-and-inclusion-report-revised_tcm18- 65334.pdf
Personnel Today, 2003. How to measure the effectiveness of your diversity programme
https://www.personneltoday.com/hr/how-to-measure-the-effectiveness-of-your- diversity-programme/
Disability:IN, accessed July 2022. DEI Best Practices Collection
https://disabilityin.org/what-we-do/disability-equality-index/dei-best-practices- collection/