By Brian Rhonemus, CEO of Sanford Rose Associates® – Rhonemus Group
and Andrew Russell, President of Sound Payments
With the recent chain of events across the country there has been a lot of talk about racial tension, the economy, and immigration. As we approach what could be one of the highest voter turnouts in recent memory come November, we still have work to do in each one of these areas, and we simply can’t afford to wait to see who wins the election. Regardless of what happens, we have to push forward to do our part to make an impact in each of these areas, as they all touch our industry.
In this article we are going to touch on what is taking place in Financial Services, and to address diversity and its impact on our industry. First, we must admit we are not in a sexy, sassy, cool to be, industry anymore. We could spend thousands of words addressing that one sentence, but let’s get to diversity.
The definition of Diversity is simply “the state of having people who are different races or who have different cultures in a group or organization”, thanks to Merriam-Webster. The lack of diversity has been a problem in banking for as long as our industry has been around. Early in my career as a banker, I experienced this in a collections department of nearly 500 people. We had a diversity problem at every level of the bank.
With 30 years serving the banking industry, unfortunately it seems like we are not making much progress. Early in my executive search career, I worked with very large banks asking for a diverse candidate field. Some would take it farther in their description and say things like “we need an African-American, Hispanic, or Arab-American for this role”. Sounds easy, right? It’s not that easy. Some used to say “we need more gender diversity”, we have a number of conservative men, and we need to get more women.
If we talked about this as a way to grow our businesses and attract talent from all walks of life, we wouldn’t have to say it, track it, or worry about any federal group poking around asking us questions about how we are going to address it. Just before the crisis, a number of large banks were putting a real effort into diversity programs, this was short lived and only lasted a few years.
Our firm attends national and state bank association events across the U.S. There isn’t anywhere else we gather as an industry that makes it painfully obvious that we are losing the battle, and in some places I doubt there is even a fight to improve diversity. In a recent conversation with Terry Gore, a correspondent banker covering the Midwest, Terry put it very clearly “I have been in banking since 2001, attending conferences across the country, and I have not seen any other African-American’s at these events or in senior leadership roles.” I too share Terry’s experience.
The lack of diversity threatens our industry and our economy. A google search on diversity returns 57,000 results, although it’s surprising the most recent post is from April 2016, and a third down the first page there is an article about bat diversity. No offense to those studying bats, but that should not make the first page of search results. This first page should be filled with results about the impact on business, economy, and neighborhoods.
Forward thinking companies are realizing they need to expand the focus and diversity of their leadership team’s, as they see the importance to set the example starting with the board. Our firm has had the honor and pleasure to work with Andrew Russell as a candidate and later on as a client where we placed him and helped him to develop a diverse leadership team.
Andrew Russell, President of Sound Payments says: “Diversity is about learning from others who are not the same, about dignity and respect for all, and about creating workplace environments and practices that encourage learning from others, and captures the advantage of diverse perspectives.”
Corporate and organizational commitment to diversity is an important business initiative as well as contributor to increased employee engagement. By building a diverse workforce, you can better serve diverse customers and communities, which in turn helps you grow the company and create shareholder value. It is imperative that, as a leader, you value the diverse background, experience and knowledge of your employees, who can provide perspective and develop innovative solutions to drive the growth and success of your company. Strive to offer a workplace reflective of your commitment to the broad cultural, ethnic, and lifestyle diversity of the markets where your team members live, work, and serve. Diversity is the key for your company’s sustainable future growth, and must be part of your company’s core values.
Russell continues with these observations: Many companies talk a good game, but lack the discipline and execution to walk the talk through measurable results. Why focus on diversity? Because creating a stronger diversity culture will:
1. Improve effectiveness in working with customers, communities, and peers.
2. Only by encouraging different viewpoints, and working together to foster innovation and increased employee engagement, will you sustain growth in our current economic and competitive environment.
Fostering an inclusive work environment will:
1. Allow others to recognize the critical value of our differences, and of our individual and collective strengths and skills.
2. Leverage the broad cultural, ethnic and lifestyle diversity of employees against and increasingly more diverse marketplace.
3. Create better engaged employees who can assess issues, provide perspectives, and develop innovative solutions.
Enhanced reputation as an employer and service provider, will:
1. Allow customers to see the commitment to diversity in actions as well as words.
2. Harness the energy of diversity and put it to work.
3. Create diversity efforts that will continue to strengthen the connection between values and business strategy.
4. Reflect commitment to employees by building a workplace that respects the multitude of differences they bring to the workplace.
5. Respond to the changing demographics in all communities and customer base.
In support of these findings, we can see the demographics slowly changing as shown below:
Changing Demographics (Source: Pew Research Center and Bureau of Labor & Stats.)
People of color will be an increasing component of the U.S. Population. Immigration will be an important driver of population growth, with foreign born accounting for nearly 15% of the American population in 2020. The working age population will also change substantially by 2020: 34.9% will be people of color, and 42.8% of the working age population will be eligible to retire.
Companies that are seeking to build a diversity strategy should consider the following Financial Services Industry Diversity Strategy:
- Create an executive sponsorship of Employee Resource Groups (ERG)
- African American
- Assign each ERG a recruiting point of contact
- Recruit point of contact will attend monthly
ERG meetings and develop relationships
- Recruit point of contact serves as liaison across ERGs, Diversity groups, and referral process
- Strategic People Plan
- Key positions
- Succession planning
- Individual development plans
- Exit Interviews – voluntary resignation
Line of business leaders commit to conduct exit interview for top three pay-grades with focus on women and people of color
- HR will conduct exit interview on all other pay-grades.
- To discover root cause of turnover
- Gain knowledge about pay, incentives, opportunities, management, workplace practices, relationship with supervisor, relationship with peers, and workplace environment
- Develop employee awareness beyond political correctness, and truly make diversity a core value and the fabric of the company: Create a multicultural program and training: ˚ Deliver facilitated coaching sessions for all senior manager (Sustainable change must start with the top of the house!)
- Deliver diversity awareness training and coaching to all other managers, followed by all other employees
The team at SRA Rhonemus Group knows our industry is losing the war for top young talent. Collectively we need to be proactive in implementing programs that will generate a new pipeline of diverse talent for years to come. The Search Professionals at Sanford Rose Associates® – Rhonemus Group appreciate the opportunity to be of service to banks, businesses and other providers of financial services and look forward to continuing to meet the evolving talent management needs of clients in the Great Lakes region.
Brian Rhonemus is the CEO of Sanford Rose Associates® – Rhonemus Group. He has more than thirty years of service to the banking, financial services, and recruiting industries, which allows him to bring genuine real-world experience to his clients. As a former banker, this experience allows him to develop progressive talent management solutions to his clients.
Andrew Russell is President of SoundPayments, a national FinTech company. He is a financial services industry veteran with over 25 years of leadership experience in the military and corporate America. He has held executive positions in the commercial, treasury, merchant, retail, and operations areas. SoundPayments’ core values are Integrity, Customer Focus, Innovation, Performance, Teamwork, and Diversity.