The case for inclusion | BankBeat

Shirley Davis

While diverse hiring practices and an awareness of the growing demographic shift within the United States has lessened the gap between minority and non-minority bankers in the past several years, there’s still work to be done, particularly when it comes to including minority bankers in decision-making processes. 

Addressing attendees of “Banking and the Economy: A Forum for Minorities in Banking,” held last fall in St. Louis, Eighth District Fed President and CEO James Bullard noted that minority representation at all levels of financial services management increased to 21 percent in 2015 from about 17 percent in 2007, according to a 2017 report from the Government Accountability Office. 

“However, the level of representation by minorities varied by race and ethnicity group, as well as by seniority,” Bullard said. “Specifically, representation of African Americans at various management levels decreased slightly during this period, while representation of other minorities increased.” 

 Still, Bullard views prospects for minority bankers as favorable. “The management pipeline at financial industry organizations — through which diverse candidates can move into senior-level management positions — has grown,” he said, citing more GAO statistics: Representation of minorities in first- and mid-level management positions was 22.4 percent in 2015, up from 18.7 percent in 2007. However, also in 2015, the GAO stated that representation of minorities in senior-level management positions was only 12.3 percent. 

While individual minority representation has risen in recent years, the number of Minority Depository Institutions has declined in the wake of the financial crisis. It has declined at a slightly lower rate than that of community banks as a whole, Bullard stated. 

According to the FDIC, the number of MDIs decreased by 31 percent from 2008 to 2018, while community banks recorded a 33 percent decline in the same period. In this same time frame, the number of MDIs owned by Asian American, Hispanics and Native Americans increased, but those owned by African Americans declined, representing just 15 percent of all MDIs by the end of 2018. And the number of MDIs overall is still tiny by comparison: In 2018 there were only 149 MDIs in all of the 5,400 insured financial institutions, down from 215 before the financial crisis. 

James Bullard

“On the plus side, financial performance at MDIs has improved significantly over the past five years in terms of revenue generation and loan performance, according to the FDIC,” Bullard told the assembly. “These institutions make a greater share of mortgage originations — as well as small business loans — to borrowers in low- and moderate-income census tracts,” he said. 

“Diversity and inclusion aren’t just good for morale,” Bullard said. “They’re a good business strategy. We can attract and recruit the best possible talent by casting a wide net and expanding recruiting efforts. A diverse workforce enhances our ability to be innovative and better serve the communities in which we operate.” 

Diverse hiring is not inclusion

“Diversity is inviting people to the dance; inclusion is asking them to dance,” said Shirley Davis, president of SDS Global Enterprises.

Davis believes bank leaders should engage in self-assessment, asking themselves if they are the kind of leaders who build more leaders through vision, inspiration and inclusiveness, because inclusive cultures will attract top talent (well-networked, self-starters with critical thinking skills who are team leaders and communicators).

But banks have to build the type of culture that attracts diverse talent. They must create an environment in which employees feel safe, not just physically but psychologically, a culture in which they feel free to “say something if they see something.” And you have to keep your employees engaged, not just require them to be in their seats.

“If you don’t have [corporate] values that really do speak to inclusion, you need to create some,” Davis said. “Respect should be there; collaboration should be there; trust should be there. Those are all areas that help to create the right kind of culture, the right kind of safe-to-speak environment … The other thing is to make sure you have [inclusion] built into the performance goals or expectations of every leader. Every leader should have an understanding of what the competency models are, and in that competency model, you tie that to values as well — how we treat people. 

“You want to make sure that from the CEO, the president to the executive director all the way down, that they’re all clear that we are a company that embraces and values diversity. We really want to create an inclusive culture, and it’s everybody’s role and responsibility,” she continued. 

Davis shared her “6 Cs of Inclusive Leadership”: 

Commitment: Inclusive leaders are committed to diversity and inclusion because these objectives align with their personal values. 

Courage: They speak up and challenge the status quo and are willing to have difficult conversations, admit what they don’t know and aren’t afraid of discomfort. 

Cognizance of bias: They are mindful of personal and organizational blind spots and self-regulate to ensure “fair play.” 

Curiosity: Inclusive leaders have an open mindset and a desire to understand how others view and experience the world. 

Cultural intelligence: They are confident and effective in cross-cultural interactions. 

Collaborative: They empower individuals as well as create and leverage the thinking of diverse groups. 

Acknowledging unconscious biases and actively working to ensure bank culture is inclusive is difficult, Davis admitted. Still, for businesses to thrive, embracing diversity and including minority hires in every level of an organization is crucial. 

“When you stay the same and when you remain in a comfort zone, you’re not becoming relevant and not keeping up with the times,” she said. “That’s a real business case, right there. We’ve got to constantly think about the fact that we’re living in an age and stage where things are changing rapidly, in our businesses, in our companies, as well as in our communities.” 

Blind resumes are one way to decrease unconscious bias during the hiring phase. While Davis and others encourage minority applicants to blind their resumes, banks could replicate the idea when reviewing resumes to select interview candidates. 

“We know there’s name discrimination, school discrimination. There’s zip code-related discrimination,” said Martie North Hamilton, senior vice president and director of community development/CRA at Pine Bluff, Ark.-headquartered Simmons Bank. “Remove those off resumes. If all a hiring manager can see is that applicant No. 127 has a college degree, etc., they can’t engage in those subconscious mental biases — that’s gone. Look at the substance of the resume, and constantly reinforce that differences are not bad differences. We all contribute to the bottom line and make the company stronger.”

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