Herbert Smith, a firm of City solicitors, last month announced that it had hired its first ‘inclusivity manager’. There were chortles all round, and the Times ran a short piece about the appointment under the headline ‘Political correctness seems to have broken out at one of London’s top legal firms’. The caravan swiftly moved on, but the recruitment of Carolyn Lee by one of the ‘Magic Circle’ of leading law partnerships is the latest sign that the City is coming to terms with the realities of modern life.
While the number of women in the professional workforce has mushroomed in recent years and a tolerance of male chauvinist piggery has correspondingly diminished, the City has remained a male-dominated bastion where old habits die hard. Earlier this month a former executive at HBOS, the bank formed by the merger between the Halifax and the Bank of Scotland, launched an £11 million lawsuit. Claire Bright, who had been on £600,000 a year as head of asset management until she left the bank last October, claimed that she became suicidal after being harassed and humiliated by her male boss. Her action is small beer compared with a claim filed in the US against the investment bank Dresdner Kleinwort Wasserstein. Six female employees are suing for no less than $1.4 billion, accusing the company of being a sexual predator’s playground, where women are viewed as ‘eye candy’ and one of them was referred to as ‘the Pamela Anderson of trading’. Whatever the merit of these actions, one thing is for sure. Supposedly reputable firms don’t like being pilloried on the front pages of the tabloids or being stung for millions. And if that means getting PC, then they will get PC.
For a guide to how the future will look, there’s no better place to start than the US. One ‘diversity consultant’ reckons that, as in so many other sectors, the Americans are ten years ahead of us in this area. Following a string of incidents involving lap-dancing clubs, allegations of dwarf-throwing at a stag party, and prostitutes in the office, the New York Stock Exchange and the National Association of Securities Dealers have both come up with draft guidelines covering business entertainment — what one report described as ‘an effort to bring decorum to an investment bank community that has increasingly been caught with its trousers down in recent years’.
But a number of US companies have been acting on their own initiative. Earlier this year Morgan Stanley — having already forked out $54 million to settle one recent sex discrimination case — fired four male employees for visiting a strip club while in Arizona for a conference. Goldman Sachs fired three traders for sending pornographic emails. Others have become so paranoid that they have gone so far as to introduce ‘no flirting’ policies.
The days of goosing secretaries and telling bawdy jokes to the receptionist, it would appear, are well and truly numbered. At least they are in the US. Over here, the City has shown a marked reluctance to go the PC route. It is now more than five years since the landmark Hugh Tidbury case, in which a £300,000-a-year female investment banker was awarded a rumoured £1 million after winning her sex discrimination case at an industrial tribunal. Kay Swinburne said Tidbury — her manager at Deutsche Bank — turned on her after she complained about the presence of escort girls at the office Christmas party.
She claimed he accused her of having an affair with a client, blocked her promotion and referred to her as ‘hot totty’ and ‘a bit of skirt’. Despite the scale of the payout in that case, few institutions moved to address the possibility that they might be next.
What explains this complacency? ‘No one reacted then because the City had a big turnover of people, their clients were normally men, and lots of people wanted to work in the City,’ says Dr Sarah Rutherford, a former investment analyst and financial journalist, who now runs her own diversity consultancy.
But things are changing. Rutherford estimates there are now about 100 ‘diversity professionals’ employed by City institutions, where five years ago there would have been none; and more and more companies are calling in consultants in a bid to change their ways. These days, there is even something called the ‘Interbank Diversity Forum’.
But only the most credulous observer would attribute this shift to a heartfelt desire to do the right thing. The truth is that diversity is good for the bottom line. While the City may have remained a reserve of the white middle-class male, the outside world has changed.
In the 1990s McKinsey, the management consultancy, published an influential study entitled The War for Talent, which argued that competition for good staff would intensify as the years went by. As Rutherford says, ‘What happens when you can’t replace the middle-class white men with middle-class white men because there is a growing ethnic community, more and more women are entering the workforce, and there’s a declining birth rate?’ The answer is that workforces become more diverse, and that has created an uncomfortable tension between City institutions and some of their potential clients.
‘One of the big accountancy firms recently went to pitch for an audit. One of the senior executives on the client side was a woman, and the accountants didn’t get the business because there were no women on their team,’ says Rutherford.
‘In the same way, if you want to get government contracts, you have to show that you take diversity seriously.’
If the City is to attract more women and avoid a corresponding increase in harassment cases, so the reasoning goes, the boys must be taught how to behave. Last October Elizabeth Weston, a solicitor with Merrill Lynch, was reputedly given £1 million in an out-of-court settlement after suing over an incident at the office Christmas party in 2003. She alleged that Nathaniel Norgren, a senior lawyer with the bank, had spilt red wine down her top, said she had ‘great waps’ and joked about her sex life. The incident was particularly galling for Merrill Lynch because as early as the mid-1990s it had produced a booklet called A Matter of Respect, which exhorted staff to avoid ‘vulgar or sexist jokes’ and refrain from the use of salutations such as ‘babe, honey or doll’. It also warned against ‘back/neck rubs, hugging, patting, kissing and brushing up against an individual’. Such advice failed to avert the Norgren affair, however, and Merrill Lynch obviously decided that a more interventionist approach was required. Today it has two full-time diversity staff.
What exactly do they do? ‘They will look at the demographic profile of the company, for example, and if they find that only 2 per cent of the vice presidents are women, they will ask what is holding them back,’ says Rutherford. ‘They will speak to the men about the culture of respect. They will conduct training programmes where they spend perhaps half a day setting out behaviours, making people think about their prejudices and about what they say.’
‘They may also attempt to dampen down laddish behaviour on the trading floor — by banning swearing, for example.’
She adds, ‘The law is changing a lot on harassment, and if a male executive is out with clients and takes a female colleague to somewhere she feels uncomfortable, such as a lap-dancing club, they could have a legal case on their hands.’
That said, there will always be those who will argue that this is political correctness gone mad. What of the non-golfers who miss out on 18 holes with the client? Are they entitled to insist that visits to the golf course
are banned on the grounds that they are being excluded from relationship-building contact with customers? Others see the formalisation of such artificial rules of engagement between men and women as a recipe for turning the current trickle of sexual harassment claims into a flood.
For better or for worse, however, it seems inevitable that more and more companies will be sending out announcements like the one from Herbert Smith in the months and years to come. As Martina Asmar, chairperson (natch) of the firm’s Inclusivity Group, says, ‘There has been a marked increase in management and partner awareness that getting it right in this area will be an important contributory factor to the long-term success of the firm.’
Dominic Midgley is associate editor of City AM.