Workplace diversity is becoming an emerging indicator of company success, and those organizations that prioritize it gain a competitive advantage in their industries. In fact, companies investing in diversity and inclusion initiatives can see significant boosts in financial profitability, brand reputation, company culture, and employee satisfaction.
In banking and capital markets, it’s clear that many firms struggle to create diverse work environments. For example, women only represent 26 percent of the boards in the industry, while African-Americans, Asians, and Hispanics/Latinos make up just 20 percent of financial advisors. Such statistics show that employers in financial services need to take a more proactive approach to diversity and inclusion in their recruiting efforts.
It is easy for employers to say they want more diverse workforces, but implementing a strategy to achieve this result takes considerably more time and effort. Successful and sustainable diversity initiatives require support and commitment from the inside out. Executive leadership must be on board, and a proper understanding of diversity must be established.
Diversity and Inclusion
To put it simply, “workplace diversity” refers to the variety of differences represented among the people in an organization. Diversity encompasses ethnicity, gender, economic status, personality, academic/professional background, and other traits. It isn’t only how an individual perceives themself, but also how that person perceives others.
Productive interactions between people of different backgrounds can help build an effective and positive workplace environment. That said, increased diversity comes with change, and the employees of an organization from top to bottom need to be ready to communicate, adapt, and embrace a shift in the status quo.
The Solution Is Recruiting
The first step in establishing a diverse candidate pool is to define your hiring approach. Basic job postings are inefficient in targeted recruiting, so you need to move forward with a detailed methodology and long-term pipelining strategy.
Once you have a process in place, you can expand your reach by asking employees for referrals and reaching out to community or university organizations. Both options can be effective in reaching a broader audience of potential candidates. Your employees more than likely have access to top talent, and implementing an employee referral program may incentivize them to reach out to diverse applicants. Employees are also more apt to refer quality leads because they know, from experience, what the firm is looking for and who would be an ideal fit.
Hiring a diverse group of applicants without providing ongoing support is not sufficient. Company leadership is responsible for ensuring new hires and existing team members can work in union as a dynamic, functional team. There can be some challenges associated with diversity in the workplace, and it is the responsibility of leadership to define the work culture. A thoughtful leader should drive the team forward by promoting open communication and inclusive business activities that allow for individual expression and learning.
Many banks are now hiring executives whose sole focus is diversity and inclusion. For example, KeyCorp recently appointed a chief diversity officer. Such measures further reinforce the idea that success of diversity initiatives heavily depends on the executive team’s commitment.
As with any company change, there would be confusion and a lack of productivity without communication from management. There may be resistance to change or conflicts in diversity training. This should all be accounted for, and strategies should be created in advance to properly handle any resistance that may arise.
Attracting top talent is a challenge in every industry, but retention in a competitive job market may be even more difficult. Aside from basic job benefits and perks, employees value company culture and acceptance. Employees should always feel they are invited to share their opinions in the workplace, and they should never fear repercussion when speaking to a manager or member of the executive team.
An open-door policy and consistent communication may develop better relationships between employees and leadership. Your HR team should also facilitate group discussions between employees and leadership and utilize team-building experiences on a regular basis. As communication improves within the workplace, employee inclusivity should increase.
Depending on the size of the company, arranging mentorship programs and/or affinity groups for employees could help with retention. Affinity groups help bring together people with shared backgrounds, goals, or interests, and they are generally formed without management input. These groups can provide education and invaluable mentorship opportunities.
Benefits of Workplace Diversity
There’s a direct correlation between a diverse workforce and a company’s growth. A study from McKinsey & Company found that “companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians.” As firms prioritize diversity and inclusion, they will see benefits in terms of both cultural growth and competitive advantages.
Achieving a diverse workplace is possible, but it requires support from the entire organization. Once recruitment strategies are in place and applications are flowing in, you must work to maintain the environment you have established to retain top talent. Workplace diversity is a process of communication, acceptance, and leadership. As time goes on, future evaluations of your strategies will be necessary to ensure the commitment to diversity is intact.
Daniel Solo is the founder of Second Line Advisors.