On February 12, 2020, I was called before the US House of Representatives Committee on Financial Services to testify on how America’s largest banks can be more successful and accountable for their workforce diversity and workplace equity and inclusion.
I addressed their Subcommittee on Diversity and Inclusion because I’m president of Seramount, the go-to resource for Fortune 1000 companies, nonprofits and governmental organizations on issues of diversity, equity and inclusion, women and women of color, and parenting and caregiving.
I also have a unique perspective: I spent 26 years in our nation’s largest financial institutions, in frontline trading, sales and business-development roles, and then a global chief diversity officer position.
I personally experienced the bias and cultural challenges that women and people of color face in banking. But I also received opportunities that came with being successful. And that gives me hope that we can overcome the barriers we’re seeing today.
The Committee on Financial Services identified three issues that are barriers:
- Defining D&I in consistent ways—we suggest through EEOC race/ethnicity guidelines, gender identity, disability, LGBTQ+, age/generation and veteran status.
- Challenges with data collection and self-identification.
- Competition for diverse talent.
But there are two additional barriers that I believe need to be addressed:
- Bias in talent development.
- The lack of accountability for making progress.
Organizations must acknowledge and focus on the bias that exists in their talent decision-making systems and processes.
While the 44 financial institutions’ workforces are demographically matched to the US population, according to the committee’s report, few of them are diverse in the C-suite.
The lack of data on how feedback and support are given and received creates gaps that become insurmountable chasms. Often, women and people of color receive feedback that is more politically correct than constructive and insightful. It should be both.
Further complicating women’s rise to the top, Seramount’s recent Gender Gap research shows how women are a third less likely to realize what relationship capital is and the importance of cultivating and monetizing it.
Women and people of color aren’t made aware that building and leveraging relationships is critical, especially in early career.
This contributes to a lack of sponsorship for women and people of color. Nearly three-quarters of white women and 83 percent of multicultural women cite the lack of sponsors as the main reason they haven’t moved into critical profit & loss jobs.
A 2015 S&P 500 analysis found that 90 percent of new CEOs were promoted or hired from line roles with P&L responsibilities. If you have neither relationship capital nor a P&L role, the odds are not in your favor to become CEO.
In addition, there is unconscious bias in the decisions to hire, promote or terminate. Unless deliberately cultivated, how likely are we to develop an affinity for, and therefore hire or promote, someone from another race or culture?
Even when organizations take steps to mitigate bias, they must do more to hold leadership accountable for making progress. That means transparently providing D&I data and metrics internally and externally. The Inclusion Index is one of the best ways to learn how successful companies are performing in this area in comparison to others.
It also means producing results. We need more-structured programs and clear-cut accountability metrics, normalized across geography and industry.
We say diversity is critical to our businesses, but we do not measure or compensate for D&I performance the way we do for meeting revenue, expense management and new-product-development goals. There are virtually no repercussions for not meeting D&I targets.
Organizations spend $8 billion on D&I education, yet only 35 percent of CEOs have clear metrics and hold their teams accountable for achieving D&I goals. Only 58 percent set percentage goals, and far fewer, 46 percent, set numeric goals for diversity representation.
So what do we recommend?
- Be transparent about your data.
- Build accountability from the top.
- Establish development programs for women and underrepresented minorities that build relationship capital, sponsorships and mentoring.
- Establish new work norms, challenge existing norms, and reframe how work gets done.
- Leverage employee resource groups for marketplace impact: recruitment, retention and business development.
Intentions and words must translate to actions and consequences.
The formula is straightforward, but execution is the key:
- Develop scorecards and metrics.
- Audit processes, systems and culture for bias, and mitigate them.
- Reward positive results and penalize lack of progress.
Accountability creates real change.
