In the recent midterms, Colorado elected the first openly gay governor in the United States. This was a big move for the LGBT+ community. Just as women in leadership roles inspire other women to step forward, the LGBT+ community benefits from seeing more openly gay leaders step forward.
It’s about time we see more diversity in leadership roles in all areas of society. But it doesn’t just happen. As PwC Partner Kathryn Kaminsky said in her recent blog, everyone should make a commitment for diversity and inclusion (D&I) efforts to succeed. To have diverse leaders, we should have inclusive workplaces. So why don’t we have them?
Earlier this year, we held a roundtable discussion with business leaders from nine of the world’s most iconic financial services firms. Representatives agreed that the D&I strategies of financial services firms have a lot of ground to cover. One thing that gets in the way: many of these firms don't know enough about the facts of today— in other words, the diversity profile of the workforce.
In order to obtain this important data, the first step is asking employees to voluntarily disclose what are sometimes personal or sensitive attributes, such as sexuality, gender, or faith. This practice is known as self-identification. For self-identification to work, a few conditions are required. First, the employee should feel confident that this kind of information is being used for positive purposes. A culture of trust is key, and this is an area where financial firms have often struggled. Second, the data should be put to good use. Unfortunately, PwC’s D&I benchmarking study found that less than half of the financial services firms we surveyed actually use self-identification data to monitor and improve their D&I strategies. Finally, we note that requests for self-identification data may have very different implications from country to country on basis of local laws and cultural norms. For global firms, finding a way to navigate these boundaries can be tricky.
Regardless of these conditions, what is clear is that many financial services firms could get more out of their D&I programs just by building trust among their employees and encouraging more prolific self-identification practices to better understand the profile of the workforce.
Visibility, or a lack thereof, is often the problem.
For example, more than half of the employers in our survey said they take steps to create a dedicated pathway to senior management for LGBT+ employees, but less than half of employees in this population believe that such a path exists. That’s an important disconnect — and it’s one that can be solved. Building awareness can pay dividends to employers, as employees who feel valued by their employer will likely offer the most of themselves in return.
Our survey showed that career progression is the top priority for LGBT+ employees. The LGBT+ talent in our survey want employers to create focused programs and opportunities to help them realize their potential. As we’ve seen, creating programs is important, but those programs should be observable to achieve the desired effect. Relatedly, almost all employees believe that visible LGBT+ leaders within a company are important. But, a high proportion of organizations don’t have senior LGBT+ leaders who are visible. With better LGBT+ programs focused on career progression, more senior leaders will likely emerge and a cycle of positive reinforcement can begin.
By now, the benefits of D&I and business performance have been linked for many of the same reasons. The leaders at our roundtable meeting agreed, but the message often gets lost when it reaches employees. Only 35% of respondents to our benchmarking survey believe that their company leverages LGBT+ inclusion for business advantage. While there are countless facets to a firm’s D&I strategy, LGBT+ inclusion is certainly one in which employers acknowledge that significant work can still be done.
We believe that firms may even find competitive advantage from taking a stronger stance on LGBT+ inclusion in their branding and communications to customers. Research shows that an overwhelming majority in the LGBT+ community — as well as their friends, family, and relatives — would switch to brands that are known to be LGBT+ friendly. This is no small market. The global spending power of LGBT+ consumers is estimated to be more than $5 trillion a year. An even bigger pool is the “ally marketplace,” which could reach eight to ten times the number of potential customers as the LGBT+ market itself. In a fiercely competitive financial services market, an inclusion strategy focused on LGBT+ issues could help firms differentiate themselves with a range of important stakeholders.
We’re not naive about the difficulties involved in changing cultural norms. For example, many leading US financial services firms have operations abroad. When more than 70 countries still have legislation that is hostile to the LGBT+ community, promoting LGBT+ D&I efforts on an international level introduces some serious challenges. Yet by promoting fairness and equality in the markets in which they operate, businesses can exert very powerful influences in changing societies. And, by offering the right working environment and career opportunities for LGBT+ talent, businesses can gain an important edge.
Under PwC’s D&I maturity model, we believe that building trust among your employees and understanding the facts of today through rigorous data and analytics are the first steps to driving a diverse and inclusive culture. Visible LGBT+ inclusivity is an important part of this transformation: it can inspire employees, attract customers, and reward employers. And it offers one other important benefit: it’s the right thing to do.
Stefanie is a director at PwC and advises financial services clients on issues related to HR and workforce strategy. If you’d like to discuss these issues, please reach out. To join the conversation, visit this post on Stefanie's LinkedIn page.
Director, Organisation & Workforce Transformation, PwC US