Research

Diversity, Equity and Inclusion is not bad for business: Evidence from employee review data for companies listed in the UK and the US 

Diversity, equity and inclusion (DEI) is a growing strategic focus area. However, measuring DEI remains a challenge, partly due to self-reporting biases and limitations of cross-sectional survey data. This paper proposes a novel measure of DEI using a data set of online employee reviews that encompasses more than 3.2 million reviews posted between 2015 and 2022 on the career intelligence website Glassdoor. We investigate the relationship between this measure of DEI and firm performance for 945 US and UK-listed firms. We find that DEI is associated with higher long-term market performance, with positive impacts larger for growth compared to steady state firms, but not short-term market performance. We find evidence of a mixed relationship between DEI and accounting performance, and a consistent positive relationship with higher innovation. 

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When Generations Meet: The productivity potential of multigenerational teams

Drawing on data from more than 3,400 professionals, this report highlights the importance of harnessing the productivity potential of generations at the point at which key operational and strategic decisions are being made — in meetings. As well as wasting valuable employee time, unproductive meetings can stifle organisations’ creativity and prevent teams from addressing key organisational challenges. For individual team members, unproductive meetings can be a source of friction and stress, undermining their overall job satisfaction. Better meetings are key to better workplaces, with each generation having a role to play.This report shows that by increasing representation across generations and creating more inclusive meetings, organisations can expect to significantly increase productivity benefits. The report provides actionable steps for leaders to realise these benefits.

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VOICE: A Blueprint for Inclusion in Financial Services

The VOICE blueprint aims to support individuals, managers, and firms in enabling the retention and progression of colleagues from lower socio-economic  backgrounds (SEB) in financial services in the United Kingdom (UK). VOICE was created based on extensive input from colleagues from lower SEB working in financial services across the UK who participated in our qualitative research. The VOICE blueprint identifies the underlying biases that hinder the retention and progression of colleagues from lower SEB with recommended actions, backed with behavioural science research, that managers, individuals, and businesses can take to bring positive change.

It identifies challenges and opportunities and provides recommended actions for five ‘VOICE’ focus areas identified through the study: Voice and Visibility, Open-Mindedness, Inclusion, Chance of Success, and Empowerment.

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Diversity and Productivity: from Education to Work Annual Report 23/24

Over the past year, the DaPEW project team has focused on deepening our understanding of the relationship between diversity, inclusion, and productivity through rigorous research, innovative experiments, and engaging events. This year’s report encapsulates the research we believe will reshape the future of diversity and productivity in the UK.

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WOMEN Vs MEN AFTER COVID: Gender Differences in Labour Market Outcomes in Post-Pandemic Financial and Professional Services

The COVID-19 pandemic underscored pre-existing gender inequalities, burdening women with the biggest share of unpaid carework and greater employment losses globally, reversing some of the progress made towards closing the gender employment gap across G20 countries. Although labour market recovery since the pandemic has helped reverse some of the disproportionate impacts on women, progress in financial and professional services has historically and continues to be slow. This raises concerns that the pandemic, followed by thestart of the cost-of-living crisis in 2022, might have long-lasting implications in advancing gender equality within these industries.

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GENERATIONS: What is the productivity potential of your multigenerational workforce? 

Prior to the launch of the Generations Survey, The Inclusion Initiative embarked on preliminary research, drawing on data from more than 1,450 employees in Finance, Technology and Professional Services Industries in the United States and the United Kingdom. The results of that research can be found in our preliminary report, GENERATIONS: Unlocking the Productivity Potential of a Multigenerational Workforce.

This report spotlights a call to action for leaders to prioritise intergenerational inclusion by making it a core forcus to DEI and talent acquisition strategies. It shows that, despite the clear potential for productivity gains through intergenerationally-inclusive work practices, firms continue to miss out due to frictions between employees of different generations.

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What Skills Pay More? The Changing Demand and Return to Skills for Professional Workers

Technology is disrupting labor markets. We analyze the demand and reward for skills at occupation and state level across two time periods using job postings. First, we use principal components analysis to derive nine skills groups: 'collaborative leader', 'interpersonal & organized', 'big data', 'cloud computing', 'programming', 'machine learning', 'research', 'math' and 'analytical'. Second, we comment on changes in the price and demand for skills over time. Third, we analyze non-linear returns to all skills groups and their interactions. We find that 'collaborative leader' skills become significant over time and that legacy data skills are replaced over time by innovative ones.

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Who Makes it to the Top? Differential Rewards to Personality Across Gender and Occupation in the UK

This study tests whether personality traits are legitimately rewarded in the labour market or whether there are differing rewards across gender that cannot be explained with productivity. We investigate if personality traits affect the likelihood of making it to the top income quintile within an occupation differently by gender using UK Household Longitudinal data. We find that being agreeable hurts men more than women across a majority of occupations, which points at the role of gender norms for wages. Further, female legislators and senior officials who are conscientious, extraverted, neurotic and open are more likely to be among the top earners than men. Other than that, we find small gender differences in personality rewards.

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What Makes an Individual Inclusive of Others? Development and Validation of the Individual Inclusiveness Inventory

This study develops and validates the 'Individual Inclusiveness Inventory'. Collaboration and inclusion are key contributors to successful work outcomes in an increasingly diverse workforce. We capture what makes an individual inclusive of others at work. We define an inclusive individual as someone who actively includes individuals in a group and encourages diversity of thought and background but still encourages the group in a way as to maximise performance and productivity. To develop the 'Individual Inclusiveness Inventory' we combine a deductive and inductive approach: we generate scale items based on the existing literature on inclusion and interviews with 14 experts in diversity and inclusion. The items are then reduced using exploratory factor analysis and confirmed using confirmatory factor analysis in two samples of working professionals in the UK. This results in a two-factor solution where factor 1 'Belonging and Uniqueness' captures the importance of fostering belonging and uniqueness at work and factor 2 'Challenge and Openness' captures being open to challenge and being challenged. 

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The Inclusive Individual 

This piece delves into the core of what it means to be inclusive, empowering each of us to play a part in creating a workspace where everyone is acknowledged and valued.

The report addresses the industry’s demand for a detailed exploration of inclusivity at the individual level, providing deep insights from a comprehensive study that includes a diverse range of professionals. It highlights the transformative impact of inclusivity on personal development and the overall workplace atmosphere.

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The ‘Beyond Workplace Wellbeing’ Framework: A New Framework for the Organisation of Work to Cultivate Wellbeing and Productivity in the Workplace

Organisations’ attempts to improve wellbeing at work are too narrowly focussed and fail to account for the diverse and individualistic ways employees cultivate wellbeing. Moreover, a clear disconnect exists between the amount of money invested into organisational wellbeing initiatives and the ever-increasing levels of ill-being at work. The ‘Beyond Workplace Wellbeing’ Framework therefore brings together findings from a large qualitative study involving 100 semi-structured interviews across financial and professional services in the UK. We propose that employers should not intervene with wellbeing, but should instead focus more on improving psychological safety and reducing ill-being of employees that is directly attributable to their employment. We also highlight the significance of employees being given autonomy in choosing how and when they carry out responsibilities subject to satisfying operations. This autonomy allows employees to create a work structure that enables them to be both productive and enhance their own wellbeing. Findings are timely in response to Covid-19 and the re-organisation of work. They simultaneously highlight the importance of large and diverse samples in qualitative research.

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Three Years of Impact at The Inclusion Initiative

We are thrilled to commemorate three impactful years of The Inclusion Initiative. To mark this significant milestone, we are excited to present our 'Three Years of Impact' report, which captures the journey—achievements, lessons, and transformative moments. As we reflect on our journey so far, we are immensely grateful for your invaluable support and contributions. Together, we've made a difference, and we eagerly anticipate the continued collaboration and growth that lies ahead.

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Diversity and Productivity: from Education to Work Annual Report 22/23

The annual report for the Diversity and Productivity from Education to Workforce (DaPEW) project summarizes the key activities and insights gathered over the past year. This project addresses the pressing issue of productivity challenges in the UK, which has lagged behind its competitors since the 2008 financial crisis. It also highlights a significant diversity problem, with under-represented groups facing barriers in accessing productive education and career pathways. DaPEW is a collaborative effort led by leading researchers from various UK institutions. Its goal is to conduct rigorous research to understand the intricate link between diversity, inclusion, and productivity in the UK.

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Too Old to Be a Diversity Hire: Choice Bundling Shown to Increase Gender-Diverse Hiring Decisions Fails to Increase Age Diversity

Past research has shown that people are more likely to make the decision to hire candidates whose gender would increase group diversity when making multiple hiring choices in a bundle (i.e., when selecting multiple team members simultaneously) compared to making choices in isolation (i.e., when selecting a single team member). However, it is unclear if this bundling effect extends to age diversity and the selection of older candidates, as older workers are often the target of socially acceptable negative stereotypes and bias in recruitment, leaving them unemployed for longer than their younger counterparts. We discuss the theoretical implications for choice bundling interventions and for age as a diversity characteristic to support the design of interventions that meet the challenges of an aging workforce

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Skills That Pay: The Returns from Specific Skills as Demanded in Job Advertisements

With AI now upon us and leading us into the “Fourth Industrial Revolution,” this new report notes hiring has evolved from requiring specific education and experience criteria to looking more at detailed skills requirements. The report that follows looks at the changing demand for specific skills in this rapidly changing job market. It discusses the skills that are rising and falling in demand and explores how the wages for these skills are changing. Looking at professional occupations, the authors identify two “soft” skills groups and seven “cognitive” skills groups that are increasingly relevant for the future of work and deemed important based on the frequency in which they appear in job advertisements. Overall, the soft skill collaborative leadership increased in importance over time in terms of demand and hourly wages.

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Does the Tendency for 'Quiet Quitting' Differ Across Generations? Evidence from the UK

The post-COVID-19 phenomenon of 'quiet quitting' could be problematic for UK economic growth because unpaid overtime has been a key contributor to business productivity since the 2008 global financial crisis. Here, we explore the extent to which this phenomenon exists in the UK, and whether the tendency for 'quiet quitting' differs across generations. We analysed data from the UK Quarterly Labour Force Survey (QLFS) between 2007-2022 to determine changes in hours worked. Given the ~24,568 million UK full-time workers in 2022, our findings equate to over 55 million discretionary hours lost to the labour market per year between 2019-2022, 48.1% of which is accounted for by Millennials. Thus, we evidence that quiet quitting has interrupted the recovery of working hours in the UK to prepandemic levels, and lost hours are especially attributable to younger cohorts.

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ACCELERATE

The ACCELERATE report aims to help firms understand more about the headwinds and tailwinds that women encounter in their careers, particularly before making Partner, and proposes a new framework for implementing change: ACCELERATE. The research includes the voices of more than 60 women in investment roles at GP firms across Europe. Their insights shape a framework to help the private equity and venture capital industry attract, retain and promote women. ACCELERATE proposes actions that firms and individual leaders can take to cultivate inclusive cultures and reduce or remove some of the challenges faced.

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Stephen Versus Stephanie? Does Gender Matter for Peer-to-Peer Career Advice

Occupational segregation is one of the major causes of the gender pay gap. We probe the possibility that individual beliefs regarding gender stereotypes established in childhood contribute to gendered sorting. Using an experiment with two vignette designs, which was carried out in schools in the UK, we consider whether students aged 15-16 years recommend that a fictitious peer pursue different college majors and career paths simply because of their gender. We find strong evidence that this is the case. The within-majors treatment design shows that our respondents are 11 percentage points more likely to recommend corporate law to a male peer. The across-majors design reveals that students presented with a male fictitious peer tend to recommend degrees that have lower shares of females to males.

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The Good Finance 'How To' Manual

To enable our partners and the financial services sector to apply the GOOD FINANCE framework, this manual has two main aims. The first is to provide clear instructions on how firms and their individual leaders can operationalise the GOOD FINANCE framework. The second is to provide clear instructions on how firms and their individual leaders can measure progress for each element of the GOOD FINANCE framework.

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The City Quantum Summit: A briefing on Diversity and Inclusion in the Quantum Sector

Workplaces are changing rapidly, with an increasingly diverse workforce and a lack of talent to fill all the roles, which is why companies across all industries are tackling Diversity & Inclusion within their organisations. Over a dedicated lunch session, The City Quantum Summit addressed D&I in the quantum sector, not least by seeking to learn lessons from the experience of the financial sector, which has been wrestling with the challenge for many more years.

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Ability or luck: A systematic review of interpersonal attributions of success

The role of luck in success has a relatively minor, albeit consistent history in academic discourse, with a striking lack of literature engaging with notions of luck within occupational environments. Elucidating why people attribute their own success to luck over ability has predominated in the literature, with interpersonal attributions receiving less attention. Here, we center on systematically summarizing the evidence on interpersonal attributions of success as a function of ability or luck, with a particular focus on whether these differs by gender and race. 

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100 DIVERSE VOICES: A framework for the future of work in financial and professional services

To understand how to navigate the future of work this study undertook a listening tour of 100 colleagues across financial and professional services, inviting people of all genders and at different stages of their career to participate. UTOPIA allows for workplaces that maximise productivity, while simultaneously embracing diversity, inclusion and the advancement of women.

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Documenting occupational sorting by gender in the UK across three cohorts: does a grand convergence rely on societal movements?

We consider the extent to which temporal shifts have been responsible for an increased tendency for females to sort into traditionally male roles over time, versus childhood factors. Drawing on three cohort studies, which follow individuals born in the UK in 1958, 1970 and 2000, we compare the shift in the tendency of females in these cohorts to sort into traditionally male roles compared to males, to the combined effect of a large set of childhood variables. For all three cohorts, we find strong evidence of sorting along gendered lines, which has decreased over time, yet there is no erosion of the gender gap in the tendency to sort into occupations with the highest share of males.

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How Empathy and Competence Promote a Diverse Leadership Culture

Achieving gender balance in management teams requires focusing on the role that the leadership environment plays in shaping ambitions, opportunities, and experience.

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The impact of mental health support for the chronically ill on hospital utilisation: evidence from the UK

Individuals with common mental disorders (CMDs) such as depression and anxiety frequently have co-occurring long-term physical health conditions (LTCs) and this co-occurrence is associated with higher hospital utilisation. Psychological treatment for CMDs may reduce healthcare utilisation through better management of the LTC, but there is little previous research. We examined the impact of psychological treatment delivered under the nationwide Improving Access to Psychological Therapies (IAPT) programme in England on hospital utilisation 12-months after the end of IAPT treatment. We examined three types of hospital utilisation: Inpatient treatment, Outpatient treatment and Emergency Room attendance. 

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Automation and the changing nature of work

This study identifies the job attributes, and in particular skills and abilities, which predict the likelihood a job is recently automatable drawing on the Josten and Lordan (2020) classification of automatability, EU labour force survey data and a machine learning regression approach. We find that skills and abilities which relate to non-linear abstract thinking are those that are the safest from automation. We also find that jobs that require ‘people’ engagement interacted with ‘brains’ are also less likely to be automated. The skills that are required for these jobs include soft skills. Finally, we find that jobs that require physically making objects or physicality more generally are most likely to be automated unless they involve interaction with ‘brains’ and/or ‘people’.

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Does Rosie like riveting? Male and female occupational choices

Occupational segregation and pay gaps by gender remain large, while many of the constraints traditionally believed to be responsible for these gaps seem to have weakened over time. We explore the possibility that women and men have different tastes for the content of the work that they do. We relate job satisfaction and job mobility to measures that proxy for the content of the work in an occupation, which we label ‘people’, ‘brains’ and ‘brawn’. The results suggest that women value jobs high on ‘people’ content and low on ‘brawn’. Men care about job content in a similar fashion, but have much weaker preferences. High school students show similar preferences in a discrete choice experiment and indicate that they make their choices based mainly on preferences for the work itself. We argue that the more pronounced preferences of women can account for occupational sorting, which often leads them into careers with large pay penalties for interruptions due to childbearing.

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Can meaning make cents? Making the meaning of work salient for US Manufacturing workers

We examine how intergenerational mobility impacts on subjective wellbeing (SWB) drawing on data from the British Cohort Study. Our SWB measures encapsulate both life satisfaction and mental health, and we consider both relative and absolute movements in income. We find that relative income mobility is a significant predictor of life satisfaction and mental health, whether people move upward or downward. For absolute income, mobility is only a consistent predictor of SWB and mental health outcomes if the person moves downwards, and in this case the impact is far larger than relative mobility. For both relative and income mobility, downward movements impact SWB to a greater extent than upward movements, consistent with exhibiting loss aversion. Notably, we find that social class mobility does not affect SWB. We present evidence that the significant relative and absolute mobility effects we find operate partially through financial perceptions and consumption changes which can occur because of income mobility.

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Return to work: a dictionary of behavioural biases

The Return to Work: Dictionary of Biases highlights inclusion issues that organisations and individuals will face as working practices continue to change. In the second edition of the series, the Be-Inclusive-2 researchers specify in which context biases in the return to work are likely to occur (in the office, hybrid or working from home) alongside a situational example.

BE-Inclusive-2 Group: The second cohort of a group of LSE students focused on using behavioural science to promote inclusion in the workplace: Julia Bladinieres-Justo, Aleesha Bruce, Anisah Ramli, Nichaphat Surawattananon and Chanya Trakulmaykee.

Additional authors from The Inclusion Initiative at LSE: Teresa Almeida, Dr Jasmine Virhia, and Dr Grace Lordan.

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People versus Machines: The Impact of Being in an Automatable Job on Australian Worker's Mental Health and Life Satisfaction

This study explores the effect on mental health and life satisfaction of working in an automatable job. We utilise an Australian panel dataset (HILDA), and estimate models that include individual fixed effects, to estimate the association between automatable work and proxies of wellbeing. Overall, we find evidence that automatable work has a small, detrimental impact on the mental health and life satisfaction of workers within some industries, particularly those with higher levels of job automation risk, such as manufacturing. Furthermore, we find no strong trends to suggest that any particular demographic group is disproportionately impacted across industries. These findings are robust to a variety of specifications. We also find evidence of adaptation to these effects after one-year tenure on the job, indicating a limited role for firm policy.

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The TRANSPARENT Framework

Mastercard, 30% club and The Inclusion Initiative

This study was carried about by Erika Brodnock and Dr Grace Lordan. The TRANSPARENT framework is the UK’s first cross-sector framework designed to remove the barriers blocking the progression of talented Black professional women in finance, professional services and big technology.

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The INCLUSION Framework

Introducing The INCLUSION Framework, a tool to create inclusive cultures when managing global teams in financial services. Written by Dr Grace Lordan and Professor Lutfey Siddiqi, this new study demonstrates that well-meaning diversity and inclusion policies in financial services firms are failing to achieve their desired impact. 

 This framework includes insights from Singapore and truly brings the work of The Inclusion Initiative into a global light. Moreover, the topics discussed within this paper connect cross-continental approaches and ideas surrounding inclusion and presents practical guidance to corporations across the globe. 

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The Good Finance Framework

This study was carried out by Dr Grace Lordan, Director of The Inclusion Initiative at London School of Economics (“LSE”). The study forms part of Accelerating Change Together (“ACT”) Research Programme designed and led by WIBF in partnership with The Inclusion Initiative at LSE and The Wisdom Council.

To understand the headwinds and tailwinds that women experience when working in financial and professional services, the study undertook a listening tour speaking with 44 women at various stages in their career.

The objective of this study is to use this information to create a framework comprised of actions that a company can take to ensure that they retain and develop their most talented employees, including women.

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The Accelerated Value of Social Skills in Knowledge Work and the COVID-19 Pandemic

The COVID-19 pandemic has brought with it a debate around which skills will be the most valuable in its aftermath. This study discusses the relevance of social skills in this debate and presents new evidence that shows its necessity. Specifically, we focus on knowledge workers and highlight that the importance of social skills was increasing pre-COVID-19 for these workers and that this importance has increased further during the pandemic, particularly for those in management roles. This study has also emphasised that we are at the beginning of the learning curve in understanding how social skills can be taught effectively to adults, and in particular knowledge workers. Establishing this evidence base is particularly important as governments around the world reconsider their skills agenda as a way to build up their economies post COVID-19.

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The Interaction between Personality and Health Policy: Empirical Evidence from the UK Smoking Bans

We investigate whether responses to the UK public places smoking ban depend on personality. Drawing on individual level panel data from the British Household Panel Survey (BHPS) we exploit variation in the timing and location of these bans to establish their overall effect on smoking outcomes, and how this differs by personality. We measure personality using the Big Five personality traits. We are particularly interested in conscientiousness, given the evidence that it is a good proxy for self-control. Overall, we find that a one standard deviation increase in conscientiousness leads to a 1.4 percentage point reduction in the probability of smoking after the ban. Notably, this is the only Big Five personality trait that interacts with the smoking ban. This finding is very robust to different specifications.

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Hybrid Working: A Dictionary of Behavioral Biases

A project by BE-Inclusive; a LSE group focused on using behavioural science to promote inclusion in the workplace: Catherine Bouckley, Michaela Fricova, Sammy Glatzel, Natalie Hall, Ipsitaa Khullar, Alexandra Kirienko, Sharon Raj, Tina Soh, and Sego Zeller.

Additional authors from The Inclusion Initiative at LSE: Teresa Almeida, Paris Will, and Dr Grace Lordan.

In this dictionary you will find a description of behavioral biases, and an example of how they may arise in hybrid working.

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Accelerating Change Together
Part 1: Changing the Narrative

By Women in Banking & Finance, The Inclusion Initiative and The Wisdom Council

These survey findings will form an important foundation for the Accelerating Change Together Report, which will be published in 2021. The Report will deliver new insights and actionable recommendations based on the insights and research of the survey participants.

Read the survey findings here

Virtual Inclusion in the City

By Grace Lordan, Director of The Inclusion Initative

In order to understand the obstacles that stand in the way of virtual inclusion for the City of London’s workers, Dr Grace Lordan went on a virtual listening tour engaging 35 of its most senior leaders who work in financial and professional services in the City of London.  

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Climbing up ladders and sliding down snakes: an empirical assessment of the effect of social mobility on subjective wellbeing

We examine how intergenerational mobility impacts on subjective wellbeing (SWB) drawing on data from the British Cohort Study. Our SWB measures encapsulate both life satisfaction and mental health, and we consider both relative and absolute movements in income. We find that relative income mobility is a significant predictor of life satisfaction and mental health, whether people move upward or downward. For absolute income, mobility is only a consistent predictor of SWB and mental health outcomes if the person moves downwards, and in this case the impact is far larger than relative mobility. For both relative and income mobility, downward movements impact SWB to a greater extent than upward movements, consistent with exhibiting loss aversion. Notably, we find that social class mobility does not affect SWB. We present evidence that the significant relative and absolute mobility effects we find operate partially through financial perceptions and consumption changes which can occur because of income mobility.

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Inclusion in the City

Setting the Agenda for the First Years of the Inclusion Initiative at LSE

By Grace Lordan, Director of The Inclusion Initiative and Karina Robinson, Co-Director of The Inclusion Initiative

In November 2020 The Inclusion Initiative (TII) launches at LSE. TII aims to bring behavioural science insights to firms to allow them to enhance the inclusion of all talent, and simultaneously produce academically rigorous and relevant research that links directly to TII’s purpose.

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