Diversity, Equity, Inclusion, and Belonging (DEIB) initiatives have existed in workplaces in some form since the 1960s. But, in the financial services sector in particular, wide opportunity gaps remain for women and people of color. The number of people of color in financial services plummets 75% as workers move up from entry-level roles to the C-Suite, according to one McKinsey analysis. Across the industry, another McKinsey report found, 86 women were promoted to manager for every 100 men.
The murder of George Floyd by police officers in 2020, however, sparked a racial reckoning and, within workplaces, a deeper look at diversity, equity, and inclusion initiatives, including in the financial services sector. Now, market forces and population trends also are pushing the industry toward DEIB, too.
Amid the pandemic’s Great Resignation, the financial sector needs workers — it had 516,000 job openings in June 2022, up from 324,000 in June 2021, according to the US Bureau of Labor Statistics (BLS). And the prospective labor force and consumer base is diversifying. In 2000, the US population was about 70% white; in 2019, that figure dropped to 60%, according to public policy organization The Brookings Institution.
Building more diverse, equitable, and inclusive companies will allow the financial services sector to draw from a bigger pool of workers and attract new customers. “You’re seeing [DEIB] being embraced not only at the [Human Resources] level, but at the CEO and C-suite level,” said Bill Hampton, CEO of Hampton Tax and Financial Services and a member of the National Association of Personal Financial Advisors’ DEIB committee, which has developed a diversity toolkit for the industry. “Now, it’s an imperative.”
But effective DEIB programs that allow for lasting change will require a large-scale culture shift for the financial services sector. Here’s why and how to build meaningful DEIB programs in the workplace throughout the employee lifecycle — and create lasting culture changes that support these efforts in the long-run.
The Business Case for DEIB
In financial services, underrepresented groups face many obstacles, including harmful, incorrect stereotypes and unconscious bias. And then there are longstanding issues within the industry that have made it difficult for people of color and women to even be consumers and access services, obtain a business loan, or withdraw money from their own account.
“The industry has to own that we have absolutely caused issues in what society looks like,” said Ronaldo Hardy, a former credit union CEO and co-owner and Chief People Officer of consulting firm CU Strategic Planning, where he heads up the diversity, equity, inclusion, belonging, and accessibility department and training for credit unions.
When financial services firms acknowledge their past mistakes and missteps and do better, they can reap the rewards of a diverse workforce where all workers have equal opportunity to develop their careers and, as a result, are happier and more productive — and can create more growth for their employers. As CU Strategic Planning research demonstrated, effective DEIB strategies boost profit, recruitment, retention, and employee engagement. “It actually does yield quite a bit on the bottom line,” said Hardy.
Meaningful Change — Not Just Checking a Box
Truly making DEIB a meaningful, embedded part of company culture in financial services firms requires leaders to develop inclusion efforts that reach and affect employees throughout the employee lifecycle, said Tawanda Johnson, a Human Resources consultant specializing in DEIB. Empty efforts to check a box — like just posting photos of Black employees on a careers page, or adding a line about diversity to a mission statement — aren’t going to cut it.
“Some traction has been made after the untimely death of George Floyd,” said Johnson. “Many companies were [doing] all these things to check the [DEIB] boxes. But their foundation wasn’t in place. And so, when you’re dealing with tokenism and just checking the boxes and there’s no real change, employees see that and feel that. And they leave.”
8 Ways to Make Meaningful DEIB Changes in Financial Services Culture
Here are eight steps for making DEIB a priority — and a lasting, foundational change — in workplace culture in the financial services industry.
1. Draw from a diverse talent pipeline.
If you’re only sourcing candidates from the usual places — such as existing employees’ referrals, specific alumni networks, or your own LinkedIn network — it’s time to broaden your scope, because that “best person” for the job was drawn from a very limited candidate pool.
To expand recruiting efforts, firms need to extend their reach. Build relationships with career offices and business programs at Historically Black Colleges and Universities (HBCUs), Hardy advised. Partner on internship programs with groups such as BLX, an organization that supports aspiring Black and Latinx financial planners, recommended Hampton. And post open positions on job boards that cater to diverse demographics.
2. Write inclusive job postings.
Images of workers on your career website and the words used in postings speak volumes to job seekers, and can demonstrate whether your organization values workplace diversity and an inclusive environment — or doesn’t, Hampton said.
Take care to write inclusive job postings. “You need to not just have the pictures [of diverse teams], but you have to have the correct wording,” he said. “You have to explicitly say, ‘We’re looking for diverse candidates.’”
Also consider stripping out impediments to hiring diverse candidates, such as requiring a college degree for an entry-level job, advised Hampton. Focus more on the experience needed for a particular role, such as customer service or sales. “Diverse candidates [who] haven’t completed college might still be great for that position, especially for entry-level [roles],” he said. “They can be trained.”
3. Provide mentors and sponsors.
Mentorships and sponsorships can ensure that diverse hires have internal guides within the firm, Hampton said, and both play key roles. Mentors provide advice as diverse employees consider ways to expand their skills, network, and experience. Sponsors are active champions — introducing employees to their own networks and lobbying for their promotions or assignments to stretch projects.
“Just hiring [diverse candidates]…that’s not enough,” Hampton said. “You have to give [them] an opportunity to go into management and become leaders.”
4. Support employee resource groups.
Employee resource groups (ERGs) are designed to let distinct groups of workers, such as women; Black, Hispanic, or Asian employees; veterans; and LGBTQ+ individuals connect, lobby for their needs, and organize company-wide programming.
Insurance and financial services company MassMutual has a broad array of ERGs, which they call “business resource groups,” or BRGs, said Jackson Davis, the company’s head of DEIB. The groups have built a sense of belonging within the organization, especially during the shift to remote work.
“[ERGs/BRGs] have the ability to touch a wide swath of the organization, and they’ve been something that has been critical over the last couple of years as people work remotely, in keeping the communities together and having that sense of being valued and belonging here at MassMutual,” Davis said.
5. Focus on internal mobility.
To actively seek out existing employees who have demonstrated the skills to move up, but might not have the wherewithal to get there, Ana Recio, Senior Vice President of Talent at online bank and personal finance company SoFi, recommended relying on an internal mobility team.
These teams look out for workers from underrepresented minorities (URMs) or underrepresented groups (URGs). And Recio looks for, in particular, employees who might not be top talent, but are strong performers that could otherwise fall through the cracks. The goal is to keep a central repository of qualified internal candidates to promote as roles become open.
6. Commit to education.
Companies can launch all the policies they want, but if stakeholders — from managers to those in the C-suite — don’t understand why inclusion initiatives are critical, they can quickly fail. “As part of this transformation, there needs to be a real commitment to education,” noted Davis.
That might include programs that focus on cultural competence and unconscious bias, for example. At MassMutual, leaders take part in an intercultural development program. “[This program has] not only helped to open [people’s] eyes to the realities of what women and people of color experience in the workplace, it’s…created a common language,” said Davis.
Other kinds of training could cover cross-cultural understanding; how employees can actively promote racial tolerance; and unconscious bias, the automatic and unintentional prejudice that can seep into our decisions and behavior. But it’s not enough to just educate employees about these topics. A review of unconscious bias programs in the Harvard Business Review found that the most successful programs provide people with concrete tools to change their habits.
What’s more, education must be an ongoing effort, said Davis. “Offering one program — and then dropping it and not having the ability to continue that conversation and then demonstrate through action that things are different — will only lead to a certain amount of success,” he said.
7. Reconsider compensation.
Compensation philosophies can create obstacles for diverse workers. Particularly in financial planning and other sales roles, new hires may be expected to approach their friends and family for business and earn a commission.
But these kinds of roles may be off limits to some underrepresented groups because their loved ones don’t have wealth to invest, Hampton pointed out. This obstacle is prompting some financial services firms to change their compensation structure and provide a salary for these roles, possibly with an additional commission or bonus, he said.
8. Measure the metrics.
To ensure they’re building diverse companies and an inclusive workforce, financial services companies must track the impact of their inclusion initiatives. HR tech solutions are making this easier.
“We're starting to see richer and more comprehensive data that is starting to track not just the hiring, but the promotion rates, bonus payout rates, [and] attrition rates,” said Recio. Those metrics “create a deeper, more 360-view of a DEIB program,” she added.
Metrics that monitor the success or failure of DEIB strategies also make it possible to hold leaders accountable as they work toward specific diversity goals, Davis noted. “That accountability, transparency, and measurement are so important because [it] encourages people to take [DEIB] seriously, look for outcomes, and really push and count [DEIB] as an equal issue, just [like] earnings or sales.”
DEIB Responsibilities at Every Level
At every level of an organization, individuals have a role in making DEIB a priority within the culture of financial services firms. Here’s how leaders, managers, and HR teams can ensure DEIB remains top-of-mind across the company and throughout the employee lifecycle.
- Leaders: Any intentional culture change must start at the top — with the board and the CEO. The board must be diverse, said Johnson. And the CEO must have a Chief People Officer (CPO) or Vice President of People who understands why DEIB is vital to the organization’s goals, she said. What’s more, Hampton added, the CEO and other executive leadership must be clear about their expectations. It’s up to CEOs to let managers know that if they’re not on board with the mission, it may be a sign they’re no longer aligned with the culture of the company going forward and it may not be a good fit, he said.
- Managers: Managers must be fully engaged, trained, and aligned with DEIB goals. “Getting our managers fluent with how [the organization] cultivates and fosters those experiences is really key,” Recio said. “Because they’re the ones who are spending the most time [with employees].”
- Human Resources: DEIB provides another opportunity for HR teams to play a strategic role — building the training programs, revising the recruitment strategies, and monitoring the success of inclusion initiatives. And, Johnson said, it’s alright for them to admit they don’t know all the answers, advising HR team members to “ask the questions that you don’t know the answers to or things that you’re curious about and challenge the status quo.”
“That’s the way we will facilitate real change, especially in the financial services industry,” she said.
Decades of inequitable hiring practices and employee retention policies have gotten the financial services industry what it has today — broadly speaking, an unequal playing field for diverse groups. Incremental progress toward an inclusive workplace where everybody can succeed, regardless of their ethnicity, sexual orientation, gender, or other background, will take time.
“It’s not going to happen overnight,” Hampton said. “You have to start where you’re at.”
But the destination — a work environment where all people have the opportunity to build a career and are provided the same tools to excel and drive the organization forward — is well worth the work.
Our DEIB Analytics Dashboard is designed to display all the employee data you need in one place. Now you can make informed decisions as you move towards a more diverse, equitable, and inclusive culture, where employees from all corners of the world truly feel like they belong. To learn more about building an organization where everyone can thrive, request a demo.