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How finance is making diversity and inclusion a priority

Too often the issues of diversity and inclusion are described as a “problem” -- as if all was well in the day and now, sigh, we have to diversify.

What was clear at the “Collaborating to Achieve Diversity & Inclusion” session Tuesday during the SIFMA Annual Meeting was that diversity and inclusion is at once an opportunity, a “moral imperative” and a sensible business move backed by an increasing body of research. Decidedly not a problem.

If there is a barrier, as Rep. Terri Sewell, D-Ala., said, it “is our unconscious and institutionalized bias.”

The panel included executives from Edward Jones, BNY Mellon and Citigroup, Fannie Mae Chairman Egbert Perry and Sewell, elected to Congress after many years as a corporate securities and public finance attorney.

Panelists emphasized how diversity and inclusion, or D&I, is an ongoing effort. Companies may make progress in one area (say, hiring women) but fall short elsewhere (retaining those women, or hiring minorities). To discuss diversity and inclusion is to discuss many things, not limited to hiring, retention, promotion, C-suite buy-in and the need for lots and lots of data. In finance, these discussions also include Section 432 of the Dodd-Frank Act, compelling select federal agencies to create Offices of Minority and Women Inclusion, or OMWI.

Let’s look at what panelists had to say about some of those areas.

OMWI

The effect of OMWI is intangible, in how these offices set standards and an example that is emulated elsewhere, but the offices also have real-world effects that the finance world has had to respond to. As a handout from SIFMA notes, OMWI’s prime responsibilities are:

  • “Develop standards to enhance diversity among the agency’s workforce and senior management.”
  • “Develop standards to increase participation of minority-owned and women-owned businesses in the agency’s programs and contracting. …"
  • “Draft standards for assessing the diversity policies and practices of regulated entities.”

Perry of Fannie Mae noted another aspect in which regulation affects D&I, namely that the US approach to diversity has largely been legalistic. This holds everyone to a minimum, but also means all but the most progressive companies do much more than simple compliance.

C-suite buy-in -- and everyone else

Perry noted how his organization has long emphasized D&I at all levels, though it's not easy. He shared how to tells people trying to change traditional demographics that they are entering a world that was not designed for them, where they were not considered or allowed “at the table,” and so that the journey will by necessity involve “breaking barriers.”

The effort really starts at the top, argued Suni Harford, who is Citigroup’s managing director, regional head of markets for North America. D&I efforts cost money, time and effort, and they require loads of data rather than just anecdotes -- all of which requires top-level authorization. Similarly, Chris Lewis, principal and general counsel at Edward Jones, noted how employees tend to follow what the CEO and other leaders demonstrate is important to them. If D&I matters to the leaders, it’ll matter to everyone else.

But the buy-in from the C-suite isn’t always sufficient. Perry noted how D&I can’t be the pet project of a couple of executives if you want those values to spread. D&I must become part of the “DNA” of the organization and its culture.

Data

One obvious use of data is its ability to reveal the truth of anecdotes. As an example, Harford shared a story of a large year-over-year turnover of women. The anecdotal suggested family concerns or other reasons, but the data revealed they almost all went to competitors.

Whatever the type of data, make no mistake, years of it will be needed -- as much as a decade’s worth, Harford said.

Hiring, retention and promotion

BNY Mellon has had mixed success, as shared by Pete Rodriguez, managing director and asset servicing chief administrative officer. The good news is that 45% of employees are women, who comprise one-third of managing directors. However, the company has fared less well with hiring minorities. To counter this, BNY looked at four large underrepresented groups and developed various tactics to recruit and develop them, including an advisory group, the Signature Leadership Forum and events that bring together C-suite, operating committee and board members with chief diversity officers.

Similarly, Edward Jones has found success with resource groups and business council groups, the latter to aid efforts to integrate diversity with strategy. Without such infrastructure, Lewis said, you’ll be hard-pressed to make progress.

Sewell noted the importance of sponsors, mentors and education opportunities, citing examples from her own life in rising from Selma, Ala., to becoming a corporate securities lawyer leading major deals, including IPOs. Pipelines need to be built early, she said, and anyone can help with that effort.

Hiring is one thing, but it’s another to keep, develop and promote. Lewis was among those who noted internal struggles with retention and promotion.

Multiple panelists also mentioned middle management as a congestion point, both in terms of talented people getting “frozen” there and middle managers not wanting to expand their hiring viewpoint past their friends, their connections and people just like them.

The “frozen middle” is not just an internal problem, as Rodriguez explained -- clients and vendors are asking about D&I. And such accountability isn’t a bad thing. As Sewell said, “I don’t think any of us gets a pass on this,” whether a private company or a government agency.

Quotas

No panelists spoke in favor of quotas. There were numerous reasons given for this, including an alternative focus on having diverse hiring pools, diverse interviewing pools, with data suggesting those presences increase the hiring of underrepresented groups. Such pools can also force people to examine their practices, see the qualified talent out there, and realize they can do better.

A notable direct argument against quotas, from one panelist, is that the first bad hire in a quota system can cancel out years of hard work.

Work in progress

An underlying message of the panel was that these efforts are a work in progress. If you make the effort and gather data, however, you can more honestly say, “we’re not there yet,” while showing what progress has been made, what goals have been set, and how progress is being measured. And, Harford noted, don’t forget that your D&I efforts shouldn’t be one-size-fits-all. How you recruit and promote women, or LGBT people, or military veterans, respectively, might differ tactically.

 

James daSilva is the longtime editor of SmartBrief's leadership newsletter and original content, as well as newsletters for entrepreneursHR executives and various other industries. Find him at @SBLeaders or email him.