Diversity chiefs gain prominence as banks confront racial inequality
Banks across the country are redoubling their efforts to improve diversity within their ranks by hiring chief diversity officers or elevating such roles to the C-suite level.
For some, the announcements are culminations of work that began at least a year ago. For others they are explicit responses to George Floyd’s death in May and the civil unrest that followed.
U.S. Bancorp in Minneapolis, for example, recently announced that Chief Diversity Officer Greg Cunningham will now directly report to Chairman and CEO Andy Cecere. PNC Financial Services Group in Pittsburgh promoted Richard Bynum from regional president to the brand-new post of chief corporate responsibility officer and tasked him with overseeing diversity and inclusion efforts. And Birmingham, Ala.-based BBVA USA is making plans to hire its first-ever chief diversity officer.
Meanwhile, the American Bankers Association, the trade group that represents banks of all sizes, is expanding its diversity team to two people with the addition of a vice president for internal diversity, equity and inclusion who will be responsible for increasing the hiring and retention of underrepresented groups and developing a culture of inclusion within the organization.
The heightened focus on diversity within the banking industry and across corporate America stems from “social issues made obvious over the last two months,” said Gregory Jones, the chief diversity, equity and inclusion officer at KeyCorp in Cleveland. (The $171 billion-asset company has employed a diversity officer for nearly 20 years and is an 11-time honoree on Diversity Inc.’s annual Top 50 Companies for Diversity list.)
“You’re seeing people trying to understand better how to approach this given all the social unrest and the obvious social issues and race issues we have throughout the country,” said Jones, a former chief diversity officer at United Airlines who joined KeyBank in April. “So organizations are trying to position themselves to be a little bit better.”
The spate of recent hires and promotions in the diversity and inclusion field is part of an ongoing trend that has been amplified in the wake of Floyd’s May 25 death while in police custody in Minneapolis and the subsequent waves of Black Lives Matter protests that spread across the globe.
In the months since, dozens of banks have pledged to do more to support diversity at their organizations and in their communities. Both Bank of America and PNC made $1 billion financial commitments to address racism and inequality, saying they will use the funds to not only do a better job of attracting, retaining and promoting Black employees, but to also financially support minority-owned small businesses including clients and vendors and provide community development financing for revitalization in low to moderate income neighborhoods.
At the same time, U.S. Bancorp earmarked $116 million this year to fight racism, committing $100 million in additional capital to Black-owned and operated businesses and organizations; Wells Fargo said it will tie senior executive pay to diversity efforts; and, according to a Reuters article, HSBC has made a commitment to at least double the number of Black directors by 2025.
Some say that banks’ efforts to change hiring and promotional policies to include more Black, Indigenous and people of color, especially in the executive ranks, could transform banks’ understanding of community needs, thus expanding mortgage access and small-business lending and opening the gates for more equitable flow of capital.
The hiring of chief diversity officers and other diversity-related staff is a start.Overall, the number of jobs in the diversity and inclusion field has been growing in banking and elsewhere as workplace issues such as gender pay gaps, discrimination and sexual harassment garner more attention. According to a July 15 Glassdoor report, diversity-related job openings reached an all-time high in March with more than 1,000 jobs posted on the website.
Those openings plunged 60% between March 1 and June 8 as the coronavirus pandemic forced layoffs and hiring freezes, but rebounded 55% between June 9 and July 1, the study showed.
“This is the greatest level of demand I’ve ever seen in my career for these roles,” said Louis Montgomery Jr., who leads the human resources and diversity officers practice at Korn Ferry. “It’s not uncommon for some candidates to have multiple opportunities they’re considering.”
This is the greatest level of demand I’ve ever seen in my career for these roles.
Louis Montgomery Jr., Korn Ferry.
How well the recent hires and promotions affect change — within banks themselves in terms of hiring and retaining diverse talent and addressing various workplace inequalities, and outside in the communities they serve — remains to be seen. According to the same Glassdoor report, more employee reviews are mentioning at-work race relations in the wake of Floyd’s death, but nearly three-quarters of those reviews express concern or dissatisfaction with their employers’ responses to racial matters, including Floyd’s death and Black Lives Matter protests.
“One of the common misconceptions about these jobs is that these folks are here to fix an organization or fix people, and they’re not. They’re not fixers,” Montgomery said. “They’re really folks who are helping an organization evolve, to address problems that exist and find longer-term solutions.”
Giving people diversity-related jobs without also giving them authority to make decisions that lead to changes within the organization is fruitless, said Kenneth Kelly, the chairman of the National Bankers Association, a trade group that represents minority- and women-owned financial institutions.
“My question would be: What is the anticipated change that comes out of these roles to unpack the culture and demonstrate higher levels of inclusion?” said Kelly, who is chairman and CEO at the $265 million-asset First Independence Bank in Detroit. Such jobs should “increase accountability and authority … to effectuate change. The naming of a position does not a culture change make.”
Dollar Bank in Pittsburgh is determined to create change, said Stephanie Herring, the vice president of human resources who crafted the bank’s first diversity and inclusion plan. As part of the plan, the $9.5 billion-asset bank created a new post — assistant vice president of diversity, inclusion and equity — and hired Paul David Spradley for the job.
Spradley is the former CEO of Care Based Leadership, a Pittsburgh firm that provides diversity training to companies. He joined Dollar Bank in July.
Herring said Dollar is “starting from scratch” on its diversity work, which includes making sure the bank is diversifying its vendor supply chain. But, she said, she already has “total buy-in” from bank President and CEO Jim McQuade. The plan calls for Herring and Spradley to work together to formulate goals and metrics that will hold the bank and its executives accountable for making the bank a more diverse, inclusive place to work.
Spradley’s arrival was not a response to Floyd’s death, but rather a coincidence of timing, Herring added.
Still, “I think it heightened the awareness of a lot of the leadership team,” Herring said. “I don’t think there’s a lot of work to do for the executive team to buy into this.”
Flagstar Bank in Troy, Mich., recently hired David Hollis as chief human resources officer. Hollis, who previously worked at the Federal Reserve Bank of Cleveland, will oversee the human resource department’s role in implementing the bank’s diversity and inclusion initiatives.
The $26.8 billion-asset bank has not created a separate role to handle diversity and inclusion efforts, but it has elevated the issue in other ways, such as the creation of nine employee resource groups and company discussions about topics such as implicit bias, President and CEO Alessandro DiNello said. Flagstar has also committed to looking at more diverse candidates when hiring, which has resulted in adding several more Black and female executives to its top leadership, he said.
Several banks contacted for this story that recently announced changes to their diversity and inclusion teams did not make executives available for interviews. BBVA declined to comment, saying it is still finalizing the details of the job.
In a statement, a spokeswoman at the $455 billion-asset PNC Financial outlined some of the highlights of the bank’s $1 billion pledge to combat systemic racism, saying “the majority of this commitment will come to life through our work in community development banking.” The focus on low to moderate income neighborhoods is not new for the bank, but will now include “a more deliberate focus on the African-American community,” she said.
SVB Financial Group, the Santa Clara, Calif., parent of Silicon Valley Bank, is recruiting a chief diversity officer. It will be the first time the $78.4 billion-asset company employs someone with that title.
“This is a new position at the bank, although one we have been considering for some time as part of the evolution of our [diversity, equity and inclusion programs],” President and CEO Greg Becker said in a statement. “This role will help us maintain constant visibility on [diversity, equity and inclusion] at the executive level and further support our global teams.”
It was time to do it the right way instead of just checking the boxes.
Stephanie Herring, Dollar Bank
At the ABA, hiring someone to lead the group’s internal diversity efforts is part of a multiyear effort that began with the launch of a diversity, equity and inclusion task force in 2017, ABA President and CEO Rob Nichols said. In August 2019, the ABA hired Naomi Mercer, a 25-year military veteran, to lead the group’s external diversity efforts by helping member-banks develop diversity and inclusion protocols.
The newest team member will be in charge of mentorship and sponsorship programs, diversity-related education and training for ABA employees and shaping the group’s workplace culture to encourage more inclusion. He or she will also collect, track and analyze data so that the group can measure the progress it makes on diversity and inclusion initiatives.
“We want the ABA to have the best in class diversity, equity and inclusion practice of any trade association in [Washington] D.C., … and we think the ABA should look like the customers and clients and communities that our banks serve all across the country,” Nichols said.
The focus on diversity and inclusion also continues to impact boardrooms, where efforts to bring in more women and other underrepresented groups have been underway for years. In June, M&T Bank in Buffalo, N.Y., added Calvin Butler Jr., a Black man and CEO of Exelon Utilities, to its board of directors. Last month, Cincinnati-based Fifth Third Bancorp appointed Linda Clement-Holmes, a Black woman and former chief diversity officer at Procter & Gamble, to the board.
A variety of voices will “bring diverse perspectives, which are really important for how businesses think about long-term strategies, growth opportunities and key business decisions,” said Bradlee Benn, co-leader of Russell Reynolds Associates’ diversity and inclusion practice. “It’s also going to have a direct impact in terms of an ability to attract and retain top talent within organizations.”
Banks and others will have their work cut out for them when it comes to showing meaningful impact from such hires and promotions. Discussions about racial and economic injustice have called attention to the nation’s extreme racial wealth gap and the difficulty some groups have in building wealth. To make changes in the community — such as increasing the rates of homeownership — banks will be increasingly called on to show that the decision-makers of their companies reflect the communities they serve.
Kelly of the National Bankers Association said it will be critical that bank executives, especially CEOs, show accountability and responsibility for improving diversity among their staffs. Otherwise, the needle won’t move.
Dollar Bank’s Herring said her team will be focusing on outcomes. While the bank meets affirmative action requirements and serves a mix of clients, it needs to be very intentional about hiring, retaining and promoting people from all backgrounds.
“It was time to do it the right way instead of just checking the boxes,” she said.