Talent recruitment and retention have become increasingly challenging across all industries over the past few years, as employees have reevaluated what’s important to them — both in their careers and their personal lives — while resignation rates remain high. In the financial services industry, despite a rise in business volumes, banks and credit unions are struggling to fill roles amid the talent shortage. Benefits that were once the exception in the industry — remote work, for example — have become the norm, and gender and racial disparities have been hard to overcome in this sector.
One way to increase the talent pool is to break the stereotype that the banking industry is a “boys’ club” by making financial services organizations more diverse and inclusive, starting at the beginning of the employee lifecycle by making job descriptions more inclusive.
The Financial Services Industry Is Still Lacking in Diversity
Diversity and inclusion continues to be a top priority for companies across all industries. According to PwC’s 2021 Health and Well-Being Touchstone Survey, employers said diversity, equity, inclusion, and belonging (DEIB) was a top area of focus in 2020 and 2021 for attracting and retaining talent, with 85% of employers saying that they are assessing, or had assessed in the past year, their programs and policies to identify bias and inclusive language. And a PwC Diversity and Inclusion Benchmarking Survey for Financial Services reported that 78% of respondents stated DEIB was a priority at their organization, but 34% said their individual diversity is a barrier to employee progression.
Despite some efforts, the financial services industry is still dominated by white men, especially at the higher levels. A 2020 report by McKinsey & Company showed that the number of people of color at entry-level positions in US financial service firms was proportional to their representation in society, at around 40%. In 2021, the number of women at entry levels was even slightly higher than those of men, at 52%. However, once you move up within the organization, those numbers drop dramatically, especially for women of color. At the C-Suite level, 64% of positions are held by white men, 23% are held by white women, 9% are held by men of color, and only 4% are held by women of color.
Part of the problem is that in general, women and people of color are less likely than white men to be promoted from entry level to manager. This “broken rung” that limits the career progression of underrepresented groups means that these groups are put at a disadvantage from the start, with the gap growing with every successive level of seniority. Other factors that contribute to lack of diversity in financial services firms include work environments that may contain discimination and microaggressions toward marginalized groups. While 12% of white men and 23% of white women responded that they needed to provide more evidence of their competence than others, these percentages were higher across all other racial and ethnic groups (Black, Latinx, and Asian) for both men and women, according to McKinsey research. The industry still has a long way to go in terms of gender and racial equity.
Why Diversity Matters
Workplace diversity goes beyond gender and race. A company with a diverse workforce will include people from all types of different groups and backgrounds, including race, gender, and sexual orientation, across teams and at all organizational levels. But diversity also includes factors other than demographics as well, such as skill sets, backgrounds, education, and work experience.
Diversity by itself isn’t the end goal. Equity, inclusion, and belonging must also be part of the equation. A 2018 report from Deloitte found that people feel included when they are treated “equitably and with respect,” and when they feel a sense of value and belonging to a group. And DEIB initiatives are not just significant to current employees, but to prospective employees, too. In Glassdoor’s Diversity and Inclusion Workplace Survey, 76% of employees and job seekers said a diverse workforce was important when they were evaluating job offers and companies.
The importance of DEIB increases even more when you look at Gen Z, those born between 1997 and 2012. Gen Z workers are entering the workforce as not only the most populous generation, but also the most ethnically and racially diverse one. For this demographic, DEIB is not just a nice-to-have — it’s a must-have. In fact, in a recent Monster.com survey, 83% of Gen Z respondents said DEIB is important when choosing an employer. In the coming years, financial services will likely be heavily reliant on Gen Z workers for talent acquisition, and can’t therefore can’t afford to ignore these numbers.
Beyond creating a workplace where employees want to be, DEIB also just makes good business sense. Research has shown that there are many benefits to having a diverse workforce, including:
- Diverse leadership can drive innovation. Harvard Business Review found that companies with diverse leaders had environments where out-of-the-box ideas were heard and championed, and that these companies were more likely to increase market share and capture new markets. And a BCG report showed that companies with above-average diverse leadership teams had almost half their revenue attributed to innovation.
- Diversity can help attract and retain talent. A majority of job seekers value a diverse workforce. In Glassdoor’s Diversity and Inclusion Workplace Survey, 32% would not even apply to a job at a company where the workforce lacked diversity, and these numbers are even higher for Black and LGBTQ job seekers and employees. A focus on DEIB is therefore also an important way to attract and retain talent, which has become increasingly important in light of the Great Resignation.
- Diverse companies have better financial results. McKinsey looked at 366 public companies across a range of different industries in Canada, Latin America, the United Kingdom, and the United States. This report found companies in the top 25% of gender diversity and racial/ethnic diversity were 15% and 35% more likely, respectively, to have above-industry median financial returns. On the other hand, companies in the lowest 25% of gender and racial/ethnic diversity tended to underperform.
- Diversity leads to better decision-making. According to research by decision-intelligence platform Cloverpop, 87% of the time, diverse teams make better business decisions, and decisions made and executed by diverse teams had 60% better results.
- Diversity can lead to higher-performing teams. And high-performing teams are key to an organization’s overall success. A team where everyone has similar backgrounds and perspectives won’t necessarily drive the business forward, while having different perspectives and strengths can lead to new solutions to problems.
- Diversity can drive more customer loyalty. If your company skews heavily toward one gender or racial group, it’s likely that your workforce demographics do not represent your customer demographics. Having diverse employees can help your organization uncover the needs of key customer groups.
DEIB doesn’t just happen on its own, nor does it happen overnight. Creating a diverse and inclusive workplace requires planning, intention, and integration initiatives within the company culture at every point of the employee lifecycle. One of the first steps to increasing diversity within an organization is to ensure a diverse pipeline of potential employees, which means writing more inclusive job descriptions.
Tips for Writing More Inclusive Job Descriptions
Building a successful DEIB program goes beyond trying to hit certain percentages or quotas. It requires bringing in qualified, diverse employees, and job descriptions are a great way to signal to candidates that they will be joining an inclusive organization in which they can thrive. The language in a job description can encourage — or deter — potential employees from applying. So it’s essential to write inclusive job descriptions, regardless of whether you’re hiring for an entry-level or executive position.
1. Add a disclaimer about wanting people with disabilities, gender minorities, and people of color to apply.
It will still be a while before financial services is seen as an industry that provides equal opportunity for all groups, so it’s not enough to post a job description and hope different groups of people apply. Job descriptions must specify your organization is looking for diverse candidates. This means revisiting your wording, removing any ableist or gendered terms (e.g., use “you” or “they/them” instead of “he/she”), and listing inclusive benefits, like paid parental leave or tuition assistance to show your company values all its employees.
2. Rethink what qualifications are required and what are nice-to-haves.
Specific requirements on language, skills, education levels, and years of experience can discourage otherwise qualified candidates. A frequently quoted statistic from an internal Hewlett-Packard report revealed women only apply for jobs when they feel they meet 100% of the qualifications, but men apply when they meet 60%. Ask yourself which qualifications are absolutely necessary, and which ones can be developed on the job. You can also add a note that candidates can apply even if they don’t meet all the listed requirements.
3. Post jobs in recruiting forums that cater to underrepresented groups.
Your first instinct may be to post jobs on large career-search engines or alumni networks, but it’s crucial to post on smaller, more diverse job boards. These forums may help you reach candidates who aren’t actively engaging with job postings for employers on larger sites. For example, websites like Black Tech Pipeline, Career Contessa, Pink Jobs, and Hire Autism are great for expanding your reach.
4. Demonstrate your company’s commitment to social change and anti-racism.
We’ve seen, especially for Gen Z, that job seekers’ expectations include factors beyond the products and services a company sells. They care about ethics, diversity, and social impact. Publicize your company’s initiatives in these areas in your job descriptions — and make sure that the efforts you’re publicizing are genuine and meaningful.
5. Ask diverse colleagues to review and weigh in on job descriptions.
Job descriptions aren’t inclusive if only one specific group is writing them. Having a variety of perspectives can help identify coded language, avoid harmful or misleading language, and reduce unconscious biases. This becomes increasingly important with more senior-level positions, as women and people of color are already underrepresented at those levels.
6. Include salary ranges.
Certain states and cities require salary ranges to be listed on job descriptions, but they also demonstrate that the salary range is based on experience and potential, rather than gender, race, or age. Pay gaps still exist between men and women as well as between people of most racial and ethnic groups compared to those who are white, so salary transparency is one step that could be useful in decreasing that gap.
DEIB Moves Businesses Forward
Despite a decrease in turnover rates in the sector in the past few years, banks and credit unions are facing extreme competition for talent. As employees’ priorities have shifted — with an increased focus on diversity and inclusion — organizations must also change their strategies to attract talent. By actively putting DEIB programs into place, financial services organizations can diversify their workforce, which will increase retention and overall success.
To understand how employees currently feel about your company’s DEIB initiatives and where there are opportunities for improvement, download Lattice’s Diversity and Inclusion Survey Template.