Diversity, Inclusion and Belonging continues to be the most talked about HR issue of my generation. Many firms have made good steps forwards with Diversity, but questions are being asked about Inclusion and Belonging. Once hired, do these individuals truly have a voice, are they listened to or are they expected to “fall in line” and “conform” rather than showing off their skills.
Willis Towers Watson have produced some analysis and “there is clear evidence to say that an investment team that is more diverse will deliver better outcomes” we are told by their Head of Manager research, Chris Redmond.
The group has look at more than 2000 investment teams across the global and has clearly shown that diverse investment teams outperform those without by 20 basis points on average throughout the course of the year.
This has created a new pressure for fund managers to increase their diversity and at speed. Investors are always looking for the best returns available and knowing what they now do, one must assume that they will look to invest in funds created by diverse teams moving forwards. This is a big step forward for diversity campaigners and clearly demonstrates the strength that diversity brings.
Many firms still suffer from homophily and managers have too much freedom to hire ‘mini-me’s’ and continue with ‘the way it’s always been’ this study will push firms to think broader and look for change. To develop collective intelligence and break down the echo chambers that these individuals are currently living within.
This in turn should create a risk of losing clients if you do not make changes, as investors are fickle and focus on the largest returns. This is great news for HRM across the globe who are pushing hard for change and now have clear analysis that should fall in line with the company’s strategic aims even if they are simply aligned to profitability.
Mr Redmond followed through with his view that “where we don’t see progress, we will likely go ahead and change our conviction level, and typically clients will follow and money will leave”.
The data provider Morningstar released a study this year demonstrating that the current level of female fund managers in the world is 14 per cent. Worse, this figure has not changed for nearly 2 decades now. This clear messaged from Willis Towers Watson should help create the changes that many firms desperately need.
