5 takeaways from NCUA's diversity assessment

November 23, 2020 5:00 AM

The National Credit Union Administration on Friday released the results of its 2019 Voluntary Credit Union Diversity Self-Assessment. Nearly 120 institutions participated in last year’s survey, a 46% increase over 2018, but that figure still represents just 2.3% of the total industry. The agency recently said it is considering a variety of steps to increase participation.

Despite gains in the number of institutions taking part in the assessment, participation from year to year remains low. Just 44 of the 81 credit unions who participated in 2018 repeated the process in 2019, and only seven have filled out the assessment all four years.

Perhaps not surprisingly, there are indications that institutions which do repeat the process are making progress to better diversify their organizations. Across a variety of metrics, including organizational commitment to diversity, transparently promoting diversity and inclusion practices and more, the percentage of credit unions providing an affirmative response to those questions is generally on the rise from year to year among those who repeat the survey.

Participation appears to be spread broadly across the asset spectrum. Out of 118 respondents, 65 that took part in 2019 had assets of $500 million or below, while 21 ranged from $500 million to $1 billion and 32 that filled out the assessment had assets over $1 billion. The most substantial gains in participation appear to be coming from the $1 billion and above category, which more than doubled from 2018 to 2019. Until this year, participation from credit unions below the $100 million-asset mark has struggled to crack the double-digit mark, and fewer than 10 credit unions each year have taken part in the $10 million or less asset category.

Read on for more highlights from the report.

Women in leadership (up to a point)

Credit unions frequently tout the success women have had in the movement and the number of women in leadership roles across the industry, but NCUA’s diversity assessment reveals credit unions have their own glass ceiling, of sorts.

While women hold a slight majority of CEO positions (51.4%, according to the latest data), they are primarily limited to smaller institutions. Women make up 63.7% of all CEOs at credit unions under $100 million in assets, but that percentage drops precipitously as the asset scale rises. For example, just 28% of credit unions with assets from $100 million to $500 million have a woman as CEO, and an average of 15% of credit unions have a woman CEO at institutions for asset categories above $500 million.

Credit unions under $100 million make up nearly 70% of the entire industry, so while women hold a majority of those CEO positions, those institutions are also the most likely to disappear as the result of a merger.

These institutions also have higher average Camel scores than those higher up the asset scale, meaning they are more likely to face additional scrutiny from regulators. NCUA’s reported the lowest average Camel score (1.5) shows up at credit union with $1 billion or more in assets that are run by men.

Lots of talk, less action

Despite an ongoing conversation around the importance of diversity, NCUA’s data shows the industry is struggling to convert talk into action.

The percentage of credit unions reporting a leadership or organizational commitment to diversity was essentially unchanged from 2018 to 2019, dropping one point from 57% to 56%. However, because the number of institutions participating in the survey rose by 45% in that time, the total number of CUs committed to diversity did increase. Still, the overall percentages have not changed dramatically in the four years the regulator has issued the survey.

The industry reported similar figures regarding diversity outreach in employment, but other fields saw a much sharper divide. In particular, less than 10% of respondents continue to say their credit union takes supplier diversity into account in procurement and business practices. Affirmative responses for that metric have averaged below 7% in the four years the survey has been conducted, though 2019 recorded the highest result yet at 8%.

The percentage of credit unions promoting transparency in diversity and inclusion practices also remains markedly low, dropping from a high of 22% in 2016 to 17% last year, a three-point rebound from the year before. Only between a quarter and a third of responding institutions say they monitor and assess diversity policies and practices.

Despite these results, there is a possibility the results for 2020 or subsequent years could see higher marks in some of these fields as more and more institutions bring on high-level positions focused on diversity and inclusion.

Struggles with racial and ethnic diversity

Data from the 2019 self-assessment showed that credit unions continue to struggle with ensuring racial diversity within their managers and board members.

Respondents to the survey reported that 65% of all workers and 73% of all management employees and directors were white. That means white Americans were overrepresented at multiple levels within credit unions. Overall, about 60% of the U.S. population is white, not Hispanic or Latino, according to data from the U.S. Census Bureau.

Those who are Hispanic or Latino and Asian were underrepresented when comparing the self-assessment data with Census Bureau data for managers and board members. Blacks were underrepresented for management roles but held about 13% of board seats, roughly the same percentage of the population.

Native Hawaiians and other Pacific Islanders were “least represented,” followed by American Indian or Alaska Natives, according to NCUA.

Overall, race and national origin was not listed for almost 24% of all staff members, 20% for management employees and about 21% for directors.

Taking steps to diversify

Some of the credit unions that completed the self-assessment reported taking steps to increase diversity. Fifty-three percent said they had completed outreach “to minority, women and other diverse individuals.” That’s up from 44% in 2018.

To inform a more diverse group of individuals about job opportunities at their institutions, 56% of respondents said they participated in events, such as workshops and conferences, that attract a broader range of people. That’s an uptick of four percentage points from 2018’s survey.

Forty-seven percent of credit unions said they routinely evaluate their programs to ensure they are getting the intended results and to make improvements. Roughly 55% said they used analytical tools to measure diversity in their workforce and 44% to track inclusiveness in employment policies.

Almost a third of respondents said management was held accountable for diversity efforts.

“Effective diversity programs charge management with reinforcing behaviors and establishing or maintaining a culture that embraces diversity and inclusion,” 2019’s self-assessment report said. “They also hold management accountable for effectively leading these efforts.”

You've got a plan, but is it in print?

A majority of credit unions surveyed reported an organizational commitment to diversity, but some of those numbers break down in the details. Just 42% say they have a written diversity and inclusion policy approved by the board and senior management. Similarly, just 36% said DEI considerations were part of their organization’s strategic plan when contracting with vendors, and only 27% provide regular progress reports on diversity to their board and senior management.

There are indications, however, that the industry is focusing on becoming more diverse. Sixty percent of respondents said they have a senior-level staffer focused on diversity, a field which could grow as more credit unions add employees at the C-level focused on DEI. Additionally, 61% reported regularly conducting training and education related to equal employment opportunity and diversity.

Many respondents also said they are taking proactive steps to diversify their staffing pools. That includes hiring, recruiting, retaining and promoting women and minorities (83%), selecting candidates for the board and other senior management roles (68%) and including DEI considerations in strategic planning related to workforce management (68%).

The high response rate on those questions is also an indication the diversity message is trickling down to credit unions of all sizes, and not just being implemented at the largest institutions.