As we start the new Octopus year, I want to talk about everything we’re doing to be a more inclusive business and the targets we’re setting to move the dial.
When I think about racism I think of violence. I think of the far right. I think of a St George’s flag at an English Defence League march. What I don’t think about is the prejudice that can be found at the heart of everyday society. This side of racism slips through your fingers – it’s far less easy to spot and denounce.
Sadly, I think it’s all too commonplace in most organisations. Without question, your life chances in Britain are impeded if you’re from an ethnic community. The statistics speak for themselves. Black school leavers with A-levels are on average paid 14.3% less than their white peers. On average, Black workers with degrees earn 23.1% less than white workers. Using identical CVs and cover letters, job applicants from ethnic communities had to send 60% more applications to receive the same number of call-backs as white applicants.
Structural racism begins when people with the same biases join together to make up one organisation. It stems from our implicit biases and the snap judgements we make on assumptions of competency. It’s rarely about personal prejudice but rather the collective effects of subconscious-bias. But just because it’s subconscious doesn’t mean that it doesn’t have a profound effect on the kind of organisation you’re building, and the kind of people you’re attracting.
Diversity of thought
I’ve always wanted Octopus to be different – the kind of company where people feel able to be themselves. Apart from simply feeling right from a human perspective, the diversity of thought which comes from hiring people with different backgrounds and beliefs is fundamental to building high-performing teams. And the evidence backs this up. Diverse companies with greater representation outperform. In 2019, ethnically diverse companies were 36 percent more profitable than those lacking diversity.
The problem when I look round Octopus today is that I don’t see enough racial diversity. And when I sit back and think about why, the answer always comes back to the same problem. We don’t have enough diversity across the people making hiring decisions.
Targets at the top
That’s a particular problem at a company like Octopus because we encourage everyone to make instinctive decisions and to trust their gut. And while trusting your gut is normally good for business, it’s often not very good for encouraging diversity (particularly when most of our hiring managers are white). It’s difficult to overcome the ‘something just feels right’ feeling that people get when they’re talking to someone who shares their own experiences.
That’s why we believe that targets need to start at the top; a diverse management team hires a diverse workforce. It’s why we’re putting in place a target to increase our racial diversity throughout our managerial positions. As of May 2018, individuals from ethnic communities made up 6.7% of all our managers, by 2030 we want this proportion to exceed 15%. We’re a long way off where we want to be, but we’re confident that the commitments we’re making will help us build a more diverse organisation.
Setting targets to create change
It’s not dissimilar to the target we set a few years ago in relation to female leadership at Octopus. Back in 2018, we set a target that by 2025 50% of all our leadership positions would be held by women. We started on 31%, and the percentage has risen consistently to 41% today. It soon became clear that increasing the number of women in leadership positions inspires ambition and belief from within the business, while also encouraging women from outside the organisation to apply for roles.
To be honest, setting diversity targets wasn’t my initial response to the problem. While I’ve never labelled positive discrimination as political correctness gone mad, my position has always been that we simply needed to focus on hiring the best person for the job, whatever their background.
My opinion changed when I realised that the systemic nature of racism is what makes it so difficult to overcome. You can’t fight your subconscious because it’s the sum of your own experiences. As a result, I think it’s very difficult for companies to build diverse teams without setting targets that increase diversity across the people making hiring decisions.
I’d also argue that the targets we’ve set are straightforward. Women make up roughly half the population and ethnic communities make up 15% of the UK population. So, it’s logical that our targets should reflect this.
How are we going to hit these targets?
Recruitment
- We are using a job decoder for all adverts to ensure gender neutrality.
- We are running recruitment programmes with ethnic, cultural or social diversity targets:
- Apprentices (aim to have 7 positions in 2023).
- Graduate schemes (aim to have 6 positions in 2023).
- We are continuing to support 10,000 Black Interns.
Education
- Unconscious bias training is being rolled out across Octopus.
- Our Chief Investment Officer and Head of People will complete reverse mentoring by the end of 2023.
- We will review succession plans with a view to provide coaching to support female and ethnic minorities to progress.
- Employee-owned inclusion initiatives – like blogs and cultural celebrations to support employees to be their true selves at work.
I know some people won’t agree with me, and at the core of some of this opposition will be the belief that ‘positive discrimination’ isn’t fair – that whiteness isn’t, in and of itself, a leg-up in the world. In response, I’d encourage anyone with these thoughts to ask themselves the same question that I asked myself. Would I be where I am today if I wasn’t white? The year I joined Mercury Asset Management (back in 1997), 26 of the 27 graduates were white. And of the recruits into investment roles, only three were women.
For too long, we’ve taken a one-dimensional view of racism. It started and ended at ‘discriminating against a person because of the colour of their skin is bad’, without accounting for the ways in which it subconsciously influences our daily decisions. The targets we’re setting for the future of Octopus will change that and will help us build a better business.
Simon