With the introduction of the Senior Managers and Certification Regime (SM&CR) fast approaching for general insurance firms, it is worth considering the FCA’s stance on diversity and inclusion. The FCA has highlighted diversity and inclusion as a significant factor in improving conduct in financial services. A recent speech on ‘Diversity: delivering excellence for the future’ emphasises this point. In it, Nausicaa Delfas, Executive Director of International at the FCA, talks about why diversity is important and how it “remains a key supervisory question for the FCA”.
Delfas underlines the responsibility of employers, reminding them that opportunities need to be there for everyone “whatever their social background, gender, ethnicity, or protected characteristics, according to their talents and ambitions”. It is for employers to embrace these changes and ensure that diverse workforces are successful ones.
It is surprising, despite the regulator’s clear focus in this area, that many firms do not seem to fully understand diversity and inclusion, and the difference between the two. While often linked together, they are different concepts.
Put in simple terms, diversity is a mix of differences (and remember that an individual is never diverse – a collective and how they exist in relation to each other is what creates diversity). Inclusion is making the mix work.
Diversity is merely the presence of difference. Inclusion, however, involves actively ensuring that those differences are welcomed and valued. Essentially, diversity is something a workplace has, whereas inclusion is something it does. It is all too easy to have token individuals representing marginalised identities sitting within an office, allowing a firm to feel it has played its part in promoting diversity and inclusion in the workplace – but this is not enough.
It is counter-productive to develop a workforce with, for example, racial, ethnic, gender and age differences, unless you work to be inclusive of those differences. Recruiting diversely is, of course, the natural starting point, but organisations need to take this further. This can be achieved through harnessing the ideas and perspectives of a diverse workforce to create business value and develop employees – each and every individual must be respected and nurtured.
Without inclusion, diversity has little real impact; it can often become a ‘tick box’ exercise. No matter how diverse the people, the culture of the firm will never alter without inclusion.
It would be advisable for firms to document their approach to this prominent issue in order to evidence to the FCA how they successfully promote diversity and inclusion throughout their organisation.