Janet King, VP, Research at Arizent (Moderator)
Chana Schoenberger, Editor-in-Chief at American Banker
Transcription:
Chana Schoenberger (00:06):
I'm Chana and this is Janet. We are colleagues here at Arizent and Janet's in charge of all of our proprietary research. Her team comes up with some really interesting analysis about questions facing the financial services industry. So this is the third year that we've surveyed bankers about their diversity, equity, and inclusion practices and how they feel about the state of the industry in this regard. Not a secret that banks could do better when it comes to hiring and promoting diverse employees. Also, not a secret that of the 50 largest banks in the US by assets, only one of them has a female CEO Jane Frazier. She's our most powerful woman in banking. Furthermore, only a small handful of those banks have male CEOs who are not white men. I think the number is three, it might be four, but some of those are based internationally. So really not a whole lot. And the issue for banks here, of course, as you all know, is that you serve customers who come from communities around the country. They want to bring their business to bankers and institutions that represent them, and also employees want to work for organizations that represent them for people who look like them and they don't all want to work for one group. So all of that is an introduction to the research that Janet's team has done. So tell us what you found.
Janet King (01:25):
Yeah, absolutely. First, I'm so excited to be here to talk about this. I just came out of, there we go. That's the signal to turn off your phones. I just came out of Fiona's Media Training 101, and she's recommending we get up and do jumping jacks or something ahead of this presentation. But I think we'll just
(01:45)
Let us bring all that energy in there. So this research, just for some context, as you said, it's our third annual wave, and it's really designed to understand how a commitment to DE and I and diversity and leadership can really impact employees' experiences regardless of who you are and what your background is. And we think that it provides some important insights into what employees need to experience in the workplace, which points to the steps that employers can take to deliver better outcomes. So this year we talked to almost 700 employees in a cross section of industries about their workplace experiences. And there they represent a wide range of demographics. We have roughly 40% white non-Hispanic men, 27% white non-Hispanic women. We have about 30% BIPOC or Hispanic men and women. We've got Millennials, Gen-X's, Boomers, 40% are parents with kids who are under 18 and 10% were members of the LGBTQ plus community. So it's a wide range of voices in this survey, which I think is important. I think it's also important to note that roughly six in 10 come from the financial services sector, and 20% of those folks are folks working directly in banking. So where we can, we're going to show some banking specific data today, otherwise we're going to be really focusing on the broader vertical point of view.
(03:18)
Okay, so let's dive into that. So I think we're releasing this research Chana at a time when the winds have really shifted around de and I, right? It's become a pretty polarizing topic. It's been a bit of a political hot potato in certain states, and certainly the recent Supreme Court decision, barring the use of race as a direct factor in college admissions has further complicated the conversation. You can see from some of the quotes here, these are employees who answered our survey. It certainly elicits a lot of polarizing sentiment among employees. Some see it's as an overblown initiative, some see it as performative and others recognize the value, but think we could do better. So Chana, how can leaders in banking most productively address that diversity and viewpoints?
Chana Schoenberger (04:07):
So it's a pretty big problem in banking right now. So one of the issues is there's legislation in various states that either punishes banks for being too focused on ESG or punishes banks for not being focused enough on ESG, depending on the state you're on, you're in. And the issue is that if you have a division that does business with states or other local governments, it's probably the same division that has to work with the same people. So you're going to either be punished for your banking of fossil fuels or you're going to be punished for not banking fossil fuels, gun manufacturers. The list goes on. So this isn't an issue, and it's more than a government relations issue because also the reason why these states are enacting these laws is because people in that state tend to elect people who care about this stuff.
(04:57)
And then you've got customer pushback, and then you've got employee pushback because employees want to feel like their company represents them. So you saw this when there was the end of Roe V. Wade. So a number of banks, Citigroup, I think was the first one to come out and say that they would pay for travel if an employee wanted to get an abortion and was not legally allowed to do it in this state where they were located, the company would pay for them to go to another state where abortion was legal. And so on the one hand, there were all the people who said, I love to work for a company that takes my needs into account and I feel seen and heard here, and gee, I love my job here at Citi. And then you figure there were probably also people who said, this doesn't align with my values.
(05:42)
I can't believe I work at Citi. I'm going to go quit and do something else. And then you see that in the customer population as well. So banks are trying to address this through things like proactive HR policies, hiring, outreach, things like town halls, like the standard HR advice for executives is listen. So that's why whenever there's a big executive transition, they'll always immediately go on a listening tour throughout whatever geography they supervise and they'll sit down with employees and listen. So Mary Mack, who was for many years, a most powerful woman in banking has retired this summer from Wells Fargo, and she was the executive who was brought in to fix the problems at the Wells Fargo Community Bank after the big scandal of the fake accounts in 2016. So she had been running a different division and they brought her in and they said, you've got a great reputation here, why don't you see if you can fix this? And the first thing she did, she told me when I interviewed her, I think it's in this issue or the magazine that you have, she spent one of the next 52 weeks on the road trying to meet as many of her employees as possible. And she sat down alone on a stool in front of a room of a hundred or 200 employees and said, talk to me about your jobs. How do you feel about your jobs? So that's typically what people do when they're dealing with diversity issues as well.
Janet King (07:01):
That's great, and I think those are great examples. And while we may be in a different place in the conversation, I think the fact is that it obviously still matters a lot and the research reveals, I hope a few key insights that I think offer a framework for how we might think about this moving forward, maybe focusing less on the capital de and I and more on inclusion and how do we build more inclusive workplace experiences for everybody. So there's three key insights that we want to frame our discussion around today. And the first one is that a genuine commitment to inclusion, that authenticity that we've been talking about a lot in a bunch of different panels and the number of demographic groups that are represented in your leadership team can drive better outcomes. And we're going to look at both of those together. So they show that those characteristics are highly correlated with healthier workplace experiences for all employees, and we'll dive into what that means in a minute. Another key finding is that companies demonstrating those characteristics are much more successful at cultivating a culture where employees feel valued, which in turn drives better business outcomes, more productive workforce. So that's insight number two. And then the third one is just looking to see, to make real progress, companies really need to take multiple actions to address what's really a multi-pronged issue. So we're going to look at all three of those as we go through this. Are there any surprises, just at a high level for you there?
Chana Schoenberger (08:31):
No, I was not surprised to see that making employees feel like they belong makes them more loyal and productive. Nobody wants to work for a company that doesn't see them or understand them for who they are. It's the classic NASA study. You guys have all seen this study that under JFK, everyone at NASA had this feeling of belonging that they were all on the mission together. And so someone asked a janitor sweeping the floor in the cafeteria, what do you do here? And he said, I'm sending a man to the moon, because he truly felt that his manual labor role was integral in the mission, and that's what banks are trying to do with employees, but you can't do that unless everybody feels like they belong.
Janet King (09:15):
That's a great story to keep in mind. Another many things I've heard while I've been here this week. So let's dive into all of that starting with this first insight that DE and I and a commitment to inclusion and diversity and leadership is good for business. That's the first thing. So to quantify the workplace experience, we created what we're calling the workplace toxicity metric. And so we asked respondents to consider 20 different statements about their workplace experiences, everything from workload and accountability to compensation and job security. And we recognize that that's not a direct measure of DE and I, but it is a really important indicator or a measure, I guess, of the stress that an employee's workplace exerts on their lives. So there is a correlation there. And toxic workplaces can have a lot of really negative impacts, including physical, mental, emotional health, workplace productivity.
(10:11)
And because we're human, we all experience these things differently. So Hannah and I could have very different workplace toxicity outcomes if we were to take this for our own work flight place. And what we found is that if the healthier your workplace is or the higher your commitment to inclusion, the more likely you are to have employees say that it's a healthy workplace environment. So if you look at that first bar, you can see 51% of those who work at companies who definitely have an authentic commitment to inclusion, 51% say that's a healthy workplace versus just 7% who say that that commitment is not present. I think another really interesting thing that we found this year has to do with this diversity in your own leadership team. And so what we found is that there's this high correlation between workplaces where there are six or more demographics represented on the leadership team and healthy workplaces.
(11:15)
So 46% of those folks said that they work in a healthy workplace versus just what, 26% who have only one or two demographics. And by that I mean different demographics can be people of different genders, different race, ethnicities, sexual orientation. So the magic number seems to be about four plus. And then I'll just share a couple more stats and then we'll get Hannah's perspective on this. We wanted to look and see how banks are doing on those two measures compared to other verticals and then compared to other banks. And so across verticals, we don't see a lot of variation with respect to commitment to inclusion. Banks are pretty much keeping pace with everybody else there, which is great. But we did see some differences when it comes to the number of demographic groups and leadership. So just 37% of employees at banks reported that there are four plus different demographic groups that actually puts banking a little ahead of verticals like accounting and insurance and maybe trailing a group like wealth management. Then finally, last stat, if we double click on that banking data to see who's leading and who's lagging, you see that employees at regional banks and credit unions are most likely to say that their workplaces demonstrate a genuine commitment to inclusion, but global national banks and credit unions are more likely to have four or more demographic groups represented on their leadership teams. So a lot of data I know, and there's a lot to unpack there, but what do you see as the most important takeaways from all of that?
Chana Schoenberger (12:58):
I think it's interesting what you were seeing that smaller institutions can have an easier time with inclusion because they have a smaller workforce, right? In the same way larger institutions have an easier time attracting diverse leaders. They're often more career paths, sometimes they're in more favorable geographies, places where people want to work. The problem is how to retain and promote those employees. And that's really where we see banks struggling in our reporting. We find that banks are doing an excellent job at hiring a diverse workforce, especially at the entry levels. Places like call centers or tellers, they will hire people directly out of the community. They typically reflect that community. Not a big problem there, but what you really do see a problem with is as you go further up the pyramid, typically there's a point at which women and diverse employees will no longer work there either because they've made the choice to leave or because they've been away or for a variety of reasons.
(13:54)
The problem is that, as you all know, all HR is micro. It's not what can we do for diversity today? I need to promote either Joe or Susan, I only have one job and gee, Joe's been doing a really fantastic job. I think he deserves it because of his performance on this project. That's not a problem. Diversity doesn't mean the woman should win every time, but it does mean that when you look across your whole workforce, if Joe wins every time and Susan never wins, suddenly you have 49 male CEOs in the top 50 banks.
Janet King (14:24):
Right? And then it gets much harder to do this thing trying to create these diverse leadership teams that have representation across all those various demographic groups.
Chana Schoenberger (14:33):
I mean, I'm thinking of one diverse executive I talked to actually was the wife of the guy who was an executive in a different company who said, my husband went to work at this large bank, and he should have been the guy they promoted because he's the guy they talk about all the time as being the type of person they want to promote, not only the performance, but also the demographics, and they just didn't.
Janet King (14:55):
Interesting.
Chana Schoenberger (14:56):
Successful CEO of a different company now.
Janet King (14:57):
Very interesting. Well, what we know is that companies that are getting it right are also more likely to be creating this culture where employees feel valued. They feel a sense of belonging. So these, we ask people a bunch of agree, disagree statements to explain how they feel about their experience at work. And so this one shows that, yes, if they have a genuine commitment to inclusion and if they have more diverse demographics represented in their leadership teams, people are going to feel generally report that they feel more valued and they feel a sense of belonging. They also more often state that they have opportunities to share their input on meaningful projects, and they're more comfortable disagreeing in meetings and report that curiosity is really encouraged and cultivated at their company. So those are all really important markers for companies. But why do you think that is? And can you share any stories about companies or banks that you think are getting it right?
Chana Schoenberger (15:59):
Yeah, so this is a tough one, right? So everybody, especially younger Gen Z workers wants to feel needed and wanted at work. Nobody wants to feel like they're a cog or interchangeable. And younger workers, this is, everyone knows this is a generational thing. They have this need for agency in their careers. They are not organization folks. They are out to change the world, every single one of them. And we've heard a lot of financial services leaders talk about how this is an industry with purpose. If you find a younger person in this industry, it's typically because they want the purpose of helping the underprivileged or helping their communities. It's vitally important to them that they feel valued, feel like they belong, feel like their input is solicited, taking into account major HR issue for banks because you just simply are not going to have a lot of 22 year olds telling the CEO what to do.
(16:47)
It's not going to happen. You can have a suggestion box, you can have town halls. People will raise their hands. You can have hackathons, you can have idea generation competitions, banks do all these things, and there's always some number of ideas that bubble up from the bottom that will be touted and they'll be in the company newsletter. But realistically, a lot of stuff is done from the top down. And it has to be that way because you folks have been working in this industry for a very long time, and you have all the experience that comes from that, and now's the time for you to run things. So the question is how to make younger people more junior people feel valued that they have a seat at the table and it's one that hasn't really been solved yet. Mary Erdoes talked about this yesterday. She was speaking about an intern in her organization who she said was raising her hand for everything. And so just the fact that the head of asset and wealth management at JP Morgan Chase knows this young woman's name is sort of a sign that woman's going to go very far.
(17:47)
So that's the young woman who gets invited into the meetings. But telling Lee, I doubt that that young analyst is the CEO of the firm today. She may be one day, but she's not. Right?
Janet King (17:59):
And I mean, it's true. You're not going to get a seat at the table as an entry-level employee with the CEO. But then I think it's beholden on the management below that to make everyone feel like they have a voice in whatever decision is relative to their business unit, their division, those small moments to make people feel heard, make people feel like they belong. What was somebody saying this morning about you needed diversity of people to make in perspectives to make better business decisions? And I think that this is evidence of that, right? People are really, this is where you can make an impact on your organization.
Chana Schoenberger (18:35):
For sure. And this came up in your earlier panel too. This is what Artie was seeing, that just because the tech team can put together a cool function, or just because other competitors have that function, you may have the information that says your customers don't want that function. If you have people of different generations in your workforce, for instance, they'll be able to explain to you why TikTok is cool, but threads is not as cool and no one uses X anymore.
Janet King (19:03):
Right? What's that again? No, I'm kidding. So that kind of leads us to the final part of this discussion today, which is just centering on what banks can actually do from an action standpoint to create these inclusive workplaces. I mean, obviously first you have to create that authenticity. You have to demonstrate that commitment. You have to really strive to build those diverse teams. But tactically, what can you do? And what we know to be true is that employees who say that their companies have a genuine commitment to DE and I and diverse leadership tend to be at companies that are taking more actions towards these initiatives. So what are they most often doing? Providing diversity training for all employees at all levels of the organization comes up as something that is cited frequently, is what folks are doing, along with providing career development, mentorship programs and things like that. Another really common and successful initiative, and we've seen this at our own organization at Arizent, at American Banker, is creating employee resource groups. And what we found is that companies who are leaning into institutions, banks in this case who are leaning into employee resource groups, eight out of 10 respondents or employees, excuse me, say that the groups have driven change and two thirds say that they've created feelings of inclusion. So ERGs can be really, really impactful.
(20:27)
I think one thing that's interesting is despite the fact that creating diversity at your leadership level is so important, fewer than 50% are actively taking steps to do that. So I think that's something that we all need to think about. Let's quickly just look at how that compares for banking versus everybody else kind of a busy charge. Sorry about that. But we see that banks here are likely to be pursuing a number of initiatives more widely, more often than folks in these other verticals. So good for us in that respect. There are some things that are being done more widely in banking than in accounting or wealth management insurance and things like that. So I think we can feel good about that. And if you look at banks, kind of the spectrum of banks, the flavor, the size of banks, what you see is that global, national and regional banks are more likely to be pursuing ERGs. And credit unions are frequently telling us employees at credit unions are telling us that they're examining pay structures to make sure there's equal pay for equal work. So that kind of tends to be some of the things that are popping for those communities. So you speak to a lot of banking leaders, Chana, how do you see these initiatives playing out in practice?
Chana Schoenberger (21:44):
So the ERG one is interesting. I know we have a lot of ERG members here today, and that's great. And what you typically see is there's almost always a women's group at a larger institution because it's generally a large part of your workforce. And then you will often find one for employees of color, and then depending on how big the bank is, they might have smaller ones based on religious groups or smaller ethnic groups. And generally what they're doing is two things. So they're doing cultural stuff. So festivals celebrating the holidays that the group celebrates general, a church would call this fellowship. We're all going to get together and bring cupcakes, and those are really fun. That's where you'll find someone brings in a Dragon dance team during lunar New Year. Everyone loves that stuff. Also, the food is usually great and opportunities for people in the ERG to get to know one another.
(22:43)
And then the other thing you'll see is advocacy. So certainly not the way a union would do it, but you'll see a women's ERG will often get up and say, Hey, we hear that maternity benefits are different at our peer organizations. We'd like to talk about upping the number of weeks we get. Or this morning at the round tables, Melissa Stevens was talking about how at fifth Third they have a maternity concierge, which is something I had never heard of. Oh, wow. But I will be telling our employee benefits news editor about that right after this conference. So I imagine that a lot of people who are in that conversation are going to go back to their women's ERG tomorrow and say, Hey, have you ever heard of a maternity concierge? And wouldn't it be great if our organization had a person who was on call and could work with people who were pregnant to first year of the baby's life, just to deal with stuff relating to that?
(23:39)
And that would make our employees so much more productive. So it's the sharing of ideas and then coming to leadership and saying, Hey, the women at this company want X. And almost like, as I said, kind of a collective bargaining, although not really sort of like a collective advocacy. So you see a lot of that. And the tension here is that of course, a bank is a financial organization. It has to make money. There only is so much money that it can allocate to certain initiatives. And so it's great to have a group that says, Hey, we all really want this. But leadership isn't always going to say, Hey, we're going to give you all raises. They're not right.
Janet King (24:20):
Right.
Chana Schoenberger (24:21):
Wouldn'tThat be nice?
Janet King (24:22):
That would be nice. But I do like that analogy to you're giving a larger voice to a collective group of people through those ERGs. And it'll be interesting to see. I wish we had dug in, and next time we do this research, we'll try to dig a little deeper into what banks can really do to try to build more diverse demographics at the leadership level. Because I think there's really something there that's quite interesting and quite powerful. Definitely. So to wrap it up,
Chana Schoenberger (24:51):
So this is really interesting research. We look forward to this every year because we talk to bank leaders all the time about what they're doing in various areas. And for some banks you'll end up with, it's somehow tied up in your CRA requirements, or it may be more of a corporate responsibility, or you think of it as a reputation management thing. But it's basically the idea that who you are is represented by who your people are, right? And your people go out into the community every day and they go about their lives in the neighborhood at the little league games as a representative of your bank. And so the question is, how do they show up, not just at work, but how do they show up in the community representing your brand even when they're not wearing your polo shirt? Who are they? And other people see them?
(25:40)
And because all banking is really retail, even when it's not, you want them to be a positive ambassador for your brand. So the more people you have who look like whatever community it is you serve, the more integrated you're going to get in that community. It's the reason why bankers have traditionally joined fraternal organizations and why they often hang out at a local country club. It's like you want people to know you, to know the bank to come and do business with you. So the real trouble is there, there's a complexity here because of the regulatory and legislative environment, because of the political polarization we have in this country, you think it would be uncontroversial to say, we would like to hire the best people and have them look like America. But that is a controversial statement. I think so. And banks run headlong into that. So it becomes a marketing and branding thing as well as an HR issue. The end of it is that your employees are who you are. They have to be happy, and they have to feel like they belong or they're going to leave. Well said.
Janet King (26:49):
Thank you for chatting with me about this today.
Chana Schoenberger (26:51):
Thank you. Thank you. It's been very fun. Very fun.