On the go: Investment consultancy Mercer’s manager selection team is to downgrade fund managers whose teams lack diversity, after it published a paper questioning less diverse group's ability to avoid groupthink.
Diversity plays a key role in idea generation, risk control and good business management, contributing to three of the four pillars of Mercer’s research process. An inclusive workplace is therefore more likely to generate outperformance for pension scheme clients, it said.
Manager research teams will look for diversity of many types, including gender and ethnicity, thinking style and personality, alongside an assessment of how the fund manager’s human resources policies contribute to a diverse workforce.
Diversity can be expressed both as a mix of identities and as a difference in the way people think, known as cognitive diversity. The two are linked, although only loosely, according to some academics.
“Mercer has always considered cognitive diversity as part of its assessment of investment strategies,” said Deb Clarke, the company’s global head of investment research.
“We are now ensuring that identity diversity is assessed and that corporates who have strong diversity and inclusion policies are embedding those at the strategy level.”
Cognitive diversity can be hard to measure, but Ms Clarke said her team looks for signals such as investment staff all sharing the same university, background or gender and ethnicity.
“Do the junior people always look at the senior people before they answer a question, does the team have differing views in the meeting that can be discussed with respect, how does the team reach decisions? Ask for examples of how they work through ideas that don’t work out,” she said.
“We will look for examples as we cross-check with people who might have left firms or with our colleagues around the globe.”
