So you’re committed to improving diversity but things aren’t going to plan. What’s going wrong and how do you achieve better? We review why diversity initiatives fail and how to improve them.
Diversity remains a top priority across the business world, and specifically within the payments sector, and rightly so. Achieving a representative balance of gender and ethnically diverse employees isn’t just the right thing to do – it also makes excellent business sense.
According to McKinsey, diverse companies are more likely to financially outperform their peers; by 25% when considering gender and 36% for ethnicity. Why? “Diverse groups tend to engage in more rigorous decision-making” explains Evan Apfelbaum, a Boston University associate professor of organizational behavior. They take “more consideration of different perspectives, which lead them to decisions that are more objective; they’re less likely to make certain mistakes,”
And yet, diversity strategies are failing. Last year, for example there were only 4 black CEOs in the Fortune 500. Globally, women hold just 24% of leadership positions.
In payments, the situation can be even more stark. "Payments has the lowest share of women in the entry-level, manager, and senior-manager ranks,” concludes a McKinsey report, even though “it is the closest to gender parity in the C-suite (where 39 percent are women)." Findexable, though, found that “women make up barely 11% of all board members and 19% of company executives.”
Ethnic diversity in fintech stands at 20% in 2021 (improving significantly 12% in 2011) but a deeper dive reveals there are still significant issues. The proportion of black people working in fintech, for example, has remained static at just 3.1%.
Diversity remains a big problem, but big problems can be paralysing. Where do you start? And if things aren’t working, what needs to change?
The way to make progress is to break the challenge down into its component parts, looking at the specific reasons plans are failing. So here’s our take on the 5 biggest reasons Payments and other industries are failing to improve diversity, and how to do better.
Reason 1: Diversity isn’t central within the strategy
Diversity aims will never be achieved if they work in opposition to ‘core’ business goals. Instead, it is critical that diversity aspirations are baked into business objectives (perhaps not so hard; remember we know that diversity has been proven to improve financial performance.) The CEO should either own the diversity strategy or ensure that someone at the highest level is taking responsibility.
Solution: Commit to aligning diversity goals with core strategy
Reason 2: Cognitive biases remain pervasive
Despite over 81% of executives now receiving cognitive bias training, “positive effects of diversity training rarely last beyond a day or two” (HBR.com). Our biases are deeply engrained and hard to overcome. This highlights the absolute need for defined processes that ensure diversity and inclusivity, particularly when it comes to recruitment. We cannot rely on individuals to overcome their ‘gut feel’ by themselves.
Solution: Train to overcome bias, but also stick to processes
Reason 3: Hiring managers undermine diversity objectives
Understandably, hiring managers’ focus rest heavily on performance; they will often do everything they can to hire the ‘best’ candidate, sometimes overriding company-wide diversity objectives. Why is this wrong? Well, we’re all conditioned to see our own strongest qualities reflected back as ‘right’ for the role, but in fact this approach can lead to homogenous teams. Instead, managers throughout the organization should feel inspired regarding the broad benefits of diversity.
Solution: Inspire managers to become diversity champions
Reason 4: It’s harder to work with those differ to ourselves
The reason diversity is good for business is precisely because it makes things more difficult. When we work with people different to ourselves it’s harder to communicate and collaborate. Diverse companies often harbor more conflict and disagreement. In short, diversity can make things… hard! But its exactly by creating this friction that diversity within teams can produce far stronger outcomes that have been rigorously examined from multiple angles.
Solution: Know that diversity might make things harder, but it’s for good reason
Reason 5: Too much talk, not enough action
Ultimately, success cannot be achieved by plans, only by action. The glossiest diversity strategy – of which many companies are quick to promote publicly – is worth nothing without effective implementation. This comes back to core operational capabilities; diversity needs to be delivered with the same rigorous attention and efficiency that’s afforded to revenue-generating activities. Too much talk and not enough action is, arguably, the biggest cause of slow progress in diversity.
Solution: Once you have a plan, get on and implement it
Too many diversity initiatives in Payments are failing. It’s critical we get a grip of what’s causing companies to miss their targets – every day it doesn’t happen is another day when talent is being wasted.
By addressing some of the key reasons why diversity plans fail, we hope you’ll be able to enjoy greater success. Results that you can be truly proud of.
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Headcount is committed to improving diversity within the iGaming sector. To talk to us about your hiring plans, contact us today.