2. Diversity is not sustainable without inclusive cultures
Will progress advance under the “new normal” or become more challenging?
Participants identified steps financial institutions have taken, or are considering, to more effectively embed DEI across their organizations. The first is setting goals and tracking and reporting on progress. As one executive said, “Measurement needs to be an enormous part of what we do.”
Management and the board gain insight into how inclusive the culture is by looking at data such as the representation of different groups at different levels, turnover, time in the role before advancement, employee referrals for new candidates, etc. Another executive added, “When it’s all put together, you might think your data is pretty good and your firm is in a good place, but you might not be looking at it correctly.” A director commented, “Our institution set targets, and we are putting metrics into compensation plans. That’s something you will see across the industry soon.”
While diversity is relatively easy to measure and track, equity and inclusion can be much more challenging, and much more important to sustaining change. A participant said, “We often hire people for their diversity, and then our strong culture encourages them to behave in ways that strip away the very reasons we hired them.”
Indeed, for many participants, the biggest challenge in sustaining progress on DEI relates to retaining and developing people so that they can assume leadership roles. A participant noted, “There is talent everywhere. It’s inclusion once you get people in the door that is the hard part.” To keep top talent from chasing opportunities outside the firm, institutions need to create an inclusive culture in which talented people are happy and believe they have opportunities to advance.
To drive progress on DEI, leaders need to define and inculcate a more inclusive culture.
Firms also need to re-examine roles and reporting structures, and to consider how diversity and inclusion efforts tie into board oversight and oversight of ESG more broadly. As one participant said, “It’s about understanding how culture and inclusivity are or are not working, and how we can create strategies and capabilities for an inclusive culture.”
One executive added, “I think the pandemic created a huge opportunity to get talent from different places, to build a more diverse pipeline.” This includes establishing rotational programs that help in identifying and developing diverse talent.