It’s hard to believe that the summer is drawing to a close.
I have mentioned previously in this publication that I grew up in a community banking household. My mother spent 20 years in banking, predominantly with two community banks in Connecticut. Kathleen loved her banking career. Even in the last few conversations that I shared with her before her passing, we talked about how proud she was of her accomplishments in her profession and the lives she was able to impact through her work.
As I begin my second year working directly for the community banking industry, I understand what Kathleen meant when she spoke proudly about her work in the community banking industry.
Don’t get me wrong. As one of the few female bank executives nearly 40 years ago, Kathleen’s career certainly was replete with challenges and obstacles. Being as competitive as she was, she never complained about her disadvantages. Kathleen simply overcame them by working harder and longer than her peers.
Next month PACB will elect its first female bank executive as its chair, Lori Cestra, EVP and COO for Enterprise Bank, near Pittsburgh. Lori’s achievement is a milestone worth celebrating. Lori becomes the first women chair since PACB’s founding in 1992, and the first in more than 140 years if you include the line of banking groups preceding PACB’s creation.
Lori’s ascension as chair demonstrates how far the association has come in creating opportunities through professional development and networking for women to advance to senior levels within their banks and the industry.
But it also creates an opportunity for our industry to recognize more must be done to identify and break down barriers for underrepresented groups to rise to senior management positions, as well as the economic and operational advantages that come with developing a diverse and inclusive workforce.
One of the pillars of PACB’s strategic plan is to develop a workforce strategy to ensure the community banking industry can identify and attract top talent and to train and prepare diverse populations of employees to lead these institutions into the future.
The economic case for diversity in the workforce is powerful. Companies that mirror the diversity of their customers in their own workforce can better understand and meet consumer needs.
One study, for example, revealed 90% of consumer spending is within the hands of women. And according to last year’s Multicultural Economy Report from the University of Georgia, the combined buying power of Blacks, Asian Americans and Native Americans is estimated to be $2.4 trillion. The nation’s Hispanics command $1.5 trillion in spending power — larger than the GDP of Australia.
Diversity in the workforce is also good for the bottom line. A 2019 Harvard Business Review report on diversity policies found that “having a diverse workforce helps companies acquire and retain the best talent, build employee engagement, increase innovation, and improve business performance.”
The consulting firm McKinsey and Company quantified this value in 2015, revealing: “There is a linear relationship between racial and ethnic diversity and better financial performance. That is, for every 10% increase in racial and ethnic diversity on the senior executive team, earnings before interest and taxes (EBIT) rise 0.8%.”
McKinsey also reported, “More diverse companies, we believe, are better able to win top talent and improve their customer orientation, employee satisfaction, and decision making, and all that leads to a virtuous cycle of increasing returns.”
A report last February by the Majority Staff of the Committee on Financial Services of the U.S. House of Representatives found that women made up over half (51%) of the workforce in the nation’s largest banks. African Americans comprised 12%, and Hispanic-Americans comprised 11%. Yet in senior-level positions within these banks, women accounted for only 29% of positions, while people of color comprised only 19% of these roles.
Earlier this month, PACB Chairman Jon Conklin announced the creation of a task force comprised of CEOs, executive management, board leaders, and executive recruiters. They are beginning a conversation about what’s needed to achieve more diverse leadership within community banks and how the association can help ensure that its institutional members are fostering equitable hiring and advancement opportunities throughout the industry.
Many community banks have developed policies promoting their commitment to equality. Some institutions are hiring diversity and inclusion officers and conducting board and staff training. But what are the next steps for enduring change?
We are all now in these efforts together. PACB is proud of its leadership role to help our industry more fully promote diversity and inclusion at senior levels, as a way to strengthen our future in community banking.
If you would like to join this initiative and serve on this diversity and inclusion task force, or if you would like to recommend a board leader or senior management level volunteer, please contact me at firstname.lastname@example.org.
See you at the virtual annual meeting on September 25th!
Kevin Shivers is President/CEO of Pennsylvania Association of Community Bankers.