Diversity and inclusion at work are on the rise, and their importance can’t be understated. According to Glassdoor, 67% of job seekers find workplace diversity a critical metric when looking at new employment opportunities, and over 50% of current employees would like to see boosted diversity at their company.
Here’s everything you need to know about diversity in finance, its benefits, and how you can begin creating a workplace that welcomes people of all backgrounds.
What Does Diversity in the Workplace Mean?
Diversity in banking, accounting, pricing strategy, and other parts of the financial sector means eliminating conscious and unconscious bias against underrepresented groups. This allows them to succeed and contribute at equal rates to other demographics. Although there’s been a massive push for diversity and inclusion (D&I) at work, the finance sector has its work cut out for it.
Here are some current statistics on diversity in finance:
- The percentage of African Americans in official and managerial roles is at best 7% in the Banking subsector, but it falls as low as 4.4% in the Securities subsector.
- Women officials and managers in the Banking subsector are 48.6% and as low as 33.8% in the Securities subsector. These percentages fall below that of total women employed as professionals, meaning there is underrepresentation.
- Hispanic managers make up 5.1% of the Central Banking subsector, as low as 2.9% in the Securities subsector.
- Asian managers comprise 6.4% of managerial roles in the Securities subsector, as low as 2.8% in the Central Banking and Insurance subsector.
- Overall, each financial subsector is highly unfavorable to women and people of color.
A truly diverse workplace means minorities make up proportionate roles in each finance sector and have equal odds of success as any other demographic. There are many benefits to diversity in finance; keep reading to learn more about them.
Why is Diversity Important in Finance?
There are many studied reasons as to why diversity in the workplace matters. Here are the highlights.
Boosted Innovation
Diversity at work means employees are exposed to various viewpoints. When people of different backgrounds work together, these novel views create innovation in ways otherwise unseen.
Research by Josh Bersin finds that diverse companies are 1.7 times more likely to be leaders of innovation.
Improved Creativity
Diversity in finance not only leads to boosted innovation but also improves creativity. There is a caveat to this, however. For diversity to truly boost creativity, studies find that deep interpersonal connections must be made between workers of different backgrounds. Once these connections are formed, the benefits of creativity abound.
How do you enable employees to form these connections? One simple yet effective technique is to pair opposing individuals (of different genders, ages, or nationalities) with one another to partake in activities that require cooperation. Cooperation is shown to promote interpersonal connections.
More Committed Employees
Deloitte studied over 1,550 workers and found that diversity at work promotes employee engagement. Since engagement is a hallmark of good company culture and said engagement can boost profits by 21%, promoting diversity in finance is a win-win. Your employees will stick around longer, and you’ll reap the benefits of a diverse workforce.
Larger Profits
Yes, diversity and inclusion in finance do increase profits. McKinsey & Company studied 180 companies across the US, France, Germany, and the UK and found that companies with higher diversity rates were top financial performers.
Since more diverse companies make better decisions faster, they tend to outstrip their competitors and generate more profits.
How to Create Diversity in Finance at Your Company
To promote diversity in the workplace and create a culture that supports it, you’ll need to put in some work. Here are the best ways to begin designing a more diverse workforce today.
- Question your recruiting strategy. Often, there exists conscious and unconscious bias in recruiting that can reduce the number of diverse hires. Consider where you source talent, your hiring process, what skills you look for, and who is involved in hiring choices.
- Set diversity targets. These targets can include a percentage of new hires, percentage of your total workforce, compensation, promotions, and more. Regardless, set these up ahead of time, track them, and make sure you’re hitting targets. This holds your company accountable and prevents it from letting diversity slip through the cracks.
- Use technology. Using modern technology, you can detect biases in compensation and promotion that discourage diversity. It can be challenging for organizations to effectively notice trends in the data using human power alone. However, by implementing technology such as AI, you can begin mapping out these patterns and correcting them.
- Sponsorship programs. Goldman Sachs 1000 Women program is an excellent example of a sponsorship program that encourages inclusion. The Goldman Sachs Foundation, IFC, and other investors come together to give around 100,000 women entrepreneurs capital that they may otherwise struggle to attain. Similarly, your company can create sponsorship programs that enable underrepresented groups to thrive, whether in your company or beyond. If you’re building one internally, these programs can offer extra support to underrepresented new hires, help facilitate a successful career path for them, and more.
Diversity in Finance Begins at the Top
The financial executive role comes with many responsibilities, one of which should be working towards more diversity in your organization. All executives should work together (with the board if your company has one) to gather data, set diversity targets, coach leaders on running diverse teams, and more, all to increase diversity in the workplace.
D&I starts with your company’s leadership. If you want to find the best executive for your organization, look no further than Jennings Executive. We specialize in many areas of finance and can source a leader for your company who will make diversity a priority. Learn more today.
Although it isn’t easy, creating diversity in finance at your company pays dividends in the future. Get started today!
