The obstacles banks face in efforts to diversify ranks
Stella LaPaglia was new to banking when she began attending diversity job fairs on behalf of Marquette Savings Bank in Erie, Pa.
“I was literally standing in the aisle trying to get people to come over and talk to me,” said LaPaglia, who was hired in 2009 as the bank’s first in-house human resources manager.
The bank was growing and trying to improve the diversity in its workforce, said LaPaglia, senior vice president of human resources. But at the time, perceptions of banking among those she was trying to recruit were an obstacle.
“It’s a hard hill to climb to get people to see this as a good career and a good place to work, because they just didn’t consider banking as an option,” she said.
It’s a hill with a history. Bankers are keenly aware that their industry’s top ranks are still dominated by white men, despite progress at lower levels. And they have been tackling issues like unconscious bias that may slow down their efforts to diversify.
However, other obstacles face even the most well-intentioned executives: Low turnover reduces the opportunity to scout for applicants. Entrenched hiring practices often reinforce a bank’s existing racial and ethnic makeup. It can take years for bankers to climb into senior leadership roles, so efforts to diversify take time to pay off at the top.
The so-called pipeline issue came into focus this fall after Wells Fargo Chief Executive Charlie Scharf was reported by Reuters to have said in a memo that “there is a very limited pool of Black talent to recruit from.” Critics have said that kind of attitude is an excuse for failures of recruitment and retention.
Still, LaPaglia and HR executives at other banks on the 2020 list of Best Banks to Work For are determined. Their local communities are becoming more diverse; they are moving into more diverse markets; they want to do more in the face of nationwide protests this year over police brutality toward Black people, protests that have drawn attention to other disparate impacts of racism in society and the economy.
Banks push for diversity because they see it as the right thing to do, but they also recognize that greater diversity leads to stronger financial performance, according to a 2020 report by the consulting firm McKinsey, one of many such studies.
“Banks that are doing it the old way are going to be left behind by those that are doing it right, that are being leaders and role models,” said Chrisanne Christ, a senior partner at the $5 billion-asset Centier Bank in Merrillville, Ind.
As they move forward, banks are turning to partners that can help them find diverse applicants.
Enterprise Bank & Trust in St. Louis, for example, helped put together a training program on banking careers conceived in 2018 by St. Louis Community Credit Union, a community development financial institution. Carrollton Bank in Illinois also is a partner in the program, known as Gateway to a Banking Career.
Lining up multiple bank partners increases the odds that participants will land a job after the training ends, said Robyn Heidger, senior vice president of strategic alliances and inclusion at Enterprise. “You don’t want to put people in this program and get them excited and fired up and say, ‘There’s no jobs available for you.’ ”
Since the program started, 39 people, predominantly African American, have graduated, Heidger said. Nineteen have gotten jobs at financial institutions, including 10 who were hired at Enterprise, the biggest of the three partners, Heidger said. Six of the 10 already have been promoted.
Participants who found jobs outside banking generally improved their circumstances, and one person was hired by the St. Louis Cardinals baseball team, Heidger said.
Ten people don’t make a huge dent in the $8.2 billion-asset bank’s workforce of 850, Heidger acknowledged. But, she said, “We just see it as a really impactful way to reach some people in our local market in a really positive manner.” The bank hopes to find partners for similar programs in its other markets, such as Phoenix and Kansas City, Mo.
Read more: Best Banks to Work For
At Savings Bank of Walpole in Keene, N.H., the need to diversify stems from growing diversity in the areas where it does business, said Mark Bodin, the bank’s president. The local hospital, for example, has attracted doctors from the Middle East and India, among other places.
The $525 million-asset bank has been catching up in gender diversity, Bodin said. But in other areas, it is not as far along as it wants to be.
To make progress, Walpole teamed up this year with two affiliate banks — Merrimack County Savings Bank and Meredith Village Savings Bank — to appoint an HR exec to lead diversity and inclusion efforts. The three banks share back-office services under the umbrella of New Hampshire Mutual Bancorp.
But Walpole has low turnover, Bodin said. It may have two or three openings a year on its staff of 85. So the change is expected to be slow. “Nobody wants more turnover, ” Bodin said.
In the meantime, the bank aims to ensure its workplace is ready to embrace employees of all backgrounds. Managers recently went through a two-day seminar on unconscious bias.
“We’ve always really been driven to do the right thing,” Bodin said. “We all just realize now that we need to be more intentional about it.”
At stake is the bank’s reputation among young job seekers, he said. “They’re looking for employers to believe in. Whether it’s involvement in the community, workplace accessibility or diversity, I think they’re looking for employers that they’re proud of.”
Banks also see diversity as crucial when they expand into new markets. Bank Five Nine in Oconomowoc, Wis., which has been adding branches in the Milwaukee area, began taking part in a national program called BankWork$ when it came to Milwaukee in 2019, said Ann Knutson, Bank Five’s human resources director. The program helps people from minority and low-income neighborhoods prepare for careers in retail banking.
If we only have older white males working and representing our organization in more diverse markets, we’re going to have challenges in attracting customers
“If we only have older white males working and representing our organization in more diverse markets, we’re going to have challenges in attracting customers,” Knutson said.
To date, the $1.3 billion-asset bank has made three hires through the program, two Black people and one Hispanic, said Knutson, who was the keynote speaker at a graduation ceremony last year for the eight-week training program.
Whatever approach a bank takes, progress doesn’t come overnight. LaPaglia said the workforce at Marquette Savings is more diverse than it was when she started a decade ago, but it does not yet reflect its community. Still, she added, her reception at diversity job fairs is warmer.
“Now I find that more people are coming over and saying, ‘Tell me about Marquette Savings Bank,’ ” she said.
She attributed the improvement in part to relationships with Erie nonprofits like Eagle’s Nest Leadership Corp., which prepares at-risk young people for employment. LaPaglia collaborated with the group’s leader, Bishop Dwane Brock, to sponsor a banking job fair in 2019. Marquette Savings ended up hiring two African American applicants as tellers after they went through an Eagle’s Nest training program. The bank hired seven tellers overall
LaPaglia said she also has worked to formalize hiring practices so that managers consider a broader slate of applicants instead of relying on informal references and networks, which tend to reproduce a bank’s existing demographics.
Nonetheless, Marquette Savings still struggles to draw a diverse pool of applicants, LaPaglia acknowledged. To improve, the $938.6 million-asset bank is exploring partnerships with other community groups.
“We feel that is way more productive for us than merely running ads,” LaPaglia said.