The City of London is rarely far from the headlines. Most recently, these have been generated by the current government’s plans to cap limits on bankers’ bonuses, a proposal that has sparked widespread controversy.
Looking back a bit further, the City experienced sustained negative coverage following the cataclysmic financial crash of 2008 but, in the decade since then, it has also attracted attention because of who it employs in its ‘top jobs’. One 2020 study found that almost 90 per cent of senior leaders in eight of its leading financial service firms were from the most privileged backgrounds, which compares to just over 30 per cent of the UK population, while another found that over half of partners in the City’s leading law firms are white, privately educated men.
This might not come entirely as a surprise but there is little doubt that these figures contradict the City’s own preferred narrative of ‘merit’. In partial recognition of this, leaders at elite investment banks, law and accountancy firms have professed their commitment to diversity and inclusion. Historically, the focus has been on addressing sex-based inequalities, but women remain seriously under-represented in the most prestigious and highly remunerated roles. Attention has now turned to social class, but here too there is little evidence of real movement in the demographic composition of City ‘elites’.
It’s difficult to avoid concluding that diversity hasn’t worked although, of course, this begs the question: what would be the measure of success? One answer would be that sex, ethnicity or background would have no impact on either access or career progression. At this point, we are very far from that. As practitioners and firm leaders have confronted this rather depressing fact, they have often sought ways to do diversity ‘better’. But what if diversity does not work because it is not meant to? What if its primary purpose is to keep unfair systems and structures which benefit elites firmly in place? This is the argument I make in my book Highly Discriminating, published by Bristol University Press this month. As diversity offers an illusion of change which protects the privileges of existing financial and professional elites, from their perspective the agenda’s failures count as its greatest success.
To understand what may seem counter-intuitive, we need to consider where diversity came from and why it was introduced. Briefly, this is a North American agenda, developed in the 1990s to help ‘manage’ already diverse organisations to reduce conflict in pursuit of competitive advantage. The problem in the City was rather different given that then, as now, its elite firms were dominated by a rather homogenous elite. Despite this, diversity filtered into the City during the early 2000s via a process of diffusion and imitation: in other words, City firms copied their US headquarters and peers in pursuit of legitimacy, and as they did so diversity became seen as the ‘right’ thing to do, for reasons quite separate from any real evidence of its efficacy in relation to improved outcomes for under-represented groups. In fact, diversity was primarily introduced to solve reputational concerns (not issues of inequality) and this is significant because protecting reputation does not require the sort of structural changes which are necessary for equality, and are often quite costly – and therefore not that attractive to leaders of elite firms. This helps to explain why diversity interventions have had a rather cosmetic effect.
At this point, it would be fair to ask why any of this matters, and to whom: after all, the City comprises only a small proportion of the labour force in the UK. However, the City makes a vital contribution to our economy and has a significant capacity to damage it. It also offers some of our most remunerated jobs and who gets them helps to determine the class structure of the whole of the UK. Over the past four decades, the City has promoted a meritocratic narrative which suggests that discriminating on any factor other than ‘talent’ is irrational and that equality can be realised as managers act rationally in pursuit of economic efficiency. In practice, hiring and promotion take place on a range of alternative values, which reflect history, tradition and established norms but, where this meritocratic myth can be sustained, this benefits current elites, as it suggests their exceptional financial rewards are fairly distributed and richly deserved. It is notable then that diversity’s ‘business case’ also suggests that where managers are convinced inclusion will bring economic benefits, they will feel compelled to act. Once again, there is limited evidence for this, and in prioritising this business case, diversity reflects the very problems with the merit principle it professes to address.
As is true elsewhere, the City’s diversity agenda is then beset by tensions and paradox, including as it masquerades as politically neutral and progressive when it is anything but. Diversity is, in fact, an excellent mechanism to keep unfair structures and systems in place while offering elite firms useful cover to distract from the very inequalities of income and wealth they help to create.
Undoubtedly, these represent inconvenient truths – and this helps to explain why related debates are carefully controlled. For example, during talks I give on this subject in the City, I am often asked how we can manage the message to keep white men on board, to which I answer it is a strange sort of equality agenda which centres the identities of the very people it is trying to (partially) displace. Meaningful change would require a more radical approach, though this is not at all what most ‘elites’ want. One way we can respond is to acknowledge this fact, and to disrupt and challenge established cultural scripts.
Louise Ashley is Senior Lecturer in the School of Business and Management at Queen Mary University of London.
Highly Discriminating by Louise Ashley is available on the Bristol University Press website. Order here for £19.99.
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