Over the last century, the necessity of diversity and inclusion has woven its way into our national dialogue, our laws, and our workplaces. Beginning with the first equal employment legislation introduced in Congress in 1943 and President Truman’s desegregation of the armed forces in 1948, the conversation has evolved as collectively we begin to understand what diversity and inclusion truly mean.
During the social and political changes of the 1960s, affirmative action and civil rights laws were enacted making it illegal to practice discriminatory hiring. Groups were established and meetings were facilitated to help create understanding between different individuals and groups.
The ‘Diversity Industry’ was born after the release of then Secretary of Labor, William Brock’s commissioned study of economic and demographic trends that became the renowned book, “Workforce 2000 – Work and Workers in the 21st century.” The study showed that the workforce was changing. For companies to remain competitive and successful, changes needed to be made not only in hiring but in the flexibility of schedules, dress codes, benefits, and career paths.
Twenty years later, we know that diversity and inclusion are so much more than policies, programs, and headcounts. A diverse and inclusive workplace is one where everyone feels equally respected, involved, and supported — a workplace where unique needs and perspectives are discussed, welcomed, and recognized.
Diversity in the Financial Services Industry
The graphs below from the February 2020 U.S. House Committee on Financial Services report “Diversity and Inclusion: Holding America’s Large Banks Accountable,” a study of diversity in the top 44 largest banks in the nation, represents the workforce by race and ethnicity.
Figure 1. Comparison of Banks’ Workforce Versus U.S. Employed Workforce by Race and Ethnicity 2018
Committee staff analysis revealed that although the workforce diversity demographics of the nation’s largest banks appear to align with the composition of the U.S. labor force, bank workforce diversity is more visible in entry-level rather than executive and senior-level positions.
A McKinsey report published in September 2020, confirms, “At the entry-level of U.S. financial services firms, the proportion of people of color is in line with their representation in society—around 40%. However, this share falls steadily along the corporate pipeline until, by the C-suite, it has dropped by 75%.”
The McKinsey report continues, “A black person is 1.4 times more likely than a white person to leave a financial services firm at entry-level. This has a disproportionate impact on overall representation. A loss of 10% among a cohort of 2,000 people of color at entry-level makes a much bigger dent in total numbers than does a 10% drop among a cohort of 200 senior managers. At the vice president level, attrition rates flatten out and are similar to those of white employees, except among Asian employees, where attrition remains consistently higher.”
Equal Employment Opportunity Commission data reveals that in the financial services industry, only 13.6% of minorities hold senior official positions in the United States. In the state of Pennsylvania, approximately 8% of minorities are part of the senior team.
While much of the data is focused on race and gender, diversity and inclusion discussion must also consider ethnic, cultural, and socioeconomic backgrounds and lifestyles.
“At the heart of the matter, is equity,” shares Charlie Crawford, chairperson and Hyperion Bank CEO in Philadelphia. “We need to recognize that not everyone starts at the same place. To understand what we need to do and implement, first we need to listen. We need to keep adapting to make sure we are not only represented by everyone but that each of those people has the same opportunities.”
Benefits of A Diverse and Inclusive Culture
What does this mean for Pennsylvania’s community banks?
What needs to be done to create a successful, diverse, and inclusive environment in the industry?
Studies have shown:
- Diverse management teams in all types of companies result in 19% higher revenues and 5.4% greater retention rates. (Boston Consulting Group, 2018)
- By breaking up workplace homogeneity, employees become more aware of their own potential biases — entrenched ways of thinking that can otherwise blind them to key information and even lead to errors in decision-making processes. (Harvard Business Review, 2016)
- Racial diversity stimulates curiosity, and gender balance facilitates conversational turn-taking. (Deloitte, 2018)
A survey of 300 HR executives conducted by Professor Roberson at Cornell University found that best practices of diversity and inclusion involve:
- fair treatment
- equal access to opportunity
- teamwork and collaboration
- a focus on innovation and creativity
- organizational flexibility, responsiveness and agility
- conflict resolution processes that are collaborative
- evidence of leadership’s commitment to diversity (e.g.,
- appointing a Chief Diversity / Equality Officer)
- representation of diversity at all levels of the organization
- representation of diversity among internal and external stakeholders
- diversity education and training
Interesting to note is how practices such as a focus on innovation and creativity – not directly related to diversity – are cited as being a best practice for inclusion.
Ray Chung, Chief Culture Officer at LINKBANK based in Camp Hill, believes considering others as equals does bring better communication and innovation. “Talent and potential are equal in many cases, opportunity is not,” says Chung. “Knowing other’s strengths and working with them according to those strengths is important. No one should be treated as ‘less than.’ When we treat and value people as they are, the unconscious bias is diminished, and avenues for growth and success are opened.”
PACB has established a Diversity and Inclusion Task Force to elevate the discussion of this topic and to provide pertinent and current information and data to our members.
PACB Chairwoman and EVP/COO at Enterprise Bank, Lori Cestra, believes more inclusion in the banking industry can be developed.
“One of my desires would be to educate, the high school/college level, about the vast majority of job opportunities in the banking industry. If more young adults were informed about their options, a wider variety of people would enter this business. We then have a responsibility to mentor and provide positive experiences, so they choose long term careers in the banking industry.”
The number of African American, Black, Latino, Asian, and other marginalized groups a company employs is data, but the experience they have at an organization is at the crux of the issue. It is the culture that fosters inclusion, acceptance, and trust among employees of all races, genders, lifestyles, and backgrounds that will have the most success.
Opening up your organization to underrepresented groups, having conversations to gain trust, and recognizing the strengths in one another will help grow your institution. In turn, it will help us as a community to engender a greater sense of inclusion.
Diane M. Sweeney is a professional copywriter and content strategist. At her desk, overlooking Beaver Creek in Chester County, PA she writes articles and web content to inform, persuade, and entertain. Her work can be found at www.dianemsweeney.com