I. THE DIVERSITY GAP(S) IN FINANCE & HOW RECRUITING TEAMS CAN CLOSE THEM

The “business case” for diverse and inclusive organizations has been validated through research showing many organizational benefits, including but not limited to increased employee engagement and productivity, higher levels of innovation and creativity, and more efficient knowledge sharing.¹ Despite the observable positive performance outcomes, heightened media attention, and public support of a greater corporate emphasis on Diversity, Equity, and Inclusion (“DEI”) as a moral imperative, the finance sector has noticeably and notoriously lagged in this area. Representation of women and people of color in leadership and executive-level positions within the financial services sector has remained relatively static and glaringly low.²

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Earlier this year, an analysis of diversity data conducted by the US Bureau of Labor Statistics & US House Financial Committee found gender and racial/ethnic disparities in the average senior level executive across all financial institutions (71% male and 29% female; 81% white and 19% people of color) (Fig. 1). In wealth management, only 1.1% of assets are managed by firms owned by women or people of color with the other 98.9% of owners being both white and male (Fig. 2).³ The problem of stark gaps in representation of women and people of color in leadership and executive positions is evident in the data. The issue at hand may appear to be an insurmountable and daunting task, yet the opportunity and ability for organizations to make impactful change exists.

Recruiters and executive search professionals can have a tangible and significant impact on current and future organizational diversity.¹ This impact can be strengthened by implementing specific best practices suggested by this insight report.

These recruitment best practices span across three ways in which recruiting teams can impact the DEI goals of the companies they support:  

1. Internal organization: ensure team members will deliver an inclusive recruiting experience; demonstrate commitment through transparency and actions
2. Sourcing practices: expand recruiting channels to improve access to diverse talent pools
3. Interviewing practices: implement equitable frameworks and practices to ensure an inclusive environment

At Whitney Partners, we have compiled research-backed and market-tested insights on DEI best practices for hiring and recruiting in each of these areas. The practices outlined in this paper can be beneficial for organizations of all sizes and DEI sophistication levels.

II. ORGANIZATIONAL BEST PRACTICES

1. Create a Diverse Recruiting Team

The recruitment and interview process typically delivers the most impactful impression prospective candidates will form of an organization. Academic and consulting research has shown that these first experiences and perceptions of an organization’s demographic composition are significant – the visible diversity of a workforce is correlated with higher attractiveness and compatibility ratings from both women and candidates of color.⁴·⁵ However, the practice of having a diverse recruiting team and hiring committee is only a first step.

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While it may attract greater numbers of diverse candidates initially, this does not ensure higher retention rates. In fact, this point holds true for many if not all recruiting practices referenced in this insight report and having an inclusive culture is an integral part of retaining talent. A diverse workforce alone may be perceived as superficial window-dressing unless there is evidence that diverse employees are thriving and succeeding in the organization as well.⁶·⁷

2. Conduct Annual DEI Trainings

Minimizing bias and its harmful influence in all aspects of the recruiting and hiring process is crucial for improving disparities within organizations and achieving DEI goals. Implicit bias training (one of many viable training options) is one  proven method for educating your team on their biases and providing a safe environment for employees to understand and reduce the effects of these biases in the recruitment process.5,8 Trainings aimed to inform employees of and minimize their subconscious biases have two major benefits to DEI efforts:

1. Enables individuals to make better judgments about the individuals they recruit and hire
2. Ensures a fairer process for candidates.⁴·⁹

There is no one-size-fits all approach to DEI training and education programs: evaluating trainings for relevance to the company’s unique needs and alignment with organizational strategy can ensure more effective and targeted training initiatives.

Successful diversity is built from the often small, everyday actions taken by people at all levels of an organization… changing how people act must [however] be reinforced by changing the organizational policies and procedures that define how people operate.⁸

3. Modify Language

The financial services industry has its own occupational language and dictionary of terms used almost exclusively by those that work in and adjacent to the sector. It is important to differentiate between language that is necessary for business and that which is unnecessary linguistic posturing, with the goal to end the use of the latter. The use of inaccessible language is detrimental to fostering an inclusive organizational culture and can be harmful in two popular recruiting practices used to tap into diverse talent networks and increasing organizational diversity:

1. Undergraduate and graduate-level diversity programs (e.g. early summer internship programs for students of diverse backgrounds and identities) – typically mid- to entry-level positions (analyst, associate)
2. Non-traditional and “out-of-the-box” hires – typically more senior-level positions (managerial, executive)

In both practices the recruiting team is likely to be dealing with individuals who have not been exposed to specific financial industry jargon, which is more likely to be off-putting to a greater proportion of candidates coming from these sources.10  One first step to combatting unnecessary vocabulary is to review all job specs and any external marketing materials for language that is superfluous or not explicitly and appropriately defined.¹·⁷

4. Demonstrate Organizational Commitment

As previously discussed, it is not enough for organizations to only communicate a commitment to diversity, equity and inclusion. Beyond diversification of workforce (reactive), an organization must demonstrate their commitment to DEI through cultural enhancement efforts to improve extant institutional systems, policies, and climate (proactive) (Fig. 4).¹¹·¹² To reinforce what has been communicated, an organization must demonstrate that their commitment is genuine through transparency and enforcement methods, including but not limited to:

1. A clearly articulated DEI strategy, (including how it relates to recruiting and hiring efforts), that specifically defines terms, breaks down targets, timelines, and aligns with the broader organizational strategy
2. Frequent communication re-affirming DEI goals and values, reporting of demographic breakdowns within the organization
3. Routine evaluation and improvements to current efforts and initiatives
4. Encouragement of open dialogue about the organization’s DEI goals and strategy
5. The creation of concrete and tangible incentives for managers and leaders that enhance and contribute to the organization achieving its DEI goals
6. The creation of a DEI task force or committee dedicated to achieving organizational DEI goals and outcomes

At Whitney Partners, we have found through our own internal DEI efforts, research, and observations within the industry, that leading with data (e.g., demographic assessments, employee perception surveys), setting concrete goals using action-oriented frameworks (e.g., maturity models, strategic timelines) vetted by employees of all levels provides a strong foundation for future success in achieving DEI goals.⁶·⁸·¹¹

III. SOURCING BEST PRACTICES

1. Re-Evaluate Employee Referral Programs

Not all employee referral programs are equal (or equitable). On one hand, studies have shown that employee referral programs are a quick and efficient way to source and recruit high quality talent with a higher retention rate.¹³ Unfortunately, there is also data to support that the practice of using employee referral programs for external hires can have a deleterious effect on organizational diversity.¹⁴ When organizations are largely homogenous – as is demonstrably the case in most financial institutions – social and professional circles often overlap in ways that make them impenetrable and exclusive.

Consequently, organizations comprised largely of “closed networks,” where connections have similar education backgrounds, gender, and race miss out on opportunities to bolster DEI efforts. Many organizations have de-emphasized referral programs as part of their core recruiting strategy because of these potentially detrimental influences on DEI goals. Other than de-emphasizing or eliminating referral programs altogether, another strategy to leverage the positive advantages of referrals is to engage with employee resource groups or organization-backed affinity groups to ensure and better facilitate their participation in these referral programs.⁹

2. Broaden Search Resources

Many executives and leaders falsely explain away diversity disparities in their organizations as due to a lack of qualified, diverse candidates in the job market.¹⁵ The truth is that plenty of diverse talent is out there – the question is whether an organization is reaching them. Online job platforms have become excellent methods to reach a wide array of potential candidates. They have enhanced the organization’s efficiency and ability to identify high quality talent, more so than traditional recruitment methods alone.

However, relying on sites like LinkedIn and Indeed.com alone fore sourcing and outreach  is not enough to ensure your firm is accessing talented, diverse job seekers. Including niche diversity job sites in your search such as DiversityJobs.com or BlackCareers.org can be just one simple yet impactful way to make sure you are tapping into diverse pools of candidates to include in your pipelines.

IV. INTERVIEWING BEST PRACTICES

1. Establish Personal Preferences with Candidates Regarding Identity

Creating and fostering an inclusive culture requires organizations to demonstrate that they value and celebrate each employee’s unique characteristics and experiences through respectful recognition and reciprocal understanding.¹⁶·¹⁷ Protocols or systems for collecting and appropriately disseminating a candidate’s preferred pronouns and/or the phonetic pronunciation of their name (e.g., provide a way for applicants to indicate “she/her,” “they/their,” on in-take forms; ensure preferred pronouns are communicated to everyone on the recruiting team and part of the interview process) are two simple and demonstrable practices organizations can implement to affirm that current and prospective employees’ distinctive identities are respected and embraced, two key elements of inclusive cultures.¹⁷·¹⁹

2. Use Standardized Evaluation

For both evaluating applications and assessing a candidate’s interview, SHRM and similar bodies of authority encourage employers and recruiting teams to consider adopting a standardized set of questions and assessment rubrics.¹⁸·²¹ Interview rubric and candidate rating systems are powerful tools in minimizing any bias that might occur (unconscious or not) during the interview and subsequent hiring committee debrief and hiring stages.¹ Group and position specific questions and assessment metrics can supplement or replace basic frameworks – regardless of the role, standardization ensures an equitable process for applicants of all backgrounds and experiences.¹·¹⁹

V. CONCLUSION

While there are numerous potential positive organizational benefits associated with increased diversity, there are also disastrous possible risks associated with mismanaged group and institutional diversity to consider (e.g., emotional conflict among co-workers, diminished group cohesiveness, increased absenteeism).²⁰ This has made diversity management best practices a focus for organizations serious about implementing and impacting real DEI initiatives and change within their companies. At Whitney Partners, we recognize the many complicated challenges organizations face as they work to close representation gaps while simultaneously working to build

To take advantage of the benefits diversity can bring to an organization and minimize its potentially negative effects, an organization must manage diversity strategically: with data-driven planning, carefully articulated goals, judiciously applied organizational changes, and soundly gathered and ruthlessly analyzed metrics.⁸

and nurture an inclusive organizational culture. The process of incorporating DEI goals and values into an organization is a continuous, multidisciplinary effort that requires full commitment, clarity, transparency, and action from employees at all levels. Through data-backed tracking (DEI benchmarks), researching (market proven best-practices & insights) and evaluating (DEI needs and maturity assessments) DEI best practices, we aim to help our clients optimize their workforce and their ability to reap the maximum benefits of organizational diversity. Routinely re-evaluating strategic goals and assessing how they align to an organization’s DEI mission is crucial for accountability and further progress in the ongoing effort to – particularly in financial services sector – create a fairer, more inclusive and representative workforce.⁸·²¹ In providing clarity to de-mystify DEI, we aim to make lasting positive change by helping our clients achieve and accelerate their DEI goals through concrete solutions and data-backed guidance.