Series Nine, Episode Seven – Build Back Better: The requirement for resilience

Julia: Hello, my name is Julia Streets, and welcome to DiverCity Podcast, talking about equality, inclusion, and diversity in financial services. On the podcast we seek to shine a light on positive progress, call out areas requiring further focus and offer lots of ideas to help drive change.

Today I’m delighted to be joined by Jayne Styles and Mitesh Sheth.

Let me tell you a bit about Jayne. From 2002 until she decided to take a career break in 2019, Jayne led MS Amlin’s Investment Business, where as CEO and CIO, she directed strategy, governance and operations for their award-winning global multi-asset, multi-manager portfolios. She is also a co-lead of the Diversity Projects Ambassador Programme, and Associate of the Chartered Financial Analyst Society of the U.K., and has an MBA at Cranfield. We’re delighted she’s here today.

Jayne, welcome to the show.

Jayne: Thank you for inviting me.

Julia: Pleasure. Joining Jayne today, I’m delighted also to welcome Mitesh Sheth. He is the Chief Executive Officer of Redington. He was appointed CEO in April 2016. He’s described himself as being passionate about culture, and much of his focus is on putting the right people in the right roles to do the right things in the right way. Prior to joining Redington, Mitesh was Head of Fixed Income at Henderson Global Investors. He’s also been an Investment Consultant at Willis Towers Watson. He’s a Fellow of the Institute of Actuaries.

Mitesh, thank you for joining us today. Great to see you.

Mitesh: Yes, so excited to be here.

Julia: Wonderful. Well listen, let’s get straight into the discussion. I’ve been really looking forward to this.

My first question to you both is, here we are, end of 2020. It’s been an extraordinary year. What’s your focus for the remainder of this year, and then looking into next year as well? Jayne, let me come to you first of all.

Jayne: My emphasis at the moment is a call to action from the Build Back Better Report that I wrote earlier on in the summer, which is asking Asset Managers to seize this current change momentum, to embrace inclusion and diversity as an enabler, to build more resilient businesses within the industry, and ones that are better aligned with all aspects of ESG.

That’s from the CEOs, as the champions of culture, but it’s actually for everybody. Everybody can play a role as being an inclusivity role model by listening more, being compassionate, kind and curious about their colleagues. Also, I’m looking at believers, the influencers that can start to help to make change faster within diversity inclusion. I’m working with a small group of search companies who have got a lot of influence at very senior levels to look at the barriers where companies may have good intentions, but then when it actually comes to hiring decisions they don’t follow through. The intention is to share best practice so we can start to get the momentum going.

And to work with the candidates as well, because it’s interesting there are a lot of female and non-white candidates. They don’t want to make that leap to a new company because they’ve got political capital in their current company, and then they need to be able to develop the trust in that new company. That’s why often on recruiting it will be male candidates that stay the course and actually are the ones that end up being appointed.

I’m also interested in the influence of the boards of asset managers and also trustee boards as well, where they can ask questions about businesses, and along the line of the asset managers that are being used. I recently wrote an article for the PLSA Viewpoint on that.

Julia: And PLSA being the…

Jayne: The Pension Life Savings Association. It’s called Viewpoint. It’s on page 40, so it’s not at the beginning. Then I’m also in discussions with the U.K. Regulator about potentially running a session for boards on how they can use their influence to improve diversification in the industry.

Julia: This is really interesting because certainly right now, you described it so beautifully as the change momentum. I mean, it really feels like there is a galvanising moment in time. But of course, there are many perspectives to come from and what I love about your opening remarks there is we think of also about the pressuring dynamics around the question of diversity inclusion. The candidate point of view, the board point of view, the trustees point of view. We would also be getting into the role of investment consultants, and also whether there is an awakening from the asset owners as well.

Jayne, it’s wonderful to have you on the show, and it sounds like you’ve got a very busy 2021 ahead.

Mitesh, let me ask you the same question. What are you particularly thinking about at the moment as you look into what the next year may bring?

Mitesh: It’s been quite a year, hasn’t it? Starting off to build on what Jayne said, Building Back Better in 2021 is a real focus for us right now. We started working with our team in China to get them home, and to figure out how to help them navigate COVID-19 very early on in 2020. Then as a result, we’re very early in getting our people across the U.K. working from home and also helping them support our clients very early through this. We’ve done a reasonable job of looking after our people, of looking after our clients through some pretty uncertain markets. Right now we’re looking at how, and whether we need to reopen our office, particularly for those members of staff who actually the prospect of a long and drawn out winter and not being really quite sure as to when we may go back fully to some kind of normal, needs some alternative to working from home.

That’s very much front of mind at the moment. But really what we’re thinking about is what have we learnt through this period and how can we Build Back Better beyond this period, whether that be in terms of attraction of diverse talent that we hadn’t been able to approach in the past, whether they’re people who won’t necessarily come into the office or can’t come into the office. That opens up a whole new pool of talent all the way through to how we really embed the smart working practices we’ve all learnt over these last few months.

The second area that I’m really focused on is we were fortunate enough to bring private equity capital into our business earlier in the year. Phoenix Equity Partners took a majority stake in Redington. So we really have a really nice long term horizon now looking forward and thinking actively about how do we take the success we’ve had in the defined benefit pension space and defined contribution, and our early successes in wealth management as well as out into selling software as a service here in the U.K. and Europe and in China. And how do we expand that? So a lot of my time is going into thinking about talent, speaking to talent, and really planning and designing the organisation that we need to be in five years from now.

And again, when you’ve got a long lead time like that, you can hire diversely really well. It’s very hard to hire diversely when you need someone to hit the ground running next week. That’s really exciting to me. And the final piece, you touched a bit on this on investment consultants, we’ve been very focused on climate change for the past few years. We’ve been very focused on gender diversity. The real focus and catalysts in the last few months has been on race, and particularly black. So we’re really thinking hard about how we embed the right partners and processes through our entire attraction, retention of talent and culture.

Julia: It is very, very timely that obviously the conversation about race is incredibly important right now. What’s fantastic for the episodes and the conversations that we’ve been having is that it really feels like organisations are taking a very proactive action plan towards driving change, which is wonderful to hear you talk about that. But also, the importance of just looking ahead and thinking ahead, and having the luxury almost, to plan a talent strategy looking forward as well, which is wonderful. Lots to talk about for sure, and I wonder whether we’re going to do it justice in literally a matter of 25 minutes.

But I do want to get straight into this conversation about Build Back Better. Jayne, you were saying at the very beginning about it is about resilience, and also thinking about embracing D&I to make sure that organisations are resilient, adaptive, etc. I’d love to get your thoughts about, in the report and in your findings, why are organisations particularly paying attention right now? Obviously COVID is one big dynamic. What should we be paying attention to? What’s changing, particularly given COVID?

Jayne: I think the requirement for resilience is not specific to asset management or to financial services. I think it’s every company. Now we have technology, we’ve got climate change, as Mitesh mentioned, we’ve got political landscape. All of those provide uncertain terms. It’s important for companies therefore to build their resilience to be able to deal with that because things are changeable and things are unpredictable. The pandemic has only exacerbated that. It’s now a lot more uncertain and a lot more fluid. People were planning to go back into the office, you were not. So companies really, really need to be agile.

And within the asset management business, we already were facing margin pressures, demographic impact on revenue flows, cost pressures from technology and from regulations. All of this requires a very agile approach, and agility means resilience. If you’ve got a tree, it’s very old and very stiff, it will get blown over in the wind. If it’s agile it’s likely to survive.

Julia: Can you share some examples of best practice where organisations who are responding to everything you’ve just talked about? I mean, regulation, margin, people, products, development, innovation. And they’re going, “We need to change our thinking. We need to think very differently because of the climate we’re in now.” Also the fact that actually I think in financial services we do need to just think differently. Any examples of best practise you look at and go, “We should do more of that.”?

Jayne: I think a lot of companies have reviewed their purpose. There’s a lot of CEOs that have done that with their businesses. I think that’s really important because that helps to provide a compass from which there are different challenges thrown at you then you know what it is that you will do and what you won’t do. I think that’s very important.

I think also companies are reviewing people strategies. We’ve talked about working from home, and that is allowing a lot more flexibility. It means that you can attract different types of talent, for instance, people with disabilities who might not have been able to come into an office as well.

Also I think the conversations are being broadened out. Whereas now, with virtual meetings, you can include a lot more people, so people can feel more part of the decision-making. You’re getting different perspectives, which I think is very important.

Julia: We are tapping into talent pools. You mentioned there about people with disability for whom travel into the City of London, and I pick that as a specific place and point of location. Of course that could be any city in the world for all our listeners around the world. This isn’t just a London centric conversation. The point being that actually their ability to come into the office, of course, the fact that using remote tools can open up access. And also talents around the U.K. and other locations as well.

I want to come back to this point I was making in your introduction actually Mitesh, about culture. I know that’s something that you’re very passionate about is creating the right culture as well. I’d really love your thoughts about, I mean, when you say culture is important, I guess my question is why? Also then we’ll move on to any good examples or any areas you’re particularly paying attention to.

Mitesh: I think culture is fundamental, and I think all organisations have noticed this if they hadn’t done prior to 2020 since the COVID outbreak, because when your staff are distributed around the world or the country in their own homes, we’re relying entirely on culture, which is how people behave when no one’s watching over their shoulder. That’s what’s going to guide. For us, it was our culture that meant that everybody could come together to help each other, and to support each other, and to onboard new members of staff, and to make sure that people were okay, and to make sure our clients were okay. Those weren’t instructions given from the top, it’s the default that people revert to, and that culture is built. Yes, in times of difficulty, but usually much like risk management, must be put in place before you need it. So, I think culture is so important.

When I specifically think about our industry, whether that’s savings and investments or financial services more broadly, I think it really matters in terms of, as Jayne said, all the way back to why do we exist? If we only exist to make money for ourselves and our shareholders, well, we’ve probably got a bit of a problem there. I think you have to start there. And again, culture oozes from that overall context because you can’t fake it. I know when we started talking, and one of the reasons you started this podcast, wanting to see more progress, well, we’re not going to see it unless we fundamentally re-evaluate what we’re here to do. And we’ve got to recognise that business and financial service businesses, and investment consultants like ourselves, or investment managers, have a role to play beyond making money.

We believe ours is to help make a hundred million people financially secure. For us, that’s making a hundred million people financially secure, and bringing financial security is so fundamental in a world that is stable and secure to live in. The climate matters. For a diverse group of people who may not have the same privileges at the start of their life or the same access is really critical. So we’ve got a real purpose to serve here and a real role to play over and above the money that we create and/or make, handle, pay. I think it starts from there and then feeds right the way into behaviour and how we act.

My number one statement to anyone who’ll listen really is the potential of our organisations to change is limited by our willingness, as leaders, to change ourselves. Unless we’re willing to change our biases, our limitations, and not just be anchored by our stories and our experiences and our affairs, we simply can’t change our organisations beyond. It starts from me as CEO, my executive team, and everyone who manages anyone in the organisation. That’s slow work, it’s one conversation at a time. It’s creating a space where there is psychological safety, where people say I’m worried, or I’m getting left behind, or I don’t get this, or I disagree, and giving time to those conversations and helping people verbalise those rather than feel ashamed, or rather than ignoring what you’re saying and really creating a conversation that allows change to happen.

That’s change that’s equally true to diversity and inclusion as it is to climate change or as it is just to innovation, and creating growth for the future. At the end of the day, organisations are collections of people. We’re not machines. So unless we can change, our organisations won’t change, and we can’t create a different society and world.

Julia: There’s so much in that. I think about the episode that we recorded with the CEO of the FCA, who said we’re looking at financial services of all the companies that we regulate. We look at basically their culture under non-financial conduct. It is important because the Regulator’s looking. This also falls under the senior manager regime. So people are looking at senior managers and saying, “We have an expectation upon you to change and you are responsible for the culture.”

What I love about your comments there is actually it says look, here’s some very practical things you could do. And part of it is a frame of mind, which is a recognition of the needs to change and the self-awareness of limitations as leaders to go, “I have biases.” We all have biases. We always have biases, so it’s important to be really aware of that. So when I say to all our listeners, particularly because we do have a lot of rising, aspiring leaders and also existing leaders in the industry today, is that that’s a very, very important point to take away from the podcast as well.

What I’d like to do now is I’d just like to move the conversation just one cog shift on if we may. It builds on some of the comments that came out in the opening remarks about the role of investment advisors and consultants, the role of the end investors. Jayne, you were talking about your article at the PLSA.

Mitesh, can I ask you first of all, to what extent are asset owners and investors awakening to the importance of diversity inclusion as a critical factor in driving investment performance?

Mitesh: I think there really are. One of the things that makes me quite hopeful is that for the first time in a long time after we’ve all been talking about this, we’re seeing real sustained momentum and it’s coming from all sides. As you said, the Regulator is putting an emphasis on this. Leaders of organisations are making changes as a result of this. I’m seeing asset managers showing real willingness to make change, whether through the Diversity Project that Jayne and I are involved with, or indeed through other initiatives.

Finally, I think asset owners are recognising the power and impact they can have through where they allocate their capital and what they’re asking. Our experience with this, and we haven’t historically had an active engagement policy, but we’ve really been focusing hard on thinking through how we can engage to help asset managers, and ultimately assisting our clients, the asset owners, really make change within their organisations. That’s on all three things. As I said, climate change, diversity, in gender diversity and race, specifically black. For me, that comes down to not just a carrot and stick, you need to do this or else we won’t invest in you, or else we won’t recommend you, or else we won’t work with you. Comes back to the same approach I take within my organisation. We’ve got to have the conversation. We’ve got to explain why it’s important. We’ve got to understand what your barriers are, and we’ve got to see that there’s a real commitment to making a change.

Then we can hold you accountable by saying well, here’s where we expect you to be in a year from now, or three years from now, or five years from now. But we’ve got to recognise this takes a long time, and it’s not just something, quick metrics and KPIs, that we need to see in a quarter because that’s going to lead to the wrong and perverse kind of behaviours and outcomes. I think it takes patience. I think it takes conversation. It takes empathy, but we’ve got to be working together and helping each other, and shining a light on best practice, and saying here are our ideas. I love hearing from other leaders on great things they’re doing, because I’m always scribbling notes down because they just help you know what to do, even if you agree this is the right thing to do.

Julia: Jayne, well, let me ask your opinion because I know you chair a lot of discussions and industry conversation and obviously we talk about the article you’ve written as well. Anything you’d add, any other thoughts as well in terms of best practise that you’ve seen around? Any ideas you’ve scribbled down?

Jayne: Maybe if I can answer it slightly differently and say well, there is a big focus now on ESG within investments. There has been for a number of years, but it’s growing. I think the really good thing is that that is continuing whereas potentially people could have been distracted because of the pandemic, I think the terrible events that happened earlier on in the year and now with the Black Lives Matter. I mean, it has definitely focused people’s attention on the social inequalities. If asset managers are going to genuinely go into the companies that they invest in and say we require you to, as Mitesh has said there, is to make you have a plan to improve all aspects of ESG. How on earth can the industry do that if they’re not doing it themselves? I think they lack that authenticity and credibility if they don’t.

Julia: More and more we’re hearing people either make a case for, or indeed bringing the diversity inclusion conversation under the S of ESG as well, which of course aligns it with a really key area of discussion right the way through the investment industry as well.

Well, I think that’s a beautiful moment to bring in Cynthia Akinsanya, who has some research to support today’s discussion.

Cynthia: Here are the five key trends listed in the December 2020 People Matters article where organisations will play a significant role amidst COVID-19. Empowering the female workforce, enabling a choice of location, rationalising setup costs, deploying tech based initiatives, and harnessing improved talent pools. During this uncertain time of layoffs where many employees have lost their jobs on one hand, and many companies have been hiring a lot of talent, this is a prime opportunity for companies to hire the best and most diverse talent with experience and qualifications.

Julia: Wonderful, thank you, Cynthia. The links to the research can be found on our website, divercitypodcast.com. That’s where you can find all our episodes and sign up for early notifications of future recordings. Please do follow us on Twitter, Instagram, Facebook, LinkedIn, and DiverCity Podcast is available on BrightTALK and all good podcast channels. We’d love a rating because it all helps to promote the show.

A question I’m asking everybody, Jayne. I’m going to come to you first of all, which is, I’m concerned that as we go into an economic downturn, and as organisations have got different priorities, that there’s a risk that diversity and inclusion can fall down the corporate agenda. I’d love to hear your thoughts about why it’s particularly important right now that diversity inclusion remains high.

Jayne: Yes you’re certainly right that during the great financial crisis diversity and inclusion did fall down the agenda as the attention was focused more on cost-cutting. I think we’ve discussed some of this already, is that in an economic downturn, and with the uncertainty that we have, which exacerbates the uncertainty that businesses were already operating under, it’s just really important that businesses build up a diverse group of talent who have got different backgrounds, have got different voices, who are being listened to. That’s an enabler, so it’s not as if it’s a thing to do because it’s part of an ESG. This is a way that businesses can enable themselves to be resilient and to grow in a difficult environment. We look at flows, there’s a lot of discussion about flows from passive into active, but that’s actually slowing. There’s three times more flows from active into active. So there is possibility for companies to grow, their asset managers, to grow even in a difficult environment.

As I said, it’s not a “nice to have”. It’s actually an enabler. I think companies, or CEOs are starting to recognise that. I’m actually quite optimistic that companies have, particularly in the asset management business, they have become more humanised. The fact that we now see inside each other’s houses and the cat walking across the keyboard and things like that, which I did have earlier, not mine, somebody else’s earlier on. There is a massive momentum for change. We’ve already seen what’s happened with people being able to work remotely from home. That’s taken two days or a week, which would have otherwise taken 10 years. There’s been a big shift in mindset there. We’ve talked already about the fact that now ESG is every aspect of it. I think it’s a shift to really shift the industry to be doing good rather than just making money for themselves.

Julia: It’s important, isn’t it? Because I think in the conversations, all the conversations we have on DiverCity Podcast, we’ve framed the conversation about diversity inclusion in a commercial lens. Hearing you talk about the opportunity, the commercial opportunity, that is on offer even during a downturn is incredibly important, which is wonderful. But it’s not easy. This is not an easy conversation to have. There are many who listen, who say yes, no, I get it. I understand it. But it’s just hard. There are some things that are not sticking or I’m trying to tackle some specific areas.

Mitesh, if there were a few pointers or key words of advice you would like the listeners to take away, of practical things that can be done, we’d love to hear them.

Mitesh: Well, I’m a real action person and I’m inspired by hearing what people are actually doing and learning. Let me share some of the things that we’re learning and that may be useful for others. I think for the first one, I’d say it’s about building bridges with empathy, and this is about really listening and understanding different perspectives at our table. How do you practice that? Well, it’s not enough to just bring in diverse talent. You’ve got to create a space where you’re listening to them. You’ve got to make sure in meetings you’re inviting a different perspective or inviting and encouraging challenge, but it’s also creating empathy with different perspectives.

For example, just last month, we invited various different members of staff to speak to the firm in a perspective session to give their different, unique perspectives on their experiences of COVID-19 and working through COVID-19. We purposefully did that going into the year end performance reviews because we wanted to help managers open their eyes and empathise to not everyone’s perspective is going to be the same as theirs. We do those all the time. This week we’re hearing from some of our black colleagues about their experiences of growing up and working in the City as a member of the black community.

I think empathy and storytelling, and really hearing and listening to each other, and being willing to slow down our discussions to invite challenge would be tip one. Tip two would be it’s all about experimentation. We just somehow have to find the risk appetite to not just talk, but to try things because we’re going into areas where we’ve not been before, therefore there’s not going to be a book we can read or experience we can rely on. We’re just going to have to face the fear of trying and failing and getting it wrong, and admitting we’ve got it wrong and then trying again. I think that’s really important, and having an environment where people hold you accountable and also give you the support to get things wrong, to admit your mistakes and to improve. I think that starts from the top.

I talk all the time to my firm about things we’ve tried and where we’ve failed. Returnships are a good example where we’ve worked with them for a couple of years, and we’ve struggled to really get the value out of returnships and provide something useful for those returners. Instead we just offer permanent roles to women with gaps in their CVS, rather than those internship temp-to-perm internships, which we’ve struggled to make work. Experimentation is number two. Just try it and learn and be agile as Jayne said earlier.

The third thing is the one I touched on before, please start by working on yourself. That’s about being more open than we feel comfortable being. It’s about making time to have conversations with the people you struggle with the most, that you disagree with the most, that are most different to you. Especially those that maybe have been quiet because they’re feeling ashamed or they’re feeling left out, whether that be in our organisations, or our clients, or the asset managers we’re dealing with. Then really key to that is showing a commitment to listening and being willing to change yourself because people aren’t going to be open if you’re just listening to tick a box. You’ve got to be willing to change your position as a result of that conversation.

Those would be my three things, build bridges with empathy, start with experimentation, and work on yourself.

Julia: Well, we love practical advice, practical insights, but we also love industry perspective, deep consideration about some of the dynamics and some of the drivers around that. I think we have covered all of that today. I can’t tell you, it’s been the most fantastic conversation. Thank you both so much for taking the time. Jayne, thank you for joining us.

Jayne: Thank you for inviting me. It’s been great. Thank you.

Julia: Pleasure. Mitesh, thank you very much indeed.

Mitesh: I’ve enjoyed it very much. Thank you.

Julia: And as always, to all our listeners at Divercity Podcast, thank you for tuning in. We look forward to the next episode coming soon.

Kieron: This episode of the DiverCity Podcast was produced by me, Kieron Yates, on behalf of Julia Streets Productions. Thanks to Cynthia Akinsanya for her insights. You can find out more about the guests on this week’s show on our website, divercitypodcast.com. Whilst you are 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 on iTunes, or your favourite podcast app. And, if you’ve enjoyed this episode of DiverCity Podcast, remember to give us a rating or review. This all helps promote the show to a wider audience. Finally, our Twitter handle is @divercitypod. Thanks for listening.