Series One, Episode One: Leadership, Race & Recruitment

Julia: Hello, and welcome to Diversity Podcast. My name is Julia Streets and on every episode we’re keen to hear the voices and perspectives of recognised champions and professionals from right across the financial services sector. Today it is a great pleasure to welcome to the show Justine Lutterodt and Heather Melville, OBE.

Justine is Director and Leadership Consultant at the Centre for Synchronous Leadership. She holds an MSC from the London School of Economics in Organisational Psychology and a BA from Yale in Maths and Philosophy. Today Justine works with senior leaders across a wide range of sectors helping them to develop as leaders, drive organisational change, and inspire and lead with authenticity, ethics, and passion. Last year she was named one of Britain’s Most Influential Entrepreneurs by BE Mogul, which recognises the most influential and inspirational black business owners in Britain. Justine, it is a pleasure to have you on the show and thank you for joining us.

Heather Melville received, surely, one of the greatest gongs of all time as this year she was listed in the Queen’s Birthday Honors List entitling her to add the letters OBE to her already widely-known name. A banker by trade, I should also stress that she’s not here today to represent the views of her employer, she is notably the Founder and the Global Chair of RBS’s Focused Women’s Network. She is also the Chair of the Advisory Committee for the Charter of Management Institute’s CMI Women Group and was listed this year and last in the Financial Times’ UPstanding 100 Executive BAME Power List in the UK and the US and their 2017 EMpower 100 ethnic minority leaders. Heather, thank you so much for joining us.

As always, it’s really important that the discussions don’t run the risk of becoming too salesy or self-serving and I do always warn our guests that the moment it feels like that, I will interject. However, it is important because first of all you’ve given your time to join us today, but also because there are no doubt initiatives that you are working with that can really make an impact. We give each guest one minute to talk about their particular areas of focus at the moment and I invite each of you to explain more about what you’re up to.

Heather, let me start with you. I’m setting the clock and your time starts now.

Heather: I like to describe myself as a disruptive legend. One, in business; two, around the whole diversity and inclusion piece. For me, it’s around not talking about creating diverse businesses, but doing it. It’s really about bringing through the talent on all levels of diversity, but I really focus around BAME and gender because they’re the two areas that I think really are lagging behind. Actually, one of the areas….BAME…where people are quite scared to use the word ‘black’. Given how much money they contribute to the UK economy, which is £34 billion, I feel that it’s now time to really rake things up a little bit.

Julia: Thank you very much and you used less than 60 seconds, so that’s very impressive. Wonderful. Thank you. There’s much in there we will be coming back to talk about. Justine, you have one minute and your time starts now.

Justine: Well, it’s a pleasure to be here and personally my connection with this is that diversity has been my life story. My mother is English, German, with a drop of Irish. My father is Ghanaian, Nigerian, with a drop of German, which is my last name. For me, diversity has been a life journey. Two initiatives that we’re doing right now that are interesting and relevant: One is called Walk the Tightrope and it’s a program around the journey to power with integrity. The other is Mindful Exclusion, which is an initiative looking at how power flows through organisations. We’re looking at this both at the individual level and also at the systemic level. I think that diversity taps very much into power dynamics. That’s one aspect of it that we don’t always talk about, but is also very relevant for business effectiveness.

The final thing I’ll say on Mindful Exclusion is that as part of the research we’ve done, we’ve now interviewed over 150 employee network leaders, employee network sponsors, Heads of D&I, and conducted what looks like the largest study ever on employee network leadership. This has given us really rich insight into what’s going on in the LGBT communities, the ethnic minority communities, as well as the gender communities. Coming off the back of that, I feel quite charged up around the change that’s going on.

Julia: Amazing. We’d love to talk more about the research a little bit later on, or perhaps we could help promote that research for you as it comes through.

Heather, you were talking about the commerciality and I think that’s incredibly important. As I spent time with organisations talking about what’s really going to drive change, it is around financial performance. If we start with a business objective, that is where people will wake up and realise there’s potential, or that they’re leaving potential on the table; that comes into questions around leadership, but is this too simplistic an ambition? Justine, let me start with you.

Justine: I think that diversity is, and continues to be, misunderstood and it’s very easy to misunderstand it because you get a group of people who are pro-diversity and a group of people who are happy to keep things as they are. It leads to a simplistic conversation. Now, what I’m going to say that’s a little provocative is that diversity on its own doesn’t actually improve performance. What happens is diversity increases the level of conflict and the muscles you need to work through that conflict, which are the same muscles you need for leadership. Those are the muscles that give you an edge and improve performance. I look at diversity as more of a litmus test for what’s actually going on in the culture than on its own inherently.

That’s why there’s some confusion in the results from the studies where you see some studies saying that yes, it does seem to indicate higher levels of performance and others that have come out more recently, are challenging that increasingly. I think that diversity needs to be understood at a deeper level and we need to understand that unless people are willing to actually engage with difference, realise that they don’t understand someone’s value just by looking at them and that they have to dig deeper, we’re not actually going to get the benefits of diversity and we need those benefits right now in business because we’re in such a globalised, interconnected, fast moving, changing time.

Julia: Across some of your work with the CMI, Heather …..and you were nodding while Justine was talking…..is this your experience as well? Especially this question around conflict, which I think suggests courage and bravery.

Heather: Absolutely. If I look back over the last 10 to 15 years, I probably would’ve been described as maybe aggressive rather than assertive because I care very much about making change in this space. Had I been from a different background, I would have been perhaps described as innovative. It’s about the language that’s being used. The conversations I’m having right now, not just within my own business, but with businesses, CEOs and Chairs right across the industry, is around the commercial value of this. We cannot afford to ignore people who spend £34 billion in our economy when the economy is struggling so much. Actually, if you just sit down and have that conversation with people, what keeps you awake at night? They’re going to tell you growing their market share, getting the best people, and making sure they hit their financials, right?

The way to make this work is to link it together. We have fantastic women that leave the corporate world because they’re frustrated. They’re often described as, ‘well, they’re really getting ready to have children so it’s going to cost us money’. Actually, when that talent walks out the door and walks into a competitor, you soon realise what you’ve lost. Then worse, when they decide to set up their own businesses, they choose not to come and bank with you or to do business with you because they remember that experience. By the way, they’re also telling their other friends along the way. Now is the time, if ever before, to make this quite imperative. It’s how we do business, not why we do business.

The conversations I have with leaders, both in my business and outside my business, are that I need to see this on every single business agenda, because if you start a new market and are developing new products and services, you will have a business update at every single board meeting about that product and service – how we’re going to get there, how it’s being measured, where are the shortfalls? Actually, that’s where we’re putting diversity as well. As an organisation and as an industry, the whole thing for us is around needing more females at the top. We need 50% females, because we know that when you’ve got an equal balance of people that sit around the table, you get the best decisions.

All UK corporates know that already. They’re all nodding and saying, “We totally understand that. The challenge is, we don’t know where to go and find them”. Well, if you look in the same places you’ve always looked, you’re going to get the same results. You’ve got to start looking and widening your net and go to some of the most extreme places that you would go to find the talent. This year I happen to be sat at the Women for Africa Conference, where there is a pool of female talent from across the globe. The Black Business Awards provide us with some 500 people that are either successful entrepreneurs or people at the helm of their organisations. I can’t understand why the headhunters don’t go there to look for their talent. Those are the conversations we’re having.

Julia: That’s really interesting, because that’s a big shift. I spend time with organisations who nod along with everything you’ve said and they go, “Yes, we know. We get it. It should be on the Board agenda. We’ve got a lot to deal with”, whether that’s Cybersecurity, performance, regulation….whatever that is. “We completely get the point but actually, as we sit and look our ourselves, we are either a little ashamed because we all look the same, behave the same, feel the same. Or we don’t have the courage to take that huge leap”. You see the examples of where mindsets have been cracked open, where Boards are just going, “We’ve just got to stop thinking the way we’ve always thought in the past because it’s just too easy, but we recognise that if we want to achieve some of these business objectives, we need to have the best teams.” Are we seeing some evidence of that?

Justine: Well, one thing I would add, and I agree with everything Heather’s just said, that’s interesting and that’s been part of my own journey is that when I started the Leadership Consultancy, I had no interest in doing diversity in my work. I discovered that the reason I could work effectively with senior boards and teams was because I had skills from being from a biracial, multicultural background. The exact same material that has been responsible for rescuing whole divisions and teams and creating massive emergency cultural shift is exactly the same stuff that we use in the diversity space. My point is that at a core level, the thing we need to fix with diversity has implications way beyond diversity.

Heather: If I might add, culture is the missing piece of the jigsaw puzzle, because if you get the culture right in an organisation, you get the leaders right. Once you get the leaders right, you start to see a great change within the organisation. If I think about the kind of people I’m having conversations with today, they are CEOs of organisations, both within my own organisation, as well as outside, and outside of the industry. One of the things I think is really important, particularly for CMI, is that we are looking at the whole piece around leadership and management because if you don’t add this as something that is part of what leaders need to do, you’re never going to get the change.

I had a conversation with a young group of graduates last week who I see as our potential leaders of tomorrow and we’re talking about the whole diversity and I’m using them as a ‘stick’. One of them said, “Oh, well, I’m not really sure about that.” I said, “Well, if you want to be a leader in this organisation, you’d better start embracing this because for the leaders of tomorrow, inclusion and diversity is how they do business, not why they do business”. Immediately they switched on. I think it’s those messages that say to them, “This is how we’re going to lead in this organisation”.

If I’m doing something, I’ll go out to the business and say, “I’d like to have one male and one female nominated for this course, please.” That’s it. I’m not even going out and saying, “Send me a couple,” because typically what they’ll do when it’s something additional is find two ladies because they always don’t mind doing extra work. Then they’ll find a couple of ethnic minorities because they’re very grateful to do it. Well, I’m stopping that, and saying, “I want you, as leaders, to go into your business and find me two people, one male and one female, to come and join what we’re doing.” I’m finding that because you’re saying it in that way and articulating it in a way that’s important to them, they’re so engaged – they’re getting it. I think that’s how we’ve got to get the message around diversity and inclusion – we’ve got to move it away from this being an add-on and instead use business talk when we’re speaking to people.

Julia: This is how we work. Heather, you said at the beginning about where we are at the moment – London is one of the leading financial capitals of the world and, yet, the world is shifting around us, whether you want to talk about life post-Brexit or what’s going on in the US at the moment. There are many, many dimensions to that. I’m being a little simplistic here, so do disagree, talent is coming from young people who don’t, frankly, want to work in banking. They want to work at Facebook, or at Google, or in a FinTech. Culture is something that we hear time and time again where, “I don’t want to work in an organisation that looks and feels like it did 100 years ago”. But that’s a huge cultural shift for large financial organisations.

Heather: That’s where I do want to challenge you, and I am going to talk about my organisation here, because what we’re doing is very different. At the moment we’re bringing the world of entrepreneurs into the world of finance. We’ve created something called the Entrepreneur Development Academy, which actually teaches our bankers to think like entrepreneurs do. That is a completely different mindset shift in terms of how they think and how they work with people. Actually we’re finding young people want to come and work for us even more. The whole apprentice scheme that we’ve put in place means that people are crying out to come and have the experience.

I’m saying to myself, “Given what the financial industry’s gone through over the last 10 years or so, that is a huge shift.” I think what you’ll find is that as bankers we’ve had to change how we communicate and how we want people to come and work with us. A lot of that is driven by the customer sets that we want to do business with. Once upon a time, you walked into the bank to get a loan, you had your suit and tie and your shiny shoes on. Now, you walk in with flip flops. They’re our Venture Capitalists, they’re our Googles of tomorrow.

That whole shift in how people work and how young people see us is about values for them. They will not work for an organisation that doesn’t have a strong values proposition, that doesn’t have a diversity make up. The amount of people that say to me, “Wow, I’ve never seen a black person in senior role before.” I’m going, “Look around. There are more of us coming through,” and they’ve never seen women. We’ve got one of the first female CEOs at the helm of our organisation, so for me that is the piece that really shows we are changing as an industry.

Julia: From the mentoring work I’ve been doing, there are a number of banks with innovation hubs that are thinking very similarly, so I think it’s only fair to give credit to them. I talk a lot with organisations using agile technology processes to drive entrepreneurship. If you look at the whole concept of failing fast, how you get the best team around a problem, how you bring the best ideas that come from very, very different mindsets to solve that problem, figure out the direction you’re going in, make your mistakes early, and then improve, improve, improve.

It’s a very similar journey with diversity, which is to go, “We have to think very differently. We don’t have time to waste.” I think this is a really important point – we can’t wait another 10 years, these changes have to come in now. Being able to think like an entrepreneur, think with very agile processes, and find new ways of working is interesting. Justine, you’re smiling, that’s a good thing!

Justine: While I think that diversity and looking at all of this would always be important, it’s particularly important in the business world right now and that’s because things are changing. Customers are more empowered than they ever were before. Because you’re in front of their face, they don’t have to go with you. They can do research, they can look online, they can talk to… Their ability to be people who actually make empowered choices is greater than before and the same with employees. They don’t have to stay with your firm, they don’t have to stay with you forever. In financial services it’s particularly acute because of brand and the financial crisis and all of that.

The employer brand and customer brand have more relevance than they ever did before. This means that the whole piece around values and what you stand for has real implications for your ability to have the best talent and the most loyal customers, etc. That ties in directly to profit. That’s one of the things. Related to that there’s a need for organisations to get uncomfortable, just in general for the business world because things are changing. They’re changing really fast. Diversity is one of the topics that makes people very uncomfortable.

This is where I come back to the surface level. It’s easy to look at the surface level and say “I agree” or “I disagree”. It’s harder to sit across from someone who might have biases and engage with them to the point that you can actually understand where they’re coming and vice versa. It’s even harder to be the person who may be talking about your own biases. That’s hard for all of us. It’s not just people who are straight, white men who have biases. We all have biases and talking about it is uncomfortable. It’s very uncomfortable.

Julia: This is a very natural place to come back to a point you were making at the very beginning, Heather, about language and reaching out to some ethnic minorities. There was a lot of discomfort around how to tackle some of the language, how we describe certain ethnic minorities and how we ensure that we are using the right language within diversity and inclusion as a whole; which ultimately makes people very uncomfortable because they don’t quite know what to say. They don’t quite know how to describe not only what the future vision looks like that is all encompassing, but how to then talk to elements of the community that are our leaders of tomorrow and our talent of today. I’d love to explore your experience of working with ethnic minorities for a moment, if we may. Again, this may be simplistic, but do they feel that they are being talked at, or are they being fully understood? Even me going, “are they” feels uncomfortable because I’m creating a box. I don’t like a box, but this is important. I think a lot of people don’t talk about this.

Heather: Well, I guess I don’t fit in any box. I have grandchildren that are mixed heritage, my niece is mixed heritage. I look at them being the best that they can be and I’m going to be the best that I can be. If I think back through most of my career, I’ve been the only person of colour in that field and that strand. That’s been the biggest frustration for me – when I look around, I don’t see any others. And I don’t see any others because sometimes they feel – I use the word feel – it’s emotional, that I don’t think I can do that because I don’t see anyone else like myself. I think the work that we’ve done around gender is very simplistic, things like having a women on the panel when you’re interviewing a woman, those things are quite important. It’s probably a little harder for them to go and find a person from an ethnic minority background to be on there, but go and field from outside if you need to. Go and work with your partners, your customers, get them to come and interview you. I think the most important thing is not finding excuses anymore.

In the UK 12% of the total population is BAME; we can’t ignore that. Yet, only 6% are in total leadership or management roles. That is frustrating and especially as many of those people go off, like Justine and my own son, and create very successful businesses and winning ‘Entrepreneur of the Year’ awards. That means the bigger organisations like Google and Facebook – all of those big corporates – are looking at people like you to buy your businesses, to come into the corporate space at some point. We don’t have excuses anymore. It’s about how you make people feel inclusive. For me, when I go into a room, I’m not that bothered if someone is Chinese, Indian, Asian, Black like me, young, old.

I have a goddaughter who is a dwarf and she’s got a bigger personality that most people I know. When she walks into a room, you don’t notice her height, you just listen to what she says. I think that’s where we need to get to. We need people with these biases to start understanding that you need to use all of your skills, not just your sight. You need to start listening to what people are saying. On the other side, we as people of ethnic minorities, we’ve got a responsibility as well. We have to own who we are. When I walk into a room, I’m a proud black woman. I’m not going to put myself in a box because somebody else sees me like that – that’s who I am. If you don’t like it then you can leave the room, but I’m staying.

It’s about having the confidence, not arrogance, but confidence, to believe in who you are. This year I broke my foot and started to realise what it was like to be somebody with a disability and how you can be excluded from things – even getting into your own building because you’re on crutches. It’s around including people. I think I’d like to lose the word diversity and really major on the word inclusion. How do we make people that work with us feel included? How do we make people who we want to do business with feel inclusive? For instance, if we have a panel, if we have an event, why would we have a panel of all the same people sat in the room, excluding 50% of the audience. I’ve been to events where it’s an all black audience and there was not one black person on the panel. I’ve also been to events where it’s all black people and there’s not one woman or there’s not one white person. That’s rubbish. That’s ridiculous.

Julia: Justine, let me come to you on that point?

Justine: I think that for people who are from minority groups, just to echo some of what Heather was saying, there’s this tightrope that people have to walk where on the one hand it’s very important that they are able to be themselves. There’s a lot of research; previously the focus was on the LGBT population, whom we learned a lot from – when they were out at work, their level of productivity, loyalty, engagement went way up. There’s a metaphor there that’s very powerful and goes across all groups. More recently there have been studies showing that given world events, when people feel that they can’t discuss racial bias and some of the stuff happening in society at work, their ability to engage and feel as productive as they could be at work is affected

There’s a real importance for individuals and also for organisations to create a culture where people can be themselves. I would add that there’s this skill you need in order to…it’s not as simple as just being yourself. You need to be yourself in a way that translates, such that your organisation can understand you. That’s almost a survival skill. When I work with minority groups, whether it’s women, ethnic minorities or LGBT, building that skill of being able to translate so that you become a leader of understanding so that people actually gain awareness is really key, but that is a skill that all leaders need in a globalised world. I guess my point is that in some ways, no one is more motivated to learn these core leadership skills than the people who are subject to bias and stigma. People who have been on that journey managed to rise to the top. The value that they bring to organisations in terms of positioning those organisations for success is enormous.

Julia: This is a perfect time to turn to my colleagues, Cynthia and Robert, who have been looking at what the industry has to say.

Cynthia: More businesses are signing up to the Women in Finance Charter. As of July 2017, 141 firms have now signed up. A new study by recruitment consultancy Green Park has stated that the highest tier of management in FTSE 100 companies now includes the highest level of ethnic minority talent for years; however, 58% of FTSE 100 boardrooms still have no ethnic monitory representation. This is an improvement on last year, but there’s still a long way to go.

Robert: A City AM article that particularly caught my eye, which was released on the same day as this year’s A Level Results, referred to a 2015 McKinsey study which we’d also come across. It’s examined the impacts of gender and ethnic diversity on financial performance. The study found that companies in the top quartile for gender and ethnic diversity were more likely to have above average financial returns. There were three key points that really stood out for me: Firstly, firms using blind CVs to nullify unconscious bias are leading the pack in attracting talent from all walks of life. Secondly, the city is built on meritocracy and therefore ability and hard work should count for much more than the colour of a school tie. Finally, in order to attract and retain the best talent, companies must adapt to the changing values and aspirations of school and university leaders.

Julia: Cynthia and Robert, thank you very much for that. You can find links to that research on our website, DiverCitypodcast.com. Justine, at the beginning of the show you mentioned this concept of mindful exclusion. Could you tell us more about that?

Justine: Well, this is the other provocative thing that I’ll say. I don’t actually believe exclusion is a problem – I think that it’s misunderstood as well – I think exclusion is necessary. When you are putting out an ad for a job, you’re only going to take one person. When you have a board room, it only fits so many people. When you’re promoting people, there’s one position available and lots of people who want it. If we understand that exclusion is part of the way that business works, we can then instead focus not on including everyone, which becomes unrealistic and which leads to some of this backlash. We can focus instead on how are we including and excluding more strategically and more mindfully; more strategically in terms of business performance, but also more mindfully in such a way that people understand that they are part of the system.

Ideally, in an organisation, if someone doesn’t get a job, they should feel that the system is fair enough that they must just not have been the best one for that job. That is the opposite of what most people actually think. The way this applies to some of the research we’re doing right now with employee network groups is that those groups, from the other side, are inherently exclusive. That triggers emotions on the other side of ‘are you shutting me out?’ Sometimes there’s a purpose to that exclusion, but it has to be done in the right way and the narrative has to be one where everyone feels that this is for the benefit of the whole.

Julia: That’s really interesting, because that links together a number of things that we’ve talked about today – one of them is about being crystal clear in terms of objectives, what we’re trying to achieve commercially, what we’re trying to achieve in terms of our commercial intention, and about how we serve our customers with the best people. It also talks about how you build the best teams, but in a way that brings everybody together, understanding that if you want to be a high performing team, you’ve got to step up.

This also avoids the potential risk of over-swing, which I also worry about and I hear a lot of people talk about: “We’re just employing more women because we’ve got to swing that way. We’ve got to employ more people like this because we’ve got to swing that way”. Actually, it’s about collective skills, a really clear intention of making sure that everybody understands that they’ve got to step up and they’ve got to be good enough for the job. If they’re not, it’s because they’ve got areas they need to work on, and that can come across in many ways. Is that your experience, Heather?

Heather: I’m judging some awards at the moment, some diversity awards, and one of them that came through for me, they’re industry awards, I can’t say who they are, but one of the organisations is looking at a young man who’s got ME. He can only work for periods of 20 minute slots, two days a week. I’m absolutely overwhelmed that this organisation have accommodated this individual by saying, “Right, okay, he works for 20 minutes slots and then he rests because of the work that he’s doing”. Now, I want to see more organisations doing that. That’s about getting somebody with the right skills to do a job, but they’re not excluded because of their disability, right?

The thing for me around having quotas is something I really, really feel quite passionate about. It’s not about quotas for me, because you will have people who want to make their quotas which are linked to how they get paid financially. They will go and tap a few women on the shoulders, “Come on, I need to get you on board” whether they’re the right women or not, just so they’ve made their mark. We’ll also look for a couple of people from black and ethnic minority backgrounds to say, “Yep, we’ve got a big bounty here. I’m going to get a double bonus.” That’s not what it’s about. For me, it’s around setting some aspirational targets. This is where we want to get to, this is how we’re going to get there, and this is the reason why we’re doing this.

Quite a lot of the time it’s a secret. It’s a big secret. No one knows about the culture in the organisation, no one knows that they’ve got a great diversity policy in place because sometimes it’s not been embedded in the business. When it’s not embedded in the business, people leave it to one side. Where organisations get really smart, and my organisation is doing that at the moment, is when it becomes part of the business agenda. When we employ somebody it’s about getting the best person and we also role model that person, whether they’re black, white, yellow, green, young or old. Because we have had a diverse group of people doing the interviews, the outcome is fair.

I think that’s what people have always struggled with. You don’t know who is doing the interviews, you don’t know if it’s somebody’s friend, you don’t know if they want to bring through this gentleman because he went to the same school as me so he’s bound to be good, or his father worked at the same organisation. That’s what we need to stop. We need to make it open and fair so everybody gets an opportunity. There’s three points – there’s the whole leadership piece, there’s the culture piece, and then there’s the education piece. When we get those pieces all linked together, the world starts to feel very different.

Julia: Fantastic. We could talk for a long time about this. It has been such a pleasure having you on the show. Thank you both so much for joining; Heather, Justine, thank you.

Kieron: This episode of DiverCity™ podcast was produced by me, Kieron Yates, on behalf of Julia Streets Productions. Thanks to Cynthia Akinsanya and Robert Pinto- Fernandes for their insights. You can find out more about the guests on this week’s show on our website DiverCitypodcast.com. Whilst you’re there, you can also sign up to our newsletter for all our latest updates. To be sure of catching all our future podcasts, subscribe to our feed in iTunes or your favourite podcast app. If you’ve enjoyed this episode, remember to give us a rating or review in iTunes, it all helps promote the show to a wider audience. Finally, our Twitter handle is @DiverCitypod. Thanks for listening