There is “little evidence” that investment banks have made “meaningful” steps towards increasing social mobility, according to a government report.
The report from the Social Mobility Commission examined social inclusion in the life sciences and investment banking sector. It concluded investment banks have not made “meaningful alterations to mainstream recruitment and selection practices” that would widen their talent pools to people from more diverse social backgrounds.
The report states: “investment banks lag behind the good progress made in peer group professions within the City such as law and accountancy”.
The report suggests that in investment banks recruiters are sticking to talent pools from middle- and higher-income candidates who have attended ‘elite’ universities. It also says that unwritten codes around things like dress codes can prevent those from less privileged backgrounds from gaining entry.
In areas such as corporate finance a candidate is assessed not just on experience or education but on “specific behaviours, speech patterns and dress codes”, the report says. “Hiring managers consider that these characteristics, summarised as ‘polish’, reassure clients about their advisors’ expertise and experience, and help build trust,” it states.
The report quotes a candidate from a non-privileged background who was told he was “not the right fit”. He said he was told he was “not polished enough” and that his tie was “too loud”.
Chair of the Social Mobility Commission Alan Milburn said working class young people are being “systematically locked out" of jobs because they have not attended the right university or don't understand “arcane culture rules”.
“While there are some banks that are doing excellent work in reducing these barriers, there are still too many that need to wake up and realise that it makes sound business sense to recruit people from all backgrounds,” he added. “It is shocking that some investment bank managers still judge candidates on whether they wear brown shoes with a suit, rather on than their skills and potential.”
The report recommends employers collect data on the background of applicants to better understand barriers to access and be more flexible around screening on academic credentials gained at secondary school.
Louise Ashley, a lecturer in human resource management and organisational behaviour at Royal Holloway University of London, who led the research on investment banking, said: “Access to front-office roles in investment banking is extremely competitive for all candidates, but our research suggests students from less privileged backgrounds are less likely to get the top jobs – no matter how talented they are.
“Banks are making good progress addressing these issues through outreach and work experience, but more needs to be done to understand the barriers to entry. This needs to be accompanied by changes to the way candidates are recruited and selected.”