Fierce competition for top talent means banks need to reimagine their strategy for recruiting, developing, and retaining high-performers. "We as employers need to be more broad in our thinking and think differently about our recruitment efforts and how we're utilizing and retaining our workforce," said Robin Hegg, SVP, Chief HR Officer at River Valley Bank, Wausau, and a member of the 2018-2019 WBA Human Resources Committee. "What worked two or five years ago isn't good enough anymore." One important, but often misunderstood, aspect of an effective talent management strategy is how to incorporate diversity and inclusion (D&I).
"Diversity is getting invited to the party. Inclusion is getting asked to dance."
Most people today agree that diversity in the workplace should be a priority, including in the financial services industry. But the definition of "diversity" sometimes causes confusion; it's more than the demographics boxes you check when taking surveys. "Diversity is all the ways people differ, and characteristics that make an individual different from others," said Lisa Pook, director – organization development at MRA, The Management Association. "It's easy to think about diversity in terms of race and gender—and those are certainly important—but it is also important to think about diversity in terms of the 'invisible' aspects, such as experience, thoughts, perspectives, and ideas."
Using this more expansive definition, every community, company, and department can (and should) be diverse—with some imaginative solutions. "Diversity requires you to be creative and think outside the box when it comes to your organization's culture," said Hegg. "How are we diversifying our workforce in skillset and experience and differentiating ourselves in our market by looking beyond our current physical footprint?" For example, diversity of geography is becoming more common as the number of bankers telecommuting rises; River Valley Bank's SBA team is located in North Carolina, Texas, and California.
But diversity alone isn't enough to make a long-term impact on your institution through your talent management strategy. The organizations who best leverage the diversity of thought, background, and experience in their staff also focus on inclusion. "Inclusion is the really important part," Pook explained. "You can have diverse people but if they're not coming into a work environment that's inclusive you're not able to retain or engage them." In other words, banks can build diversity through their hiring practices, but without inclusion they won't see the benefits of that diversity.
One final piece of the "diversity" definition: it impacts everyone, and it isn't easy to achieve. "Acknowledge that we all have stereotypes and biases," advised Molly Bauer, VP/HRO at Bank of Wisconsin Dells and a member of the 2018-2019 WBA Human Resources Committee. "You have to work to eliminate your biases, whether that's assuming someone over a certain age hates technology or haloing people who look like you." Humans are hard-wired to prefer the familiar, and while that preference for the status-quo kept the species alive thousands of years ago, today it inhibits our ability to collaborate and innovate with unfamiliar people and situations. Getting over that natural hurdle requires dedicated time and effort, but the ROI is significant.
Benefits of Inclusion
Why Diversity Matters, a 2015 study from McKinsey, found that "companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians." The same study also found that gender diverse companies can outperform industry medians by 15 percent. "You simply cannot dismiss or argue with those results!" said Julia Johnson, senior manager of talent management consulting at Wipfli, LLP. As more organizations formalize and implement diversity programs, better data about its impact has become available. "Diversity and inclusion started out being the morally right thing to do," Pook explained. "But, there's now enough measuring and testing to demonstrate that not only is it the right thing to do, businesses succeed because of it. The numbers say that inclusive workplaces increase the bottom line."
Talent management strategies that focus on diversity and inclusion have benefits beyond profits, too. One of the most impactful is fostering innovation. "By bringing together people from diverse backgrounds, you are able to draw on the collective experience of these individuals to bring a different, broader perspective to doing business or resolving business issues and challenges," explained Johnson. "Creativity and innovation are just two outcomes that result from a diverse team." Banks can use this phenomenon to their advantage. For example, if the bank's strategic plan calls for expanding its social media presence in order to attract new customers, hiring or training an individual with social media skills (no matter their age) may have the most impact. "Getting people to think outside of their box and work with people who are different from them allows creativity, innovation, and collaboration," said Bauer. "As a stereotypically conservative industry, using differences to problem-solve and push into 'new' areas like social media and electronic banking can really help vet concerns on both sides."
D&I Best Practices
Creating an inclusive workplace culture can be "very simple and very complex," said Pook. A simple example is reviewing the company's marketing materials and making a concerted effort to rework all visuals to demonstrate diversity in age, race, attire, etc. A more complex example is reframing the company's values to reward employees for contributing new ideas, even if they fail. "Saying 'that's a great idea' doesn't do anything if you don't act on it," Pook explained. "It's being open to new ideas and acting on them." Employees and customers alike notice the differences in what the organization says it values and what it shows it values.
Below are four best practices to help you get started on incorporating diversity and inclusion into your talent management strategy:
1: Start at the top.
"You need to start with top leadership," Pook recommended. "HR plays a part in leading the initiative, but it has to be owned by senior leadership." Senior leadership—including the board of directors—should craft and practice a philosophy around diversity and inclusion and what that means at their institution. "Boards should be actively seeking diverse members," said Johnson. "A balanced board representative of populations served speaks volumes." The key is active support, according to Hegg. "You need to have support from the top, and it needs to be action, not lip service," she explained.
2: Align with your strategic plan.
Look to the bank's strategic plan in order to define the skills you need to attract and cultivate within your staff. "Look for people who are savvy in areas pertinent to your strategic vision for the organization," Hegg recommended. According to Pook, one effective way to find these focus areas is to compare the organization's current state with their ideal state (described in the strategic plan), and zero in on the gaps. Identifying these skill and experience gaps helps focus not only your recruitment strategy, but also talent retention and development. "I think about talent development holistically," Hegg explained. "We need to bring people in and understand their career path. How do they want to grow, where are their gaps, and how do we bridge those gaps?"
3: Formalize your D&I philosophy.
A formalized D&I policy and strategy provides important clarity and guidance throughout the organization. "A strategic and well-planned approach to diversity facilitates satisfaction and, therefore, retention," Bauer explained. "People are more engaged and productive when they feel included and respected. It all ties back to inclusion!" In addition, banks should consider updating or amending other current policies, resulting in a complete collection of policies and procedures that work together to promote diversity and inclusion. "You need to have appropriate policies and practices in place to foster a diverse workforce," Hegg advised, strongly recommending banks include remote and flexible workforce policies in that collection. "You need that in place to support the level of diversity you're bringing in," she said. "You need an avenue for people to bring ideas forward and implement them."
4: Provide training and development.
Effective D&I strategies include funding and time allocation for training and developing staff. "Build training and curriculum around those areas that are lacking," Johnson advised. "Target the spend of the development dollar to achieve the greatest impact." The Center for Creative Leadership (www.ccl.org) recommends the 70-20-10 rule for development: 70 percent through experience, 20 percent through coaching, and 10 percent through formal classroom training, so banks should incorporate all three into their program. That could mean establishing mentoring programs for underrepresented groups, forming special project groups to bring diverse employees together, and/or something as simple as holding a special non-Christmas holiday event with traditional ethnic food.
Wipfli, LLP is a WBA Silver Associate member.
MRA, The Management Association is a WBA Associate Member.