BAI’s latest Executive Report offers insights on hiring and promoting talent with the goal of greater diversity, equity and inclusion. Download now.
By now, the diversity, equity and inclusion (DEI) landscape in U.S. financial services is well mapped—while the lower levels of the hierarchy more closely resemble the society at large, the upper reaches remain disproportionately white and male.
A U.S. House of Representatives committee report, released in early 2020, used data provided by the nation’s four-dozen largest banks ($50 billion+ in assets) to determine that the executive ranks in the typical bank is 70 percent male and 80 percent white. The breakdown for boards of directors is similar.
The current national focus on addressing inequality includes the financial industry. Many banks are making public commitments to create more diverse and inclusive workplaces. There is a growing commitment among top executives, financial institutions are developing and improving educational programs, and employees are more willing to have difficult conversations.
This month’s Executive Report is centered on diversity, equity and inclusion in hiring, nurturing and promoting talent in financial services. With close to half of millennials and Gen Z being minorities, the business case for DEI is becoming ever clearer.
In our lead article, contributing writer Amy George points out that the effects of COVID-19 threaten some of the more significant gains made in recent years, particularly by women who now often find themselves carrying more child-care and educational responsibilities as a result of pandemic-related school closures.
Her conversations with bankers and industry experts yielded a number of suggestions on how banks and credit unions can move forward in their DEI efforts, beginning with casting their hiring net over a larger area to find a more diverse pool of prospective employees, many of whom may not have been thinking about going into financial services.
Having more workforce diversity is really just the beginning—after that comes the equity and inclusion components of DEI, including mentoring to help build internal networks and skill sets, and career pathing to provide growth opportunities and enhance retention. Doing this part right is effort-intensive and requires full buy-in by leadership. As one banker put it, “It’s important to focus on the total employee and what it takes for that employee to be successful—and then I can figure out how I can best deliver on that for the employee.”
Employees from traditionally underrepresented groups can also find community and support from their peers. More financial institutions are creating and funding employee resource groups (ERGs) based on gender, race, ethnicity, sexual identity and other distinctions.
Contributing writer James A. Anderson tells us that ERGs also serve as intermediaries between workers and management—sometimes conveying complaints, and at other times making suggestions or advocating viewpoints. Given the turmoil of 2020, it should come as little surprise that enrollment in ERGs has surged at financial services organizations.
One diversity consultant told Anderson that ERGs may play ever more important roles as the nation and workforce become more diverse, and that those who emerge as leaders within ERGs may be well-positioned for corporate leadership positions. “The role of running organizations like these makes you a change agent. … The expertise and responsibilities involved translate into a formidable set of skills.”
Another area subject to change is growing emphasis on DEI in the annual performance review. Contributing writer Karen Epper Hoffman explains that a shortcoming in the current structure is the overweighting of white males in the managerial ranks in banking, which often leads them to “groom up-and-coming employees who look like them. Hence, women, people of color and other less-represented groups are often working at an inherent disadvantage.”
She collected a range of ideas from bankers and consultants on how performance assessment may be revamped to more appropriately train and then evaluate a diverse workforce.
One suggestion is revisit mission statements and strategic goals with an eye toward DEI, while another is to better manage career paths by matching new employees with senior-level “sponsors” in the organization.
Within these ideas and others expressed in this Executive Report, bank and credit union leadership can find the business benefits of placing DEI among their institution’s core values.
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