Reflecting diversity, choosing inclusion
Speech given by
Mark Carney, Governor of the Bank of England
Court Room, Bank of England
9 February 2017
I am grateful to Jennifer Nemeth, Anne Wetherilt and Iain de Weymarn for their assistance in
preparing these remarks, and to Richard Galletly, Cat Hines and Daniel Nixon for background
research.
And there were never, in the world, two opinions alike, no more than two hairs, or two grains; their most
universal quality is diversity.
(Michel de Montaigne, Essais, Book II, Chapter 37)
Introduction
The Bank of England recognises that to pursue its mission it must reflect the diversity of the people it serves.
That has not always been the case. Historically, there were times when this institution was run by the City
for the City. Our first female Court member, Frances Heaton was only appointed in 1993, while our first
Black, Asian and Minority Ethnic (BAME) member, Lord Morris, followed five years later. Ten years ago our
graduate intake was drawn from just 11 universities. And I am the 120th in a very long line of male
Governors of the Bank.
- -
Frequent charges levelled at this central bank like many of our peers include being mono-culture,
secretive and ridden with groupthink.
Those charges began to lose their force in the face of significant efforts by my predecessors. But despite
that progress, when the Bank was reunited with the PRA we knew that we still had to do much, much more.
So three years ago we made Diverse and Talented a central pillar of our first strategic plan. We value
diversity for at least three reasons. First, it is the right thing to do; a public institution should seek to reflect
i
the public it serves. Second, it helps to build the trust we need to deliver our remits. Third, it is well
established that diversity leads to more creative thinking and reduces the risks of groupthink and bias.
It isn't enough for us to reflect diversity, however; we need also to choose inclusiveness. Inclusiveness
true value of an organisation's diversity; through inclusion people can realise their full potential.
unlocks the
That's why as we increase the diversity of the Bank, we are focussing on building a culture that values
diverse ideas, encourages open debate, and empowers people at all levels to take initiative.
Since these two ideals go hand in hand, today I will reflect on both diversity and inclusion: what they mean,
why they matter, and how they are best delivered in a modern central bank.
The what
-
There are two main types of diversity identity and cognitive.
Gender, ethnicity, age, disability, sexual orientation, education are all identity factors, which can be
measured, targeted and their impact assessed.ii As I will discuss in a moment, we have introduced diversity
targets for the first time.
-
The Bank is also seeking to increase our cognitive diversity, which shapes our perspectives how we think
about problems and solve themiii
Cognitive diversity doesn't lend itself to targets. But it's no less
important.iv Research shows that while older
colleagues often view diversity as an issue of representation and fairness, millennials tend to view cognitive
diversity as essential for a diverse and inclusive organisation.v This younger generation is interested in
connecting with each other, collaborating across teams and exploring a variety of ideas to solve problems.
That's not just interesting, it's necessary. The spirit of the millennial is better suited to the complex
challenges that central bankers face in a risky and uncertain world.
So our commitment to diversity cannot only be about meeting targets. It must promote an environment that
brings cognitive differences to the fore, and it must create a culture where everyone can maximise their
potential. We need a richness of ideas and perspectives that are exchanged in the pursuit of clear goals
under an overarching mission. This is the crux of inclusion: an organisation where people feel empowered,
enabled and engaged in pursuit of a common goal.
The why
Increased trust
As a central bank, we need to be understood, credible and trusted for our policies to be most effective.
The Bank's work often requires deep technical skill and knowledge. Not everyone wants to be steeped in fan
charts; modelling and stress testing. Yet the decisions we take impact every UK citizen. How can they rely on
-
us the dreaded experts?
Of course, trust can be built through a track record, but it can also be grounded in familiarity. People trust
individuals, places and things that they know.vi Reflecting the diversity of the people we serve can reduce
misperceptions that we are experts making esoteric decisions in an ivory tower for the benefit of others.
Moreover, diverse decision-making bodies typically have greater political support and enjoy greater public
trust.vii They also tend to achieve better policy outcomes through better understanding of community needs
and more effective dialogue with the wider population.viii
Better decision making, innovation and adaptability
Homogenous groups that pay insufficient attention to minority views are vulnerable to biases, groupthink and
over optimism. They are more likely to be influenced by the way information is presented (framing); and to
stick with under-performing projects because of prior investments.ix
Diverse groups can overcome these ills as they are more inclined to consider novel ideas and challenge
x, xi
each other, enabling them to infer cause and effect and to solve problems better.
xii
Diverse teams are also better able to adapt to changes and are more resilient. This is particularly
important in a rapidly changing world, where information is super abundant and certainty is absent.
Indeed, almost all decisions in finance are taken under uncertainty. This makes it especially important that
decision makers are exposed to a range of views, with open debate that includes perspectives that challenge
the prevailing wisdom.
For those central banks with regulatory responsibilities, biases in supervision can be countered by
considering a variety of perspectives and debating within diverse supervisory teams.xiii
Diversity must be supported by the right structures for its benefits to be realised. For example, research on
central bank committee design shows how diverse decision making benefits from:

Having a clearly defined policy objective;

Having relatively small policy committees, with external members;
xiv

Publishing policy decisions, and allowing for external scrutiny of decision-making processes.
These features are integral to the MPC, FPC, PRA Board and Court of the Bank of England. In recent years,
we have reinforced them by implementing the recommendations of the Warsh review, including publishing
transcripts and putting all policy committees on an equal footing with clear remits.
More effective communication
Being diverse can help us to craft communications that people can actually understand.
-
The past few decades have seen enormous strides in central bank transparency minutes are published,
interviews given, speeches rendered, blogs posted. Now it is high time that greater emphasis is placed on
how central banks communicate.
Increasingly we are asking ourselves whether we are communicating messages in accessible language.xv
Whether we're using the right media channels to reach the widest possible audience. And most
fundamentally, whether people from different backgrounds deduce the same things from our policy
messages.
Diversity can help. The more homogenous an organisation the more likely it will fall foul of the 'curse of
knowledge.' This cognitive bias occurs when people assume that their audience has the same background
It's assuming that everyone has the same
information and base level of understanding as themselves.xvi
narrow view of humanity as the representative agent at the heart of a DSGE model.
To communicate to both the City and the country, the salon and the suburb, we need to create content that
different audiences. The problem is that they don't teach you this in Grad school (or at least the
engages
ones where we traditionally recruited). We need alternative perspectives to craft our messages so that they
make sense and resonate with more people.
The more people can recognise themselves in us, the more we can stand in their shoes and speak their
language, the more likely the Bank is to be trusted.xvii
The how
The Bank's approach to increase diversity and foster inclusion
is three-fold:

through inclusive recruitment,

developing an inclusive culture, and

creating inclusive communications.
Inclusive recruitment
To support our objectives, we have introduced diversity targets that are reviewed and challenged by Court.
Specifically, we aim to triple both the proportions of women in our senior roles, to 35% by 2020, and of
BAME employees in these roles to 13% by 2022.
As a first step, we are fishing from a larger pond and removing perceived barriers to entry.xviii We want to
make the Bank a more obvious career destination for a wide range recruits: young school leavers who want
to develop their skills as apprentices to graduates looking for their first full-time job, people who wish to
return to work, or experienced professionals who are considering a career change and want to contribute to
public policy.
In our last graduate round, we hired from over 40 UK universities (four times as many as a decade ago),
attracting students from a range of socio-economic backgrounds. Two fifths of the 2016 intake were female
and a quarter came from a BAME background. Only half studied economics. The remainder were plucked
equally from the sciences, business and the humanities.
15% of our graduates were hired from Oxbridge, and a fifth were from lower socio-economic backgrounds. In
contrast, 21% of fast track hires to public service are from Oxbridge and only 4% are from lower
socio-economic backgrounds.xix
While we are casting a wider net, the reality is, the nature of our work means that we will always need to hire
technical experts. Unfortunately, there continues to be limited diversity in both US and UK economics
departments, which to some degree, constrains whom we can hirexx. Both the education sector and the Bank
need to do more to broaden access.xxi
One new initiative that enables the Bank to hire graduates from a broader set of disciplines and train them as
economists and technical specialists is our new Central Bank Qualification. Similarly, our African-Caribbean
scholarship aims to attract those hitherto underrepresented in central banking. Launched in 2015, the
scholarship has given three students per year £30,000 toward living and study costs, offered summer
internships and provided career mentors.
To recruit experienced hires, we have committed to ensure that wherever possible, we will create diverse
shortlists for jobs and interview people with diverse panels in order to mitigate affinity effects and
unconscious biases. This is starting to pay off. Of the 700 experienced professionals we hired last year,
almost half were women and a quarter came from a BAME background, up from two-fifths and one fifth
respectively since our strategic plan was launched. In recent years, we have recruited new PhD students not
just from economics, but from physics, computer science, linguistics, psychology, anthropology and
economic history.
We recognise that career paths can be varied, so for people who want to return to work or to retrain, we are
offering more opportunities to learn. Around 200 of our colleagues studied for degrees or professional
qualifications in 2016 and 670 re-skilled through internal job moves across directorates. And since new skills
can also be acquired outside the day job, we are increasing our support for community volunteering and
engagement.
We are encouraged that at the last count, over three quarters of our staff believe that the Bank offers good
opportunities for learning and development. That's
a six percentage point improvement on the previous year
and 20 percent higher than the UK average.xxii
We can't take this progress for
granted, however, and need to redouble our efforts to build a more inclusive
culture at the Bank.
Inclusive culture
Having attracted a diverse workforce, we must enable and encourage participation. We are striving to create
a more inclusive environment where different working patterns are accommodated, people can debate,
challenge and present ideas, and are supported when undertaking new and innovative work. Inclusion
Fortnight, with 21 events over ten days across three sites, attended by almost 1700 people is the latest
example of this commitment.
our aim to be
An inclusive culture is essential to realise the benefits of 'One Bank'. We are working to create
a more agile work environment, which encourages cross-disciplinary and cross-team working further
supporting the development of new ideas and approaches.
We are encouraging innovative thinking through our Research Hub, where people have collaborated with
colleagues across the Bank and externally on over 50 projects. Meanwhile, our Research Away Days and
One Bank Flagship Seminar series expose policy and decision makers to different ideas; from sportspersons
to philosophers, and economists to psychologists. Our seminars are broadcast externally so that others can
benefit from this diverse knowledge.
To empower colleagues, we have implemented an 'author in the room' policy so that expert staff can attend
senior-level meetings and explain their papers in person and challenge conventional wisdom.
Our Bank Underground blog, launched in 2015, enables colleagues to share their diverse opinions outside
the Bank's four walls. 400,000 people viewed the blog last year. Over the same
period, its followers and
subscribers increased by 60%.
Our staff are reaping the benefits of these inclusion and transparency initiatives. Two thirds feel encouraged
to try new ideas, three quarters believe that their manager acts on people's
suggestions and ideas, and 60%
feel comfortable speaking up on important issues. We have improved on all of these measures since just a
year ago.xxiii But we also need to do more.
To get the most out of a diverse workforce, we also need to ensure people can bring their best to work and
feel supported. Our wellbeing programme promotes mental and physical wellbeing with staff counsellors,
discounted gym-memberships, a Cycle to Work scheme, working life seminars and flexible leave options.
An inclusive culture recognises that work can be done in many ways; and that our best ideas can occur at
xxiv
any time and in any place. 11% of our staff are employed on a formalised flexible working arrangement,
including remote working. In our most recent survey, two thirds of people agreed that there was a good
balance between their work and their personal life.
Our broader leadership training programme emphasises unconscious bias training to ensure diversity can
flourish and progress. This training is part of our broader focus on values. Values count heavily when
assessing performance and reward. All managers - including myself - are assessed by colleagues on their
values and behaviours.
The Employee Network Groups support colleagues in the Bank to be themselves and connect with different
aspects of their lives. They bring issues to the attention of the Bank's senior team and they hold us to
account, raise awareness of different cultures and causes, and educate us to work against any biases. For
example, the disability network has played a huge part in our efforts to make the building more accessible,
the women's network was heavily involved when we developed our flexible working propositions and
the
Bank's ethnic minorities network has launched a reciprocal mentoring scheme to support career
development.
Inclusive communications
Diversity also means engaging with all our stakeholders, internal and external, and being aware of the many
ways in which the economic situation affects different people. Active engagement between Bank officials and
a range of expert and non-expert stakeholders across the UK has always been important, but it is taking on
new prominence in the information age.
Our agents and Bank officials meet thousands of business contacts across the UK each year to take the
temperature of the UK economy.
Our new Open Forum and Future Forum events do this on a large scale by bringing together thousands of
the financial system and the Bank's role in promoting
people from the community to discuss the economy,
the good of the people of the United Kingdom. We listen to the views and concerns of local business
leaders, technology developers, representatives from the voluntary and education sectors, unions and the
wider public and explore how the Bank can maintain stability and reduce uncertainty. The 2015 Open Forum
event attracted 10,000 webpage views, 11,000 playbacks of our YouTube content and 3,000 tweets, while
our 2016 Future Forum event saw almost 140,000 twitter impressions.
In reality, we can't always be there face to face. And this requires more tailored content. Deploying social
media, including Facebook and YouTube, delivers our messages directly to a broader audience. New digital
products, such as KnowledgeBank, use accessible language and engaging visuals to help us tell a story
about what the Bank does. Our recently created visual summary of the Financial Stability Report, explained
how risks in both the UK and the global environment may affect financial stability without the need for dense
text.
Conclusion
Our staff survey last year showed that almost 80% of staff felt that the Bank takes diversity seriously, and
90% of people felt respected. Our direction of travel is encouraging, but we are far from satisfied. To take this
to the next level, we have two priorities.
First, we need to do more to change the way that we work. To maximise the potential of our people, the Bank
needs to embrace fully collaborative working in diverse teams. We have an incredible endowment of skills
and experience. We maximise our impact when we get together - across disciplines and across
areas. Everyone in the Bank should be able to devote some proportion of their time to such cross-cutting
work.
Second, we need to make our communications more inclusive. Everyone, every day in the Bank will benefit
if our thinking tailored to its audience. This also means making the Bank more permeable, so that internal
analysis can be more readily lifted and shared with others. And it means considering what we communicate,
through which channels and to whom.
Just as having a diverse and talented workforce has been a central pillar of our current strategic plan these
priorities will be platforms of our next one. They will help us build the trust that is crucial to delivering our
mission. And they will help us merit that trust by making us more effective. By reflecting diversity and
choosing inclusion, we will ensure we are doing all that we can to promote the good of the people of the
United Kingdom.
9
All speeches are available online at www.bankofengland.co.uk/speeches
ENDNOTES
i
Putnam, R (1993), "What makes democracy work?" National Civic Review. Putnam finds that cities, regions and countries with more
trusting people tend to have better working democratic institutions. See also OECD (2009), "Fostering diversity in the public service",
October.
ii
See e.g. Noland, M, Moran, T, and Kotschwar, B (2016), "Is Gender Diversity Profitable? Evidence from a Global Survey", working
paper 16-3 Peterson Institute for International Economics, February.
iii
Page, S E (2007), "The difference. How the power of diversity creates better groups, firms, schools, and societies", Princeton
University Press. Page describes four elements of cognitive diversity: perspectives, the way we see and present problems and
solutions; interpretations, the way we explain our perspective; heuristics, the way we seek to rationalise and solve problems; and
predictive models, the way we infer cause and effect.
iv
See e.g. Riordan C M (2015), "Diversity is useless without inclusivity", Harvard Business Review, August.
v
Deloitte (2015)
vi
"Trust in Me:
Farmer, H, McKay, R, Tsakiris, M, Trust in Me (2013): Trustworthy Others Are Seen as More Physically Similar to the
Self", Psychological Science
vii
See OECD (2009)
viii
OECD (2009)
ix
D (2012) "Thinking Fast and Slow", London. See also (2014), "Making Dumb
Kahneman, Sunstein, C.R, Hastie,R Groups Smarter",
Harvard Business Review, December.
x
See e.g. Page, S (2007) Hewlett, Marshall,M and Sherbin,L (2013), "How diversity can drive innovation", Harvard Business Review,
- and That's Why They Perform
December; Rock, D., Halvorson, H.G. and Grey, J (2016), "Diverse Teams Feel Less Comfortable
Better", Harvard Business Review, September; Sunstein, C. R. and Hastie, R (2014), "Making Dumb Groups Smarter", Harvard
Business Review, December.
xi
See Page (2007).
xii
See e.g. Page, E (2011), "Diversity and complexity", Princeton University Press.
xiii
See e.g. Jansen, R and Aelen, M (2015), "Biases in supervision: what are they and how can we deal with them?", DNB occasional
studies.
xiv
See e.g. Sibert, A (2006), "Central Banking by Committee", De Nederlandsche Bank Working Paper 91,
February; Ball, L (2012), Ben Bernanke and the zero bound, NBER working paper 17836, February; Warsh, K (2014), Transparency
and the Bank of England's Monetary Policy Committee, December.
xv
See Haldane, A (2016), One Car, Two Car, Red Car, Blue Car, speech given in Redcar December and Bank Underground Blog for
examples.
xvi
Newton, L (1990) "Overconfidence in the Communication of Intent: Heard and Unheard Melodies." Unpublished doctoral dissertation
(Stanford, CA: Stanford University) as cited in 'The Curse of Knowledge' by Heath, C and Heath, D, Harvard Business Review,
December 2006. Available at: https://hbr.org/2006/12/the-curse-of-knowledge
xvii
"in
Luhmann, N (2000), "Familiarity, Confidence, Trust" and H. Farmer, R. McKay, M. Tsakiris. "Trust in Me: Trustworthy Others"
Gambetta, Diego (ed.) Trust: Making and Breaking Cooperative Relations, electronic edition, Department of Sociology, University of
-
Oxford, Chapter 6, pp. 94 107 and Farmer et al (2013).
xviii The Bank aims to move female representation at senior levels from 30 to 35 per cent by 2020, and BAME representation at senior
levels from 6 to 13 per cent by 2022.
xix
Social Mobility Commission (2016a), "State of the Nation 2016: Social Mobility in Great Britain", November;; Cabinet Office (2016),
"Socio-Economic Diversity in the Fast Stream", February; and Social Mobility Commission (2014), "Elitist Britain?", August; Institute for
government research: https://www.instituteforgovernment.org.uk/blog/civil-service-fast-stream-six-charts . See also Friedman, D and
Laurison, S (2015), "Introducing the 'Class' ceiling", LSE sociology department working paper; and
Social Mobility Commission (2016b),
Diversity in Life Sciences and Investment Banking", July.
"Socio-Economic
xx
A US study showed that gender and ethnic representation in the US economics profession (academic and student populations)
remains below that in other disciplines. Interestingly, diversity had improved in Science and Technology (STEM) subjects and business
and management studies, but not in economics. See Bayer, A. and Rouse, C. E. (2016), "Diversity in the Economics Profession: A New
an Old Problem", Journal of Economic Perspectives, 30, "The 10th
Attack on p.221-242. See also Royal Economic Society (2015),
Royal Economic Society Women's Committee Survey: The Gender Balance of Academic Economics in the UK 2014".
xxi
See also Haldane, A. (2016), "The Dappled World", November; and Fourcade, M., Ollion, E. and Algan, Y. (2014), "The Superiority of
Economists", Max Planck discussion paper 14/3.
xxii
Bank Viewpoint survey 2016
xxiii
Ibid
xxiv
See e.g. PWC (2014), "The Future of Work. A Journey to 2022". See also CIPD (2014), "HR: Getting smart about agile working",
November.
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"Ben Bernanke and the Zero Bound",
Ball, L (2012), NBER working paper 17836, February.
"Diversity in the Economics Profession: A New Attack on an Old
Bayer, A and Rouse, C E (2016),
Problem",
Journal of Economic Perspectives, 30, pages 221-242.
Blinder, A S and Morgan, J (2000), Are Two Heads Better than One? An experimental analysis of group
versus individual decision making, NBER working paper 7909.
Cabinet Office (2016), Socio-Economic Diversity in the Fast Stream, February.
CIPD (2014), HR: Getting Smart about Agile Working, November.
"The Radical Transformation of Diversity and Inclusion. The Millennial Influence".
Deloitte (2015),
Farmer, H, McKay, R, and Tsakiris, M (2013), "Trust in Me: Trustworthy Others Are Seen as More
Physically Similar to the Self", Psychological Science.
"The Superiority of Economists",
Fourcade, M, Ollion, E and Algan, Y (2014), Max Planck discussion paper
14/3.
"Introducing the 'Class' Ceiling",
Friedman, D and Laurison, S (2015), LSE sociology department working
paper.
Haldane, A (2016a), "One Car, Two Car, Red Car, Blue Car", speech given in Redcar, December.
Haldane, A. (2016b), The Dappled World, speech given at GLS Shackle Biennial Memorial Lecture
November.
"How Diversity can Drive Innovation",
Hewlett, S A, Marshall, M and Sherbin, L (2013), Harvard Business
Review, December.
"Biases in Supervision: What are they and how can we deal with them?",
Jansen, R and Aelen, M (2015),
DNB occasional studies.
"Thinking, Fast and Slow", London.
Kahneman, D (2012),
"Committees versus Individuals: an Experimental
Lombardelli, C, Proudman, J and Talbot, J (2005),
Analysis of Monetary Policy Decision-Making", International Journal of Central Banking, 1, pages 181-206.
"Familiarity, Confidence, Trust: Problems and Alternatives" in Gambetta, Diego
Luhmann, N (2000), (ed.)
Trust: Making and Breaking Cooperative Relations, electronic edition, Department of Sociology, University of
-
Oxford, Chapter 6, pp. 94 107
"Overconfidence in the Communication of Intent: Heard and Unheard Melodies."
Newton, L (1990)
as cited in 'The Curse of Knowledge'
Unpublished doctoral dissertation (Stanford, CA: Stanford University)
by Heath, C and Heath, D, Harvard Business Review, December 2006. Available at:
https://hbr.org/2006/12/the-curse-of-knowledge
"Is Gender Diversity Profitable? Evidence from a Global
Noland, M, Moran, T, and Kotschwar, B (2016),
Survey",
working paper 16-3 Peterson Institute for International Economics, February.
"Fostering Diversity in the Public Service",
OECD (2009), October.
"The Difference. How the Power of Diversity Creates Better Groups, Firms, Schools, and
Page, S E (2007),
Societies", Princeton University Press.
"Diversity and Complexity", Princeton University
Page, S E (2011), Press.
"The Future of Work. A Journey to 2022".
PWC (2014),
Putnam (1993), What makes democracy work? National Civic Review
"Diversity Is Useless without Inclusivity",
Riordan C M (2015), Harvard Business Review, August.
"Diverse Teams Feel Less Comfortable - and that's why they
Rock, D, Halvorson, H G and Grey, J (2016),
Perform Better",
Harvard Business Review, September.
(2006), "Central Banking by Committee",
Sibert, A De Nederlandsche Bank Working Paper 91, February.
"State of the Nation 2016: Social Mobility in Great Britain",
Social Mobility Commission (2016a),
November.
Diversity in Life Sciences and Investment Banking",
Social Mobility Commission (2016b), "Socio-Economic
July.
"Elitist Britain?",
Social Mobility Commission (2014), August.
"Making Dumb Groups Smarter",
Sunstein, C R and Hastie, R (2014), Harvard Business Review,
December.
"Transparency and the Bank of England's Monetary Policy Committee",
Warsh, K (2014), December.
"The 10th Royal Economic Society Women's
Royal Economic Society (2015), Committee Survey: The
Gender Balance of Academic Economics in the UK 2014".