London, United Kingdom

Banking on Success: Diversity at Lloyds TSB

Lloyds TSB

February 9, 2009

Local recruitment is rewarded by customer satisfaction and increased profits

In 1995 when Lloyds Bank and TSB merged, the new organization Lloyds TSB faced the usual challenges that come with the merger of two large organizations. The actual merger resulted in a financial services organisation with a strong presence in areas with high ethnic minority populations, and the potential for a very diverse customer base.

For instance, Lloyds TSB discovered they now had several branches in East London serving the large Bangladeshi customer base located there. However, managers of local branch offices soon realized that their branches were being underutilized by local residents. Branches in this area also reported an increase in customer misunderstandings and communication difficulties.

Further investigation confirmed that none of these branches actually employed any Bangladeshi residents.

Realising the impact that this situation could have on both their brand and customer satisfaction, Lloyds TSB undertook a program to address the situation. Job advertisements were translated in Bengali and placed with local community groups to attract more Bangladeshi applications. A 13 week work experience program was launched to provide members of the Bangladeshi community with the opportunity to discover whether they wanted to work at Lloyds and to help them develop the skills they would need to apply for a position through the regular hiring procedure. As a result of the program, a number of those who had participated successfully applied and secured jobs with Lloyds TSB.

The Lloyds initiative led to East London branches having over 40% of their employees from ethnic minority communities. The business result? An overwhelming 30% sales increase in this same area during that time. Correspondingly, there has also been a significant decrease in the number of customer complaints. Local line management believes that this is directly the result of having a more diverse workforce and therefore being able to understand the needs of their customers more effectively.

The Business Case:
Traditionally, racial equality was seen as an HR issue but as Lloyds TSB and others are increasingly finding, good racial equality practices can help businesses achieve their key performance targets of: business growth, greater market share and a competitive edge.

UK Government statistics from December 2005 list ethnic minorities as being 8% of the population, with this figures set to double in less than twenty five years.

With the continuing growth of the ethnic minority population as a proportion of the whole population, these customers will become increasingly valuable to businesses. Current purchasing power for ethnic minorities in the UK is exceeds 156 billion pounds sterling after taxes –-a number that is also set to increase dramatically.

Ethnic minorities also tend to be highly entrepreneurial (ethnic minority businesses representing 10% of all businesses in the UK) and research has shown that for nearly one third of all firms, it is business to business sales that account for more than 50% of total sales.

An ethnically diverse workforce is better able to recognise the needs and aspirations of different customers and enable businesses to develop products and services suited to a diverse customer base. Businesses that understand the different cultural, religious and often linguistic requirements of their existing and potential customers will be able to secure competitive advantage over those that do not.

After their success with the Bangladeshi community, the Lloyds program was widened to include all sections of the community with well over 100 people having taken part in it –70% of whom have obtained permanent employment with the Bank.

A Good Idea Travels Internally…
Since then according to the UK organization Race for Opportunity (RfO), Lloyds TSB has come a top performer with regards to increased commitment to ethnic minorities in all aspects of business – and the reasons is, that they have seen the clear business case for having race issues on the boardroom agenda.

“Quite simply, they realize that communities equal profitable customers and potential employees. If you rely on traditional perceptions of who these groups are, you limit your pool of talent and your target market,” says Allan Leighton, RfO Chairman.

Lloyds TSB has also expanded this approach to focus on issues of race within its graduate cohort after realizing that in the late nineties, only three percent of graduate intake came from ethnic minorities while 12 percent of people graduating at that time were from these groups,” says Andrew Wakelin, a senior manager equality and diversity for Lloyds TSB.

“Among the most effective changes the bank has made since the late Nineties has been working specifically with minority ethnic graduates and their families to show them that banking is a worthwhile career. We have also made the imagery of our literature far more inclusive and make links with newer universities, where there are higher proportions of ethnic minorities, rather than just concentrating on the traditional ones, ” Wakelin adds.

Along with awareness training across the bank, the initiative means that while in 1997, just three per cent of Lloyds TSB’s graduate intake was from ethnic minorities, that figure grew to 25 per cent this year. “To be honest, we are not doing an awful lot anymore, because once we make those changes, it started becoming business as usual that one in four applications comes from an ethnic minority,” says Wakelin.

The success of these initiatives have led Lloyds TSB to seek to duplicate this approach in their international locations by finding ways to recruit from within the local community and broaden their local employee base. For instance, in Dubai, they launched a Management Development Program for Young Emiratis to help give valuable work experience to young UAE nationals.

Making it Work for You:

  • Local communities provide businesses with customers as well as potential employees. Understanding local markets and reaching out to them gives businesses of all sizes a competitive edge.
  • To recruit new employees that represent the diversity of the local service population, disseminate information about employment opportunities in the languages spoken in your community and/or signpost workers to relevant service providers.
  • The role of employers in the successful integration of immigrants is well-recognized. What is your business doing to make this process work for existing employees and newcomers?