Aberdeen Standard Investments: Approaching D&I from multiple angles

Ambitious firm and industry-wide changes are needed to address the scale of the diversity and inclusion challenge, say Aberdeen Standard Investments’ Karen Hill, Karin Hyland and Shelley Morrison.

This article is sponsored by Aberdeen Standard Investments.

Aberdeen Standard Investments is focusing hard on increasing diversity in its talent pipeline through a variety of initiatives, while also analysing data and improving policies. Karen Hill, senior investment director and head of ESG, concession infrastructure; Karin Hyland, senior investment director – private equity; and Shelley Morrison, senior investment director – fund finance, give a cross asset class perspective on why wider cultural change is critical to ensuring these actions have their desired impact.

Can you tell us about some of the initiatives Aberdeen Standard Investments has taken to address diversity in the talent pipeline, from recruitment through retention and talent development?

Shelley Morrison

Shelley Morrison: It is fair to say that within private markets at Aberdeen we have been talking about diversity and inclusion for a long time – about the need to access a wider talent pool, but in the last few years we have started to take more tangible, concrete actions.

For example, we are participating in the #100BlackInterns programme – an industry-wide initiative across 80 investment management firms in response to the chronic under-representation of Black colleagues in our industry, particularly in front-office investment roles. As a group we have committed to hire 100 Black interns onto paid intern programmes in the hope that they will roll off onto our graduate programmes. Through that programme we have been able to connect with individuals with diverse backgrounds and skill sets that we might not otherwise have seen.

Karin Hyland

Karin Hyland: We are making a lot of effort to improve diversity in our early-stage hires, but there are even bigger challenges at a senior level. We are involved in a cross-company returner programme organised by Women Returners in partnership with The Diversity Project, where we offer six-month returnships for senior professionals that have had career breaks of more than 18 months, both male and female. We have seen some really good candidates through that process and taken on four people, including two into the private markets division. Again, that is talent that we might not have attracted otherwise, and the idea is that if these returnships work out we will be able to keep those people in our business longer term.

Morrison: It is important to recognise that a firm is not going to meet the challenge with just one initiative or one programme. You need to tackle this on multiple fronts to ensure you can access talent from a much wider pool. We also need to get better at articulating our revised search requirements to recruitment partners that we are no longer still looking for candidates from the same firms, with the same degrees from the same universities. Our executive search firms now have it in their contractual terms to remove the university and degree from CV submissions.

What strategies have you deployed to measure data on diversity in the business, to set targets and to drill down into the data?

Hyland: One of the key challenges most organisations face when they start thinking about this is the availability of data and the consistency of data. We subscribe to the idea that what is being measured gets done, so we have had a real drive to get more employees to share their information. At the moment, we are only able to track gender, but we are working towards tracking ethnicity and other forms of diversity more accurately. We have set and achieved company-level diversity targets in previous years, but this year we have set metrics on gender in investment roles for the first time. This is because we are focused on getting more women into investment decision-making roles.

We have also set more specific, supplementary goals, including gender and ethnicity metrics and we are drilling down to understand diversity by seniority. The aim is to improve diversity in our decision-making forums and those targets are already focusing minds.

Morrison: Obviously, creating a diverse workforce is more than a data-collection exercise. While the data provides the baseline, we have to look beneath the numbers and interrogate the data to understand how we got into this position and what we need to do to change it. As an industry we need to start having those difficult conversations with ourselves.

How have you updated your policies and benefits packages to encourage more diversity in your teams?

Hyland: We are trying to involve more of our colleagues in our efforts to make our business more diverse, so we have set up a forum within our private markets business to look at where we need to change our policies.

We have a market-leading parental leave policy whereby both men and women can take 12 months off, nine fully paid, with the option of a phased return working part-time on full-time pay. In the UK, we led the market with this approach and hope it levels the playing field. Still, one challenge is making sure there is no stigma attached to it, which means encouraging senior men to take that leave.

The other element is our approach to flexible working, which, like most companies, has shifted quite significantly in the last 12 months. Post-covid, we will move to a hybrid model and give our teams much more autonomy – certainly, my role has historically involved a lot of travel and I think the days of having to get on planes on such a regular basis are behind us.

Karen Hill: We have a number of employee-led networks to support diversity within the business, including for gender, mental health, ethnicity and LGBT+. Those help build a culture of inclusiveness by helping people network and build relationships with others in the business outside their immediate teams, creating an environment where people want to stay and work.

What types of requests have you received from LPs on D&I? How are they holding private funds accountable for the way their capital is invested?

Karen Hill

Karen Hill: LPs are certainly helping increase the pace of change on this. In the infrastructure business we are currently working with a large multilateral institution for a new fund launch in the Middle East that is asking questions about how fund investments will further their diversity and inclusion goals in the region, as well as looking at how diverse our investment management team is. That LP is asking that at least two of the seven team members involved will be female, which is quite significant in a region where gender equality is a key issue.

LPs are also pushing their managers for accountability, asking for auditing rights and regular reporting on ESG metrics, as well as asking us to look beyond our own teams and think about who we partner with. In infrastructure, we work with large construction and engineering companies that have historically been white male-dominated, so as part of our due diligence we are now looking more at their recruitment processes and how inclusive they are, including their track records on treating people fairly.

LPs are taking ESG so seriously that we believe managers will struggle to raise funds going forward if they are not taking action on this.

Hyland: In private equity, we are also an investor in GPs, so we see this from the other side. We like to think about the questions we ask of GPs in the context of how we would stand up if we were diligencing ourselves on the same metrics. We are holding our underlying managers to much greater scrutiny, not just at the diligence phase but on an ongoing basis.

Morrison: When we are looking at potential investments, we factor in ESG and how the GP fares in terms of diversity, equity and inclusion. That is no longer a nice-to-have but is now
a fundamental element of our due diligence.

What have you learned about building and maintaining a diverse culture, and what advice would you give others about initiatives that can have the most impact in the private funds space?

Morrison: The scale of the challenge in front of us is apparent and tackling this issue requires collaboration across the entire private markets community and also within firms. It is not a change that is going to happen by us acting unilaterally – we need some ambitious, brave changes at an industry-wide level. While senior leaders have a key role to play in setting the tone and making the case for cultural change, perhaps the biggest change happens when you give everyone in the firm permission to lead and everyone becomes accountable for building a diverse culture. At ASI, this is built into our code of conduct, people manager goals as well as the executive scorecard.

Hyland: It is not just about hiring decisions or promotion decisions; it is about running our business as an environment that allows diverse talent to flourish. There is a risk that you put all your efforts into hiring and then let those recruits down through your meeting culture or behaviours, either driving them to leave or forcing them to change to fit in, thereby losing the diversity you were seeking in the first place.

Hill: If you can demonstrate that you trust your people and enable them to work in a way that suits them, you get a lot more from them and they deliver better results. Building that trust is so important, as is role modelling. In our real estate business, one of our senior managers was juggling home schooling with his wife during the first lockdown and made it clear his working hours were going to be 6am to 9.30am and 5pm to 9pm. That set a really good example.

I have been working flexibly for the past 10 years – I currently work 60 percent of full-time hours and I manage that through a combination of what works for me and what works for the business. We should assess people on outputs rather than presenteeism. That is the kind of culture we want to promote.