Bank of England wants to end ‘monoculture and groupthink’

The head of England’s national bank made it clear that the institution has a long way to go in terms of representing the UK populace, so it seeks to step up its game in terms of diversity.

Mark Carney, Governor of the Bank of England, gave a speech on the topic, saying that “frequent charges levelled at this central bank – like many of our peers – include being mono-culture, secretive and ridden with groupthink.”

The speech is from February, but is newly relevant as the U.S. Federal Reserve — the American counterpart to the Bank of England — battles a scandal that may became worse because of secretiveness and groupthink. The Fed is closing ranks to push back against a leak investigation that has already claimed the resignation of the Richmond Fed president  — and some predict there may be more.

Which all goes to say, Carney is right: while companies should try to reflect who they cater to, science has also proven that having employees who come from a range of cultures and different genders is good for business.

‘120th in a long line of male Governors’

Carney touched on the history of the bank, showing that this concept has not always been at the forefront of the institution’s mindset.

He pointed out that the “first female Court member” “was only appointed in 1993,” that five years afterward, the “first Black, Asian and Minority Ethnic member” joined, that “graduate intake was drawn from just 11 universities” ten years before, and that he is “the 120th in a very long line of male Governors of the Bank.”

He breaks down why they “value diversity” in three main reasons: that it is “the right thing to do,” so as a public organization, it “should seek to reflect the diversity of the public it serves,” it helps increase “trust we need to deliver our remits,” (referring to research from 1993 and 2009) and that because it’s known that “diversity leads to more creative thinking and reduces the risks of groupthink and bias.”

He used diversity as a jumping off point, however, adding that it’s more than that — “we also need to choose inclusiveness.”

The benefits of inclusivity in the workplace

The Governor of the Bank of England emphasized that diversity comes in both identity and cognitive form. In other words, it’s the difference between who you are versus how you think. Carney was making reference to concepts from a 2016 working paper and a 2007 book).

Carney spoke about how and why diversity can boost trust, improve both how decisions and ideas are made and flexibility, and that it will help communication— saying specifically, “being diverse can help us to craft communications that people can actually understand. “

The Bank will reportedly step up its diversity and inclusion in three ways: by recruiting more diverse talent, by creating a more “inclusive culture” that encourages people to openly “debate, challenge and present ideas,” and that supports them when working on something new, and by “creating inclusive communications.”

Carney mentioned various initiatives in his speech, but one that stood out in terms of the Bank’s commitment to diverse hiring was a set of goals.

The institution seeks “to triple both the proportions of women in our senior roles, to 35% by 2020,” and of  “Black, Asian, and Minority Ethnic” workers “in these roles to 13% by 2022.”

Science-backed reasons to strive for inclusion at work

Taking a diverse approach at work will not only ensure that employees feel more included, but it can have an impact on how much money a company generates.

A McKinsey report that studied “proprietary data sets for 366 public companies” in different types “of industries in Canada, Latin America, the United Kingdom, and the United States” found that “companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians.”

The same report found that gender diversity can lead to higher company earnings, or EBIT.

“In the United Kingdom, greater gender diversity on the senior-executive team corresponded to the highest performance uplift in our data set: for every 10 percent increase in gender diversity, EBIT rose by 3.5 percent,” the McKinsey article said.

Another case was made for gender diversity. MIT News reported that a study co-authored by a researcher from the university found that “shifting from an all-male or all-female office to one split evenly along gender lines could increase revenue by roughly 41 percent.” The study reportedly drew from “eight years of revenue data and survey results, covering 1995 to 2002, from a professional-services firm with more than 60 offices in the United States and abroad.”

The Bank of England’s push to be more inclusive reflects the growing need for many companies to see the benefits of challenging traditional hiring practices.