Diversity is a multi-faceted concept that covers surface level indicators such as gender, ethnicity and age, but also lived experience and the way we think, all of which can add value to a team. Creating that diverse and effective team, however, takes effort and significant resource.
“We can all be guilty of spending too little time on recruitment, even though the decisions we make around hiring are arguably as important as the decisions we make around investment,” Mike Sales, chief executive of real assets and real estate at Nuveen shares during a virtual roundtable discussion. “We spend all this time preparing incredibly detailed reports for our investment committee, but we don’t always invest the same time in finding people.”
Sometimes, according to Marisa Hall, co-head of the Thinking Ahead Institute at Willis Towers Watson, the right people exist right under our noses. “Companies should also consider the diversity that already exists in their ranks, taking time to uncover those less obvious, but equally, valuable forms of difference which contribute to cognitive diversity, such as neurodiversity, and those from varied educational and social backgrounds,” she says. “Organizations need to draw out the diversity they already have in place, creating psychologically safe spaces for voices to be heard. That’s the first step. Then they can look to fill any gaps through hiring.”
Filling senior gaps is challenging, of course, particularly in industries where a lack of diversity is systemic. “When you get to senior leadership, you do need people with experience and who are able to positively manage the culture of an organization, so the issue cannot be fixed overnight,” Hall says.
Partner at Norton Rose Fulbright
Jennie Dorsaint is a real estate finance and structured finance partner at Norton Rose Fulbright, acting for lenders, asset managers, originators and sponsors. Dorsaint is also co-chair of the Origins BAME diversity network at Norton Rose Fulbright, a member of Black Women in Asset Management and a board member of CREW UK.
However, she does suggest the possibility of hiring those with transferable skills from other industries, citing a C-suite asset manager with a military background. “That individual may not have had a wealth of investment experience, but they did bring exceptional leadership skills.”
Meanwhile, it can be easier to generate a diverse entry-level pipeline, although this too takes effort. In particular, it involves outreach programs at a school and college level. But, as Laura Parrott, managing director and head of private placements at Nuveen, points out, asset managers have to be aware they are competing with recruitment machines such as the banks and professional services firms that are hiring hundreds of analysts each summer.
Organizations also need to address the way in which they assess prospective talent.
“When people that don’t fall into an under-represented group are interviewed by organizations, they often tend to be assessed on their potential,” says Jennie Dorsaint, partner at Norton Rose Fulbright. “But when it comes to ethnic minorities, for example, they are assessed on what they can offer right now. No one is born with an innate talent for real estate. Across the sector, we should be focused on recruiting people who we can nurture, but I think that bias exists in the way we view diverse talent from day one.”
Co-head of the Thinking Ahead Institute, Willis Towers Watson
Marisa Hall is co-head of the Thinking Ahead Institute, a global not-for-profit investment research network focused on mobilizing capital for a sustainable future. Hall spends much of her time working on sustainability, value creation, culture and leadership, as well as diversity and inclusion. She was previously a senior investment consultant in Willis Towers Watson’s investment advisory business.
Tackling this means tackling the thorny issue of unconscious bias. According to Parrott, the very fact that unconscious bias has become part of the vernacular is significant. “Ten, or even five, years ago, this wasn’t something that was talked about,” she says. “Unconscious bias needs to be acknowledged, so that it can be called out. In my team, we write the words ‘unconscious bias’ in big letters on a whiteboard in talent review situations, so that it is right there in the room with us and cannot be ignored.”
Hall, meanwhile, points out that it is important not to get complacent about what it takes to overcome unconscious bias. “Numerous studies have shown that many unconscious bias training programs set up to deal with discrimination in the workplace do not work. This is because either the scope of the training is too narrow – just dealing with stereotype bias – or it is not sufficiently reinforced, with little evidence that it changes attitudes in the long-term,” she says.
Organizations, she adds, should instead focus their training on understanding “deep-seated inequalities” in society and how they manifest in workplaces. “For Willis Towers Watson’s Investments leadership team, this was a key priority and so we worked with an external provider to really help unpack several forms of discrimination such as sexism and racism,” she says.
Managing director, head of private placements, Nuveen
Laura Parrott heads private placements and oversees Greenworks Lending from Nuveen. Parrott has spent the majority of her career in the private placement originations and portfolio management group. She has been responsible for building the direct origination platform and was instrumental in the formation and growth of the Private ABS specialty.
This had a major impact on Hall’s own understanding of these issues as a black woman working in the industry. “For example, many individuals limit racist behavior to name calling, often by strangers. But it can be so much more, especially in a professional context,” she says. “We know from numerous studies that ethnic minorities are less likely to be employed, paid less, less like to be promoted and are severely under-represented in executive and board-level posts.
“It also affects how others view you and, in turn, how you view yourself. If there is no one in leadership who looks like you, then you implicitly create a psychological barrier to success. Unconscious bias training cannot be about a checklist. It has to get to the root of why women and ethnic minorities still seem to be fighting their way to the top or why individuals still feel as if they are not treated equitably.”
The power of mentoring
Once diverse talent has been brought into an organization, meanwhile, the emphasis shifts towards cultivating and retaining those individuals. This is where mentorship plays a vital role.
“Having a mentor can be critical to supporting someone who doesn’t see a bunch of other people who look, feel or sound like them in the room, whether that comes down to skin color, gender or anything else,” Parrott says. “That mentor can help that person access opportunities for development. They can help nurture them.”
CEO, real assets and real estate, Nuveen
Mike Sales is responsible for Nuveen’s $166 billion as of Q2 2021 in real assets. In addition to executive responsibility for Nuveen Real Estate, Sales is accountable for setting and driving strategy across Nuveen’s impact and infrastructure teams and investment specialists, Westchester, Gresham, Greenwood and AGR. He has over 30 years of experience.
Parrott adds that it is important to remember that a mentor doesn’t have to be someone who looks like you. “If you are working in an organization that is heavily weighted to one demographic then you are going to be fishing in a smaller pool if you restrict yourself,” she says.
“In my career, I have been blessed with men who have chosen to sponsor and mentor me, and I think that is a gift. Organizations need to recognise that there shouldn’t just be one segment of the population mentoring others from the same population. This is something that is good for the whole company, not just the individual, and everyone needs to be involved.”
Indeed, Dorsaint raises an important point about ensuring that the burden of promoting DE&I doesn’t fall unfairly on diverse talent. “That DE&I can take a significant proportion of your time, but at the end of the year, you will be evaluated purely on your formal job. It is important to shift the burden and to get non-diverse talent involved as well.”
Sales points out that, in addition to formal mentoring programs, a mentoring culture should be the norm. “We call it mentoring. But really it is part of everyday life – listening and learning from one another. Mentorship should happen informally all the time. Although, of course, it is also important to have some structure in place to ensure discipline. It is easy to lapse when you are in the throes of doing business. We all lead busy lives.”
Dorsaint agrees. She describes a recent experience in which a first-time father at Norton Rose had just returned to work. “I knew it would be a big transition for him, so I called him up for a chat. You need that balance of the informal and flexible, alongside more rigorous programs.”
She also notes that it can be hard to replicate formal mentoring schemes in smaller organizations. “In those smaller companies, it can be easier to pick up the phone to an outside organization, of which there are plenty – for example, Black Women in Asset Management,” she says.
Sponsorship, meanwhile, is another important tool, and one that often gets overlooked. Where mentorship provides an opportunity to chat and work through problems, sponsorship is where a leader in an organization identifies exceptional talent and advocates for that person in the workplace, explains Hall. “I think sponsorship is really important for women and other minorities that may not always be as confident in putting themselves forward. Having someone champion you and help give you a voice can be extremely helpful.”
Reverse mentorship can also be powerful. “I learn just as much from our young people and minority groups as they do from me,” Sales says.
“If there is no one in leadership who looks like you, then you implicitly create a psychological barrier to success”
Thinking Ahead Institute
Hall mentions that reverse mentoring has been particularly revealing through the pandemic, as people’s work and home lives have been smashed together. “It has allowed mentors to have a deeper understanding of the types of challenges that people are facing. For example, we saw the unlawful killing of George Floyd in 2020 have a massive impact on individuals,” she says.
“For some, it was seeing such racism so publicly and brutally displayed. For others, it was difficulty in understanding why something that happened in the US had such a major impact for those living in the UK and other minorities around the world. Reverse mentoring helped us understand from both our black and non-black employees about why this mattered and how it affected them, enabling us to create more informed diversity policies. Listening and showing caring and empathy has been especially important for leadership teams over the past 18 months.”
Indeed, the pressures of remote working have placed particular pressure on an organization’s most junior staff, some of whom, as Parrott points out, have never set foot in a corporate office. “They don’t know what it is like to be in a cubicle farm where you can go to a neighbor and ask how a particular app works or get help on figuring out a formula,” she says. “Whatever your background, it is a big ask to expect junior talent to raise their hand, or make a telephone call, and even harder if they feel they don’t look like everyone else.”
Parrott has tackled this issue by setting up one-on-one coffees with the entire team on a quarterly basis, for “half an hour where they feel they can have some authentic face time,” she explains. “It is incumbent on senior folks to reach out and create that opportunity for others to speak up.”
Other ideas have included an hour a day of simulated office environment, when people can work quietly alongside each other on Zoom, but also look over that virtual cubicle wall and have a chat. The idea is to make people feel less isolated and not feel as if they were bothering their bosses by asking questions.
“This crisis has been unprecedented in terms of the adjustment required by individuals. We are all trying to work from home and balance this with our personal lives during a global pandemic,” Hall adds. “People have been coping with home schooling or having elderly parents move to live with them. That is where the culture of an organization really comes through. Leadership needs to bring the values of caring and respect for humanity to the table.”
Hall’s team at the Thinking Ahead Institute borrowed an idea from a Harvard Business Review article to address this problem. “We held a 30-minute team meeting every week where we gave individuals space to talk about how they were feeling, but also to make their own numeric assessment of how stressed they felt, as well as how engaged they were with work/life,” she says.
“We still continue to do this as it’s a simple but effective tool in understanding where the team’s pinch points were – for example, when schools were shut or infection rates were high. We found that this was an important addition to the storytelling. Some people speak in numbers,” says Hall.
Sale adds: “I think we all needed a degree in psychology to navigate the pandemic which has affected employees in so many different ways. There has been no one-size-fits-all. Engagement at a personal level has been critical.
“For example, we had a young person, who recently started at the company, who was excellent at what he did, but also had three kids under four and a wife with postnatal depression. He was working from 7pm to 3am to cope. It is important to identify these things and to try to support people as much as possible.”
Sales also believes it is important to be light-hearted and to bring a sense of humor to the situation. “Corporate emails can be dull and repetitive. In fact, three people in our team came up with the idea of a newsletter for the European offices. We are now on the 59th edition. There is a photo of the week, joke of the week, cocktail for the weekend and an interview with a team member. You have to find the right balance between engagement and not pushing too much corporate information.”
One of the most frequently cited challenges around measuring and improving diversity, meanwhile, is the ability to collate data, which often involves regulatory hurdles.
According to Dorsaint, the solution involves engagement and transparency. “You need to tell people what you are collecting and why you are collecting it,” she explains. “A PwC survey recently found that you need an 80 percent response rate for the data to be valuable. That can then be supplemented by focus groups, but 80 percent should be the minimum requirement.
“To get there you have to be open. You almost need a marketing session where you explain that you are doing this to help your organization achieve more and to create a better team and culture. You need to explain why it will benefit the whole group.”
“I am uncomfortable with the ideas of targets on one hand, but I recognise that, as human beings, we get very little done without them”
Norton Rose Fulbright
Then, once you have collected the data, you need to provide updates on the value that data is bringing on a regular basis, Dorsaint adds. “Finally, you also have to be sensitive to the fact that if there are only one or two individuals from a certain demographic in a group, then their responses may lose their anonymity. However, there is software out there that can overcome that, so that individuals don’t feel targeted.”
Hall wholeheartedly agrees. “Red tape is often cited as a challenge, or an excuse, when it comes to collating diversity data. But it does really boil down to transparency,” she says.
“You have to communicate with your staff to explain why this data matters and what this data will be used for. It is also important not to focus too narrowly on a single identifier, such as gender, but to think about multiple aspects of individual identity such as ethnicity, neurodiversity or educational and social backgrounds.
“Your focus should also be on how the proposed diversity policy benefits the company as a whole, for example by providing clients with the different linguistic abilities they require and therefore providing a better client experience. It has to be holistic and it has to demonstrate why this is better for individuals, clients and how it fits into your corporate values.”
Once the data has been collated and an organization can accurately identify its starting point, the question of whether to implement formal targets arises. Some companies declare a statement of intent. Others go into more detail. “Personally, I am not a fan of diversity targets which are solely focused on hiring to fill quotas,” Hall says.
“Instead, organizations would do well to set out what diversity means to them and a statement of intent that signals its ambition, values and roadmap to achieving your aims. Building in explicit incentives to hold people to account is also very important.”
Dorsaint adds: “I am uncomfortable with the ideas of targets on one hand, but I recognize that, as human beings, we get very little done without them.”
Rather than having targets in place for diverse hires, many feel the emphasis should be on ensuring a diverse group of prospective candidates.
“It is also about how we present ourselves to that prospective talent,” Sales points out. “That means putting together diverse hiring panels, which are the shop window of a company. That is the first insight prospective hires get on the culture of a business and it is how you can move towards greater diversity without having to sacrifice on quality.”
In addition to sounding a note of caution on targets, the roundtable participants also question the use of data for benchmarking purposes. “It is a bit like when schools are competing for your children by saying they are at the top of the academic table,” Sales explains. “It doesn’t tell you anything about the rounded nature of the education that your child is getting. It can’t only be about the numbers.
“Talk to our global CIO of real estate, Carly Tripp, who has been with us for over a decade. She will tell you that the company is unrecognizable from when she first joined. A person who has had that positive experience is unlikely to leave. It is all about creating an environment where people can thrive.”
“Benchmarking can be gamed,” Hall notes. “All you need to do is get that number to align with your peers. It is more important that a mission to build a better society is instilled in a company’s DNA.”
In addition to diversity and inclusion, organizations must also work to ensure an equitable environment, which Hall believes many firms still struggle to achieve. “A lot of it boils down to incentives,” she says. “How do you measure the value of employees who are doing different jobs and how do you put pay structures and promotion processes in place that reflect that, which are transparent?
“Diversity addresses the number of people you employ from different groups, but not whether those people are treated fairly in remuneration. Better organizations will spend as much time thinking about how to promote equity in the workplace and bring about that fairness across the board.”
“All paths lead back to sponsorship,” adds Parrott.
“It can be hard to ask that question about whether you are being paid fairly. You need someone that you have a relationship of trust with to help facilitate that conversation.”
Managers also need to be receptive, of course. And, as Sales notes, many managers fall short on communication, and, in particular, providing difficult feedback, for example when someone has been passed over for promotion.
“We have a history in our industry of promoting those with technical prowess to management. It is almost a reward or a right of passage,” Hall says.
“But someone could be excellent at running a portfolio but not at dealing with people. It is a very different skillset and I think the approach in our industry has to change so that people management becomes a priority.”
In Willis Towers Watson’s Investments practice, for example, everyone is evaluated annually, not only on their performance, but also on the extent to which they live up to the company’s values. “That rating helps inform that person’s bonus and their salary for the following year,” Hall says. “They are evaluated on things like teamwork, integrity and respect because we do find there are people who are technically competent but are unable to work with others. The technical aspects of a role can be picked up relatively easily, but someone who struggles with the human side can easily destroy the culture of a team.”
“Boards need to reflect society and they need to bring different perspectives to the table,” says Nuveen’s Mike Sales.
“Boards are there to govern and not comply, so you need a group of people who can challenge management and that requires diversity,” he adds.
Marisa Hall of The Thinking Ahead Institute, says: “You are highly unlikely to achieve strong cognitive diversity and hence good collective decision making when everyone has a uniform set of experiences. Representative diversity is also very important. It isn’t enough to say we may all look the same but we are cognitively diverse. It is important that boards look and feel like the population that they are there to serve.”
Leveraging that diversity is also key. In his book The Wisdom of Crowds, James Surowiecki discusses the importance of aggregating mechanisms that enable diverse voices to come together to build collective intelligence. How meetings are run is important to this. There need to be psychological safe zones where everyone feels they have the opportunity to express a different point of view.
“Those aggregating mechanisms are often overlooked and include things like selecting a social chair, in addition to the content chair, who looks around the room to ensure everyone feels included,” says Hall. “It also includes techniques like focused turn-taking or asking members to offer a level of conviction when agreeing to a decision and explaining any levels of doubt. Diverse representation is just the first step. There is a lot of work to do to bring the benefits of that diversity out.”
Sales believes the representation of youth is one of the biggest missed opportunities on boards. “The accepted way is to have boards dominated by experienced custodians, but for me that youthful perspective is important.”
“The idea of diverse boards isn’t new, of course,” Norton Rose’s Jennie Dorsaint adds. “No-one would ever have accepted a board run only by accountants or only by lawyers. We have always known different skills are required to help boards make those difficult decisions. What can work, if certain forms of diversity aren’t readily available in the short-term, is to establish sub committees or working groups that feed into that board, and that can include the younger generations.”