As nation grapples with race, credit unions double down on DEI efforts

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More credit unions are forming diversity, equity and inclusion councils and similar initiatives to improve their organizations.

Some credit unions have been stepping up their efforts to recruit a more diverse workforce and provide training that addresses hidden biases for years. But these initiatives have taken on a greater importance since protests swept the nation in June following the death of George Floyd in police custody.

Now more companies have stepped forward to pledge their support in fighting systemic racism and promoting diversity within their organizations. Credit unions need to be doing the same, experts said.

“The national conversation makes this an important priority for credit unions,” said Renée Sattiewhite, president and CEO of the African-American Credit Union Coalition. “It’s very important at this time for us to look at how we can best support this effort because it’s here to stay. It’s not going away.”

Overall the financial services firms have long struggled with ensuring diversity within their workforces, especially for leadership roles. Credit unions are no exception to this. For instance, 52% of credit union CEOs are female but that number drops to just 13% for institutions over $1 billion in assets, according to the National Credit Union Administration’s 2018 voluntary diversity self-assessment.

The numbers are even worse in terms of racial diversity. Less than 3% of credit union CEOs are Black, according to data from the African-American Credit Union Coalition.

A lack of workforce diversity at all levels of the organization, including front-line staff, the C-suite, members and volunteer board members, could hurt credit unions financially. A 2018 study from Boston Consulting Group found that increased diversity at companies improved an organization’s bottom line.

Organizations that reflect their target audience, and in a credit union's case, their field of membership, are more likely to be successful than those that do not, said Jill Nowacki, CEO at Humanidei.

“The elements that are necessary to really integrate DEI throughout an entire organization is to first understand and assess the current state of the organization,” Nowacki said. “Determine where the organization is today.”

Increasing diversity across the financial services industry has been discussed for years, but much work remains to reach parity. For one, conversations must go deeper than they have before to acknowledge the effects of systematic racism and gender discrimination, experts said.

To do so, several credit unions have created DEI panels, councils and initiatives to improve their own organizations and spur long lasting change.

Spire Credit Union in Falcon Heights, Minn., has prioritized diversity and inclusion for several years. Last year, 37% of its new employees were Black, Indigenous or people of color, up from 19.4% in 2016. The credit union has been able to recruit a diverse workforce despite having six branches in the rural northern part of the state where the population is less diverse.

The $1.4 billion-asset credit union also created a diversity and inclusion council in February to further these efforts. After receiving 18 applications, seven employees were selected to join the council.

The group met for the first time in June and outlined three goals — issue recommendations to senior leadership to improve the credit union’s culture, enhance community involvement related to DEI and drive individual employee growth as it relates to DEI.

The council will provide recommendations next month about training, recruiting and mentorship programs.

“The senseless killing of George Floyd and the events afterwards highlighted and pushed the need for difficult discussions in credit unions and the credit union industry,” said Justin Burleson, chief operating officer at Spire. “And the need for continued improvement with all organizations and society as a whole.”

To be successful with DEI efforts, management needs to put metrics in place to measure success. For instance, reviewing compensation by demographic, specifically when looking at gender, is necessary to ensure that certain groups are being fairly compensated, said Susan Mitchell, CEO of the consulting firm Mitchell, Stankovic and Associates.

Ensuring equal pay is an issue being addressed more broadly in the financial services industry. For instance, Citigroup publicly disclosed in 2019 that the median pay for female employees was 29% less than the median pay for male workers after an activist investor challenged a dozen companies to release unadjusted compensation numbers.

Reevaluating board diversity needs to be part of the conversation as well, though making changes can be tough since directors are unpaid. Those that lack diversity at the board level could face backlash from members who want to bank with an institution that reflects their values. For instance, SchoolsFirst FCU recently came under fire from a long-time member for its lack of diversity among directors.

One solution could be creating non-voting emeritus positions, Mitchell said. This would allow the director to remain involved with the institution while creating open seats to recruit new board members.

“Over time, volunteers may not represent the field of membership any longer and it is tough to break up a credit union family that has volunteered countless hours and seen the impact of their organization,” Mitchell said. “They are most often not paid, so how do you ask a volunteer to move on?”

Training is a big component of addressing diversity and inclusion, said Todd Lane, CEO of California Credit Union, which launched a formal DEI initiative in early 2019.

The $3 billion-asset credit union believes that unconscious or implicit bias training is important for improving the workplace because it helps employees recognize their own unconscious bias and then works with them to hopefully correct these assumptions.

“I think we as an industry need to make better progress in terms of diversity at the highest levels of the credit union, and one piece of that is through recruitment.” Lane said. “At times, communities and people of color are not necessarily driven to the banking industry — why is that?”

The industry has resources available for smaller credit unions that can’t afford to pay external consultants to assist with DEI efforts. Organizations such as the CU DEI Collective and its founding organizations can help credit unions get started and identify key areas to improve on.

It’s important to note that these efforts aren’t just internal, but affect the communities that the industry serves as well.

“It’s not just for credit unions. We want to change how the hearts and minds of Americans feel about racism — let’s do this together,” Sattiewhite said. “Any organization that’s embarking on a DEI journey is looking to enhance their community.”

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Diversity and equality Financial inclusion Workplace culture Growth strategies Racial Bias Gender discrimination Recruiting Workforce management