Many companies today are talking about the value of a diverse workforce. After 30 years in human resources at a range of leading companies, I am heartened by the evolution and increased focus on diversity and inclusion. But it's time to move from discussion to action. To see real change, companies must stop treating diversity as a "nice-to-have" box to be checked.
A growing body of research shows that companies with culturally and ethnically diverse leadership are more likely to have above-average profits. A recent report from McKinsey found that gender diversity correlates with both profitability and value creation in the workplace.
But despite the business imperative, the financial services industry is falling behind. Women- and minority-owned asset management firms exhibit strong returns, yet are dramatically underrepresented in every asset class, according to a 2017 Knight Foundation report. Only 20% of mutual funds globally have at least one female fund manager, according to a 2016 Morningstar study. And 2017 data from the Bureau of Labor Statistics found that only 4.8% of advisers are African-American, 6.6% are Asian and 8.3% are Hispanic.
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The world we live in is diverse, and the lack of diversity in the financial services industry has a real impact on how we relate to clients and ultimately how we do our jobs. The more diversity of background and diversity of thought we can bring to the equation, the better equipped we will be to excel in our work.
At Capital Group, our perspective is that our differences make us better. Our success depends on the ability of our portfolio teams and investment professionals to reflect diverse perspectives to make good investment decisions. To do that, we must recruit, retain and help advance employees who reflect our diverse world.
In my experience, it starts with leadership support and a deliberate approach, followed by a comprehensive program with short- and long-term goals. What makes it work over time is a genuine organizational understanding that a diverse and inclusive business is one that will thrive.
We have embraced the "REAL" model to drive diversity and inclusion firmwide. We realize we can't just invest in recruitment or engagement to create tangible change. We need to develop our future leaders and set an example for the rest of the industry.
• Recruit. Attract and retain strong talent that is representative of the diverse world we live in.
The first critical area all financial companies should be addressing is recruitment, specifically bringing new people into the financial services industry. We need to make our industry more appealing to individuals from all backgrounds if we want our businesses and clients to benefit from a diversity of perspectives.
One of our programs, Climb (Capital Leads, Inspires and Mentors in Business), offers skills workshops and networking opportunities to introduce undergraduate students from all backgrounds to careers in financial services. This biannual workshop serves as an opportunity for us to engage with students from across the country and further build out our hiring pipeline for students from underrepresented groups in the financial services industry.
• Engage. Inspire current team members to get involved and contribute to an inclusive culture.
We are also taking steps to create a more open and inclusive workplace in all our offices globally. One way we do this is through more than 30 associate-driven Capital Communities, including CG Pride, CG Veterans, Capital Associates of African Descent and various women's groups. Approximately 2,800 employees are involved in this initiative, which allows our employees to connect and celebrate both our similarities and our differences.
• Advance. Develop the next generation of leaders and ensure that the group includes people with different perspectives and backgrounds.
To measure and drive accountability, we created a framework for our managers, Leading Capital, which outlines our expectations for leaders and embeds specific people practices during interviews, performance reviews, development programs and talent reviews.
• Lead. Set an example that diversity and inclusion are critical to business, the industry and beyond.
We prioritize a focus on participation by our senior leaders in industry conferences and trade groups on topics related to diversity and inclusion. We also have equipped our national financial adviser education team to speak on the role of diversity and inclusion as a healthy business practice.
As an industry, we've done plenty of talking about diversity and inclusion. But it's time to take real action that will have both short- and long-term impacts. We must also hold our colleagues, peers and leadership accountable. Our investors expect it — and depend upon it.
Jim Evans is the head of diversity, inclusion and engagement at Capital Group, home of American Funds.
This story is part of an ongoing initiative by InvestmentNews to cultivate a financial advice profession in which diverse perspectives are welcomed and respected, and industry best practices can be shared across organizations.