To boost diversity in their talent pipelines, banks and credit unions should look to expand their recruiting efforts to historically Black colleges and universities, and stand up programs to build a diverse internal talent pool.
As more businesses become aware of how recruitment and employment policies have played a role in perpetuating the wealth gap, some local banks and credit unions are beginning to evaluate how internal policies and corporate cultures shape opportunities and career paths for people of color.
“It’s one thing to be aware of issues; it’s another thing to see those issues come to light,” said Gwendolyn McCoy, a consultant with Cambridge-based Diversity@Workplace Consulting Group. “There are obvious inequities within work that are based on a system of institutional racism.”
A year ago, conversations about diversity, equity and inclusion would have focused on the business advantages to having diverse and inclusive workforces, McCoy said. Research from the likes of Boston Consulting Group and McKinsey & Co. have linked diverse workforces with improved financial performance.
“We talked about the business case in terms of how it drives financial growth,” McCoy said. “And that when you have a diverse group of people, there’s better decision-making.”
But in the months since the protests against the killing of George Floyd began, McCoy said, the conversation has turned toward equity and the role of systemic racism.
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“Now we have to look at it differently,” McCoy said. “We say that we want diversity for those reasons we talked about in 2019, but the fact is that unconscious bias is something that prevents us subliminally from moving forward with that charge.”
The protests against racism are not the only factor driving the need to take a different approach to diversity, equity and inclusion. McCoy said Generation Z – the youngest workers – expect to work at companies that have DEI incorporated into their cultures.
How are Banks Doing?
Comprehensive statistics on the state of diversity, equity and inclusion efforts at banks and credit unions are hard to come by. Financial institutions can voluntarily submit a diversity self-assessment to regulators, but few do, possibly signaling the topic has not been a priority for all firms.
The National Credit Union Administration encourages participation in the self-assessment from all federally insured credit unions, but in 2019 only 118, or 2.2 percent, submitted results. Of those that did, an average of 55.6 percent responded affirmatively to questions about leadership or organizational commitment to diversity, while an average of 17.2 percent had affirmative responses to questions about transparency around diversity and inclusion.
Federal bank regulators – the FDIC, the Office of the Comptroller of the Currency and the Federal Reserve – request voluntary self-assessments from only some financial institutions, and for lenders supervised by each regulator in 2019, fewer than 20 percent responded.
The FDIC, which supervises more than 5,000 institutions, requested self-assessments from 784 and received 133. The aggregate workforce profile, which represented the year 2018, showed that minorities made up 18 percent of the workforce, 11 percent of management and 8 percent of board members, while only 60 percent of America identifies as white non-Hispanic or Latino, according to the Census Bureau.
The CEO Pledge
Leaders at several Massachusetts banks, however, have personally pledged to boost diversity, equity and inclusion at their banks.
Leaders at Boston-based Berkshire Bank, State Street, Rockland Trust Co. and Webster-based Webster Five have all signed in the CEO Action for Diversity and Inclusion pledge, a nationwide initiative that requires CEOs to support open dialogue around diversity and inclusion, implement unconscious bias training in the organization and share diversity and inclusion plans with the board of directors.
Webster Five’s president and CEO, Donald Doyle, had signed the pledge back in February. In response to the events of the last three months, Doyle said the bank has shifted its diversity and inclusion initiatives to include a focus on equity, recognizing the effects of systemic racism.
Hearing from Black employees about how they’ve experienced racism in their lives, was an eye-opening experience, Doyle said. In response, he decided to bring in an outside consultant for training, starting with the board of directors and senior management, to help employees get more comfortable having uncomfortable conversations about race.
Banks can also attack the issue by cultivating a pipeline of diverse talent, McCoy, the consultant, said. But the cultivation needs to start at the middle and high school levels, she added.
Diane McLauglin
Banks should also cast a wider net when recruiting, McCoy said, such as looking at historically Black colleges and universities. Training and opportunities to complete college degrees later can help build more diverse internal talent pipelines, McCoy said.
Doyle said he realizes any effort to change will take time.
“It’s a centuries–old problem, so it’s going to take a long time to get to a point where we’re all in a position to say that it’s eliminated,” Doyle said. “At this point the goal is to reduce racism, and if I can play a part in that, then I’m really pleased to do it.”
