Herman Brodie of Prospecta On How To Create More Inclusive Workplaces
An Interview With Rachel Kline
Put in place protocols — Sometimes, though, the encounter with the unknown other might just be a one-off. There might not be any opportunity or incentive to uncover shared values or experiences between people who might never meet again. In such situations, clear protocols to govern the encounter are needed.
Creating inclusive workplaces is crucial for any organization that wants to get the most out of its talent. This means creating an environment where everyone feels like they belong, has equal opportunities, is empowered to do their best work, and feels comfortable making requests and contributing ideas. In this series, we asked prominent HR and business leaders about the steps they take to create more inclusive workplaces. As a part of this series, we had the pleasure of interviewing Herman Brodie.
Herman Brodie is a specialist in behavioral economics, author, educator, and founder of Prospecta, a UK-based consultancy firm that advises businesses on the use of behavioral sciences research. Many of the hurdles we, or our businesses, face are behavioral. So, over the past 20 years or so, he has help to find solutions to challenges relating to complex decision making, client relationships, team dynamics and ethics, and has advised hundreds of major firms in his primary domain, the financial services industry.
Thank you so much for your time! I know that you are a very busy person. Before we drive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?
I thought I had it all figured out when I was younger. My plan, after studying economics and finance, was to embark on a successful career in the financial markets. But then my ambitious plan met Mike Tyson’s figurative punch in the mouth. Three weeks into my dream job at an international commodity trading house, global stock markets crashed.
Black Monday, they called it. It was the biggest one-day drop in stock prices in history and nothing I had learned at university had prepared me for it. In the years that followed, I found myself repeatedly wrongfooted by errant financial markets that seemed to delight in disobeying the economic rules described in my former textbooks.
I grew disillusioned, quit, and went back to the classroom. This time, though, I was determined to study something that might still have some value by the end of the class — French language and History. Yet, at the end of the course, I found that I missed the world of finance terribly. So, I decided that would give it another go. But my approach would be somewhat different. Instead of using economic data to help predict an asset’s price in the future, I would use that asset’s historical price instead.
To many, that approach might sound uncontroversial, but to economists this was equivalent to heresy. You see, in Economics 101, we learn that all available information that is pertinent to an asset’s value is already reflected in its price. As such, knowledge of where the price was yesterday is useless for predicting where it will be tomorrow. But that was not true. And I was able to prove it again and again using computer-based algorithms. I later came to understand that these algorithms were not predicting unreliable economic trends, but instead the reliable behavior of human investors.
Understanding and predicting human behavior has been my career ever since. In my firm, we use behavioral sciences not only to help our clients to improve their investment decision making, but also to tackle a host of other behavior-related business challenges, such as building high-trust relationships, managing teams, driving organizational change, encouraging ethical behavior, as well as fostering greater workplace inclusion.
It has been said that our mistakes can be our greatest teachers. Can you share a story about the funniest mistake you made when you were first starting? Can you tell us what lesson you learned from that?
Once I succeeded in programming a trading algorithm that, at least in tests using historical financial-market data, seemed capable of delivering outstanding investment returns. My colleagues whooped with delight at my achievement; Herman had found the Holy Grail of the investment world. Together, we set off to the big boss’s office, where we planned to tell him he’d better get ready to pay some massive bonuses at year-end. On the way down the corridor, though, one of my colleagues suggested that I should perhaps check the results one more time. So, I scrutinized the algorithm’s code, line by line. Then I found the error. It seemed that before deciding whether to buy or sell, the algorithm took a sneak peek at the subsequent day’s price. If the price was higher, the algorithm recommended a buy, and if it was lower it recommended a sell. I learned a valuable lesson that day: if it looks too good to be true, it probably is.
None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful for who helped get you to where you are? Can you share a story?
I have been incredibly fortunate to have had two bosses during my time in investment banking, who had a completely hands-off approach. I shared my ideas and they just let me get on with it.
The first was on my return to the finance world following a second stint at university. Already during the job interview, I presented what I considered to be my heretical notions about forecasting financial markets. The bank director sat silently for a while, stroking his beard, and then said: “OK, let’s try it.” He wasn’t completely convinced, as it turned out, because he only proposed a six-month contract. But it worked. After three months he offered me a permanent role.
The second boss followed after I moved to the head office of the same firm and was given greater responsibilities. By now my ‘crazy’ ideas were coming thick and fast. I needed resources, and lots of them — high-end IT equipment, innovative software, cutting-edge optimization engines, and subscriptions to academic journals in cognitive psychology. Back then, none of these things had any place in an investment bank dealing room. Yet, my boss supported my experimentation and allocated budgets to everything I was keen to try.
That was my final job before co-founding my first consulting company. I have since tried to be that kind of boss. I recognize just how rare they are.
Can you please give us your favorite “Life Lesson Quote”? Can you share how that was relevant to you in your life?
I once read that the secret to a successful marriage was to never forget those three little words: “You are right.” I have always adhered to it. My wife has stuck with me for thirty years.
Thinking back on your own career, what would you tell your younger self?
“Take risks, especially when you are young.” The funny thing is that, when I was young, I thought I was taking risks. But I only thought that because my worldview was ridiculously narrow. Stepping out from a tiny circle of conservative views is not boldness. So, I should refine that advice and first recommend learning about the world and about real risk-takers, so that I have the right reference points.
Let’s now move to the central part of our interview. What systems do you have to ensure your workplace is as inclusive as possible?
One area of our work is to investigate the psychological obstacles to greater workplace inclusion to support our clients’ efforts. So, naturally, we eat our own cooking.
Based on your experience and success, what are your top five tips for creating more inclusive workplaces? Please share a story or an example for each.
1 . Do not waste time with ‘prejudice porn’
I am not a DEI consultant but, in the wake of the 2020 racial justice demonstrations, many of my financial services clients entrusted me to open conversations in their firms about race. On several occasions I led discussion panels in which many individuals shared their deeply personal stories about the discrimination they had encountered. Back then, these testimonies were essential. Many participants genuinely did not know about the experiences of Black people — even those of their Black colleagues. Many could not understand why far-away events in the US could so deeply upset the Black community in the UK.
That time is now past. The testimonies of women, people of color, those with disabilities, the LGBTQ community, veterans, seniors, and the scores of other social groups who sometimes face unfair discrimination in the workplace, are out there. The internet is full of them. People can and must inform themselves. I no longer lead groups that want to indulge in what I call ‘prejudice porn’, the personal recounting of the harm inflicted on stigmatized groups. ‘Raising awareness’ is not a solution.
2 . People already know how to be inclusive.
Teaching people how to be inclusive presumes that exclusion is a product of ignorance. Yet, it is more likely to be a product of low motivation. People naturally include others who they perceive to be ‘one-of-us’. It is known in psychology as an in-group preference. However, if they perceive the unknown other as ‘one-of-them’, there is no motivation to include. So, the goal of our intervention is to change perceptions.
As an example, consider the day my daughter brought her new boyfriend home to meet the family. I didn’t like the guy (not because there is anything wrong with him, but because I wouldn’t have liked ANY guy she brought home), but I knew how to include him. I enquired about his meal preferences and asked about any food allergies. I put on some pants instead of old college jogging bottoms. We ate at the dining table instead of around the TV. We cleaned up the place. We did everything to make him feel at home because we care for our daughter. We were motivated to include him.
The change in our perception does not require an extended family relationship, though. Any shared characteristics, values, experiences, or goals are enough to flick the switch on our perceptions of the other — even arbitrary ones. One needs only to make people aware of what they share. Literally anyone could be perceived as one-of-us.
3 . Put in place protocols
Sometimes, though, the encounter with the unknown other might just be a one-off. There might not be any opportunity or incentive to uncover shared values or experiences between people who might never meet again. In such situations, clear protocols to govern the encounter are needed.
Take the case of Alexandra Wilson, the Black British barrister and author who wrote about being mistaken for the accused in the court building three times in a single day. The first was by the man minding the information desk. Without any prompt, he asked her was whether she was looking for her lawyer. No, she WAS the lawyer. This exchange embarrassed her and him. But there was no need for it. A strict protocol whereby the man at the information desk began every encounter with: “How can I help you?” would have spared blushes all around. One cannot control the fact that he initially thinks she is the perp, but one can simply eliminate the behavior that excludes.
4 . Limit ambitions to the workplace
Clients are sometimes surprised when they find me unenthusiastic about unconscious-bias training. So, I share an anecdote from junior school.
A White classmate once said to me: “I don’t like Black people, but you’re alright. You’re not like the others.” As he was only nine, he didn’t realize that I was precisely like ‘the others’. He’d never met ‘the others’. So, from where had he drawn the comparison?
Over his short life, ill-informed family members, books, TV, and movies had no doubt taught him that Black people were unlikeable individuals. This anti-Black education undoubtedly continued throughout his time in middle school. But, because we shared the same taste in games, food, hobbies, and jokes, he saw me as an exception. I was his friend.
It is ambitious to expect anti-bias training to make a dent in decades (centuries) of anti-Black socialization. Yet, there is hope from my experience. Although that boy probably couldn’t be shifted from his view of Black people, he did change his opinion of a Black person. Indeed, many of our prejudices struggle to survive an open and honest conversation with a person from the prejudiced group. So, one cannot expect the mere revelation of shared characteristics between people to solve the problems of society. But it can improve the relationship between you and me, between the members of our team, or between people in our firm. Changing someone’s perceptions is also doable, it works, and it seems to make them happier.
5 . Anticipate the pushback
Whatever intervention one tries — especially the insistence on the use of simple protocols — there will always be some people who will oppose it. One must anticipate the pushback and prepare thoughtful responses to address the opposition. Let me give you some examples:
“You can’t say anything at work these days.”
“Why not say something about the business, or the mission, or about our values? Why don’t we talk about improving cooperation, encouraging innovation, or about deepening our client relationships? Let’s discuss how we can make our business more attractive to the talent pool, or about our continued professional development. There are lots of things we can, and should, talk about when we are at work. And, with the other person’s permission, we can also talk about more personal things. However, I suspect that if you ask permission to make a crude comment about someone else’s body shape, it is unlikely to be granted.”
“But shouldn’t people who join an organization have a duty to assimilate?”
“If, by ‘assimilate’, you mean subscribing to, endorsing, and adhering to organizational norms, the answer is: it depends.
I believe everybody should adhere to your firm’s ethical code of conduct, and to its strategic objectives for growth and profitability. If your firm has a culture of DEI then everyone should endorse that norm, too. If, on the other hand, your firm accepts inequity, one cannot expect those who suffer unfairly to subscribe to this norm. Even those who do not suffer should not subscribe to it because, once one accepts one kind of unfair discrimination, where does one draw the line for what is unacceptable? For example, you could be the 1-in-4 of us who experience a mental health problem each year. Hopefully, we all live long enough to be considered an older worker. Both these groups suffer from workplace discrimination. So, why would anyone want to subscribe to, endorse, or adhere to a discriminatory culture?
Can you share 3 or 4 of the most common mistakes you have seen businesses make while trying to become more inclusive? What should one keep in mind to avoid that?
No genuine belief that inclusion matters.
I once delivered a presentation in which I spoke about the economic costs of exclusion. I had argued that if, as a society, we choose to exclude a large chunk of our precious human capital for reasons unrelated to their ability to do the work, like class, gender, or skin color, we will never achieve our full potential. If, furthermore, we dedicate part of the capital we do include to holding back the tides of change and maintaining the status quo, our collective prosperity will become even more remote.
Following the talk, the boss of an investment management firm cornered me. “Our firm is extremely…,” he paused to find the right word, “… homogeneous. Yet, over the 25 years of its existence, we have been extremely successful. Why should I change?”
I suspected that he might have been playing the devil’s advocate. After all, he had just dedicated an hour of his time in the middle of the day to listening to me speak about the topic. I reminded him first that my comments concerned the collective rather than the individual. I then pointed out that over the previous 25 years, all his competitors were largely ‘homogeneous’ too. In the meantime, though, we see that the attitudes of the stakeholders are changing — asset owners, regulators, shareholders, the talent pool, etc. Was he convinced that a ‘homogeneous’ firm would still be able to compete as effectively in 25 years’ time?
Unwillingness to make changes in organizational structures or processes.
Inclusion cannot happen if organizations are unwilling to change their structures and processes. As in the example with my daughter’s boyfriend, the changes do not need to be huge or painful, but they must be thoughtful and durable. Sadly, too many firms settle for superficial changes, like the creation of an employee resource group (ERG).
Yet, if a firm was serious about impacting the lives of employees who suffer unfair discrimination, it would promote them to positions where their decision-making influences the firm’s internal and external interactions. It would not applaud these employees when they commit unpaid time to ERGs that exist primarily to provide action, support, and repair in response to the firm’s unfairness. Inclusion does not mean the creation of ERGs; it ought to mean making them unnecessary?
Unwilling to set targets
No business would dream of pursuing a strategic goal without setting a target and holding people accountable. Yet, many shy away from targets concerning inclusion-related goals, like improving boardroom representation and closing pay gaps.
When, for example, the UK government introduced voluntary targets for female representation on large company boards in 2011, not every company was enthusiastic about it. Some saw its pursuit as little more than virtue signaling or thought the imposition might worsen their performance. But then they tried it.
Did you know, the average attendance of women at board meetings is higher than the average attendance of men? So, you can already expect the addition of a woman to increase board meeting attendance marginally. What’s more, that woman also has the effect of improving male board members’ attendance at board meetings, and their preparation for them. Woody Allen, admittedly, not exactly a scientific reference, joked that 80% of success is just showing up. So even before a woman says a single word, she already has the effect of increasing the potential effectiveness of that decision-making group. You see, other team members tend to change their behavior in a beneficial way in the presence of diversity.
Undoubtedly, many companies subsequently wondered why they had not made the change years earlier. In the 100 largest UK companies, the proportion of women board members stood at 12.5% when the 25% target was introduced. Last year, the proportion stood at 39.1%. That is not virtue signaling, even if it started that way. That is the desire among those firms to perform and to use all the resources at their disposal.
How do you measure the effectiveness of your DEI efforts?
We neither design nor execute entire DEI transformations; our work is typically one element in an organization’s broader plan. However, I believe the affected individuals are best placed to judge the effectiveness of DEI efforts. So, the only way to measure people’s sense of inclusion and belonging is to ask them. Scientifically validated surveys designed to measure our sense of belonging are available. However, surveys of existing employees might not capture the inclusiveness of the firm because of the survivorship bias. If individuals who feel excluded simply leave, or refuse to join an organization, they cannot participate in the survey. So, it is essential to interview those who leave or who do not accept job offers, too.
Are there other organizations you admire for their approach to DEI? Can you please explain why?
I admire enormously firms who gather opinions from their employees through surveys, collect data about recruitment, pay, training and promotions, and are transparent about the findings. These firms deliberately leave themselves no place to hide. They can then embark on targeted initiatives, similarly, communicating the results. Clearly, not everything they try will succeed. However, in the eyes of their employees, the effort directed at the challenge is as important as the results. Firms that persist in their efforts, and see DEI as an iterative process, already demonstrate inclusive behavior.
What do you do to address Proximity Bias? How do you ensure remote workers are treated the same as onsite workers and have equal access to opportunities?
Although we have investigated the behavioral implications of remote vs. proximate work in the context of the pandemic, our focus was primarily on the consequences for interpersonal trust. It is undeniable that high-trust relationships are far easier to establish and to maintain when people work in proximity rather than remote. People more readily pass responsibility to those they trust, so proximate individuals have an advantage over their remote counterparts in the competition for opportunities.
The basis for high-trust relationships, however, is identical to that for inclusion. We more readily trust those who we perceive as familiar. In addition, we tend to judge proximate team members by their personal characteristics and their behavior, whereas we tend to judge remote team members by their performance and by their (digital) communication. Proximate communication is continuous, asynchronous, sometimes spur-of-the-moment, and might not even be related to the task. Remote communication is synchronous, disjointed, and more deliberate. And, when things go wrong, there is more consideration of situational factors when judging proximate outcomes. Remote failings are commonly attributed to individual inattention with little attribution to the situation.
To redress this imbalance, it is essential to make room for remote team members to have the kinds of conversation their proximate counterparts have. One can set up online meetings in which we do not talk about work, but instead participate in exercises that permit the discovery of shared characteristics, values, experiences, and goals. These are the same exercises that we use to promote greater inclusion. Of course, we are more likely to include people we trust and to trust people we include.
We are very blessed to have some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world whom you would love to have a private lunch with, and why? He or she might just see this.
I am a huge podcast fan, especially those concerning psychology. Every now and again I discover a guest who is so compelling that the interview seems way too short. This happened twice recently. I immediately ordered the guest’s latest book and gobbled it down in a few short sittings. The first was Claude Steele, the psychologist who conducted much research into ‘stereotype threat’. He prompted me to read his wonderful book, Whistling Vivaldi. The second was Jonah Berger, a specialist in language, influence, and behavior change. He is also the author of a great new book, Magic Words.
How can our readers further follow your work?
Readers can see topics on which we have done research by checking out www.prospectabriefings.com. To see more of our work on the topic of trust, my colleague Klaus Harnack and I co-wrote a book called The Trust Mandate: The behavioural science behind how asset managers really win and keep clients. It was written for financial services professionals, but it applies to all service providers whose services expose their clients to some kind of risk (financial, health, reputation, etc.).
Thank you so much for sharing these important insights. We wish you continued success and good health!
