How Hiring the Same Types of Leaders is Hurting the Financial Services Sector

Groupthink is one of the biggest threats to leadership decision-making in financial services (FS). It occurs when teams of similar backgrounds, perspectives, and experiences fail to challenge each other’s assumptions, leading to stagnant thinking, blind spots, and costly errors.

We’ve seen time and time again how a lack of diversity at the top has contributed to some of the FS sector’s biggest failures – from the 2008 financial crisis to the downfall of major banks that ignored critical risks. Regulators now recognise that diversity isn’t just a “nice-to-have” but a core part of risk management and sustainable leadership.

So, what does groupthink look like, and what can be done about it?

What Groupthink in Leadership Looks Like

• The Same CVs, The Same Backgrounds – Many FS companies rely on traditional executive search firms that recycle the same pool of candidates, meaning boards and leadership teams remain homogenous.

• Risk-Averse Hiring Decisions – Companies play it safe, hiring “known quantities” who have held similar positions rather than leaders who will bring fresh perspectives.

• Failure to Spot Emerging Risks – Homogeneous leadership teams miss warning signs because no one is challenging assumptions.

• A Culture of Agreement Over Debate – A lack of diverse viewpoints leads to rubber-stamping decisions, rather than rigorous debate that ensures the best outcome.

Why Regulators Are Pushing for Diversity

Regulators are clear that increasing diversity at senior levels is now a business-critical issue:

• They highlight that diversity isn’t just a social obligation – it improves governance, reduces risk, and strengthens decision-making.

• Companies with more diverse leadership teams are less likely to be caught off guard by market shifts and regulatory changes.

How to Avoid Groupthink in FS Hiring

1. Expand the Talent Pool – Don’t just recycle the same CVs. Look beyond traditional hiring circles to bring in leadership talent from different industries.

2. Change How You Assess Candidates – Instead of relying solely on CVs, use tailored ‘killer questions’ to uncover real leadership potential.

3. Ensure Recruitment Partners Prioritise Diversity – Work with executive search firms that commit to delivering diverse shortlists, rather than offering more of the same.

4. Encourage Debate in Leadership Teams – Boards and executive teams should welcome constructive challenge and fresh thinking, not just consensus.

The future of FS depends on diverse leadership teams that are ready to challenge assumptions, manage risk effectively, and drive innovation. The time for change is now.