Now more than ever companies are grappling with a country and workplace that have struggled with diversity, equity, and inclusion. The last five years have been marked by the #MeToo movement, Black Lives Matter, discrimination in the LGBTQ community, and the increasing focus on the importance of Allyship. America’s social justice issues have caused national debate that has been brought into the workplace dialog.
What is the difference between diversity and inclusion
The first step in addressing diversity and inclusion in the workplace is to understand the distinct differences between the two. While diversity and inclusion are both important and go hand and hand, they are not one and the same. A diverse workplace environment does not mean it is inclusive, and an inclusive environment does not mean the environment is diverse.
What does diversity mean in the workplace?
Diversity is the representation of a range of traits, characteristics, and experiences in a company’s workforce. These characteristics include gender, race, physical ability, religion, age, education, and socioeconomic status, among others. Some of these traits and characteristics are physically visible, while others are not1.
What does inclusion mean in the workplace?
Inclusion refers to how people feel at work, a cultural and environmental feeling of belonging. A company’s workforce may be diverse, but if employees do not feel safe, welcomed, respected, and valued, that company isn’t inclusive1.
Benefits of diversity and inclusion in the workplace
Study after study reinforces the business benefits of diversity and inclusion are expansive:
- A McKinsey Study found that diverse and inclusive environments have a 33% increase in performance compared to their peers2
- Deloitte found that cognitive diversity (diversity of thought) can enhance team innovation up to 20%3
- 48% of employees believe that respect is the most essential factor for a culture of inclusion4
- 67% of Millennials and Generation Z employees value diversity when considering employment opportunities5
- Companies with higher-than-average diversity had 19% higher innovation revenues6
- The Society of Human Resource Management found that 1 in 5 workers have left their job because of workplace culture. The cost: a staggering $223 billion7
- 45% of American workers experienced discrimination and/or harassment in the past year8
Today diversity and inclusion at the workplace is increasingly expected, highly valued, and just good business1.
Diversity and inclusion in Finance
It is no different in the Financial Services industry. For the Financial Services industry to truly meet its full potential and best serve American consumers, consciously driving diversity and inclusion initiatives is imperative.
Today, diversity and inclusion in the Financial Services industry is quite visibly lacking. Ana Maria Fernandez Haar, chair of the board of directors for the New America Alliance stated that Hispanics are underrepresented in leadership and executive positions with the Financial Services industry9. Further Hispanics represent approximately 15% of the U.S. population, but when you look at the U.S. securities industry, Hispanics represent only 4.7% of the workplace9. McKinsey found that while entry level positions in financial services are more racially diverse, this significantly drops when you look at the C-Suite, where nine out of ten C-Suite executives are white10. Another jarring stat: fewer than 1% of CPAs are Black9. Women and people of color are particularly underrepresented in certain sectors such as private equity/venture capital, wealth management, investment banking, and asset management.
Societal benefits to diversity and inclusion
Diversity within Financial services is particularly important as the industry is a significant driver of the accumulation and transfer of America’s wealth10. The economic impact of diversity and inclusion within the Financial Services industry therefore is wide-spanning; there are expansive internal organizational benefits as well as external, societal benefits. From an external society standpoint, according to the US Bureau of Labor Statistics, the Financial Services sector is one of the highest paying sectors in the United States. It is also one of the top 10 industries by average hourly earnings11. More diversity in Financial Services means more diverse Americans earning above-average compensation. Further, the research underscores that Black and Hispanic Americans want to do business with, and be serviced by, people who look like them12. Therefore, the benefits of diversity and inclusion in the Financial Services industry are twofold; largely benefiting both the organization as well as society at large.
D&I starts from the top
While it is everyone’s job to drive inclusion, it is critical that inclusion starts with every leader, from the C-Suite Executive to those in mid-level managerial roles to ensure diversity, equity, and inclusion practices permeate throughout the organization. Leaders set the tone for what is culturally important and a strategic priority and what is not.
Building and adopting focused talent acquisition strategies and strategic partnerships to nurture relationships with diverse American populations is paramount. So also, is nurturing relationships with diverse employees once they have joined your organizations. This includes targeted professional development opportunities, mentorship, and providing opportunities for high-visibility projects.
A Gallup study adequately states, “when employees in inclusive work environments feel appreciated for their unique characteristics, they become comfortable sharing their ideas and other aspects of their true and authentic selves13”.
Inclusive leadership starts with you; listen to understand, diversify who you tap for high visibility projects, ensure every voice is heard during team meetings, and get comfortable being uncomfortable. In diverse and inclusive environments, the leader does not have all the answers, groupthink does not stifle innovation and new ways of doing business and healthy conflict does exist.
Financial Alliance for Racial Equity
Increasing diversity and inclusion in the financial services industry is getting more and more visibility as a business imperative. So much so that a group of financial services firms, historically black colleges and universities as well as financial services industry organizations founded a new industry coalition, the Financial Alliance for Racial Equity (“FARE”), whose mission is to increase racial diversity, drive greater equity and foster inclusion within the financial services industry and the communities served. Through this work, the Coalition is focused on the recruitment of Black and diverse talent as well as retention strategies including professional development programs, peer networking groups, mentorship opportunities and so much more.