Retaining Diverse Talent in Financial Services: The Struggle is Real

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Financial services firms follow standard D&I practices, but they often fail to address deeper cultural issues. We surveyed close to 350 financial services executives about their firms' D&I efforts and interviewed  six diverse executives who recently left the industry to understand where the biggest gaps are  - and how firms can begin to address them.   

Financial services (FS) firms have a retention problem, in large part due to cultures that fail to sufficiently engage and develop diverse talent. According to Russell Reynolds Associates’ 2018 Diversity & Inclusion (D&I) Pulse survey, nearly one-third of industry executives believe that key diverse talent has left their organizations due to lack of inclusion or engagement1. Our interviews with senior executives who have recently left the industry further underscore the lack o​f effective responses to these problems.

Our extensive research has uncovered three common mistakes that financial services organizations make in their efforts to retain diverse talent, and identified three leading-edge solutions to address them.

Three common mistakes

1. Applying generic solutions to unique pain points is not effective

Study Findings

While FS organizations tend to cluster around a standard set of D&I practices, they often implement these programs without pinpointing their unique problems or addressing larger organizational culture issues. As a result, they fail to make a real difference in their culture or D&I outcomes.

Effective D&I strategies start with understanding the unique pain points within an organization; defining the groups of people who most need to be served and setting goals based on this data.

Executive Viewpoints

“When you’re working 80 hours a week, participating in those women’s networks makes it 83 hours a week. [And] the reality was I still worked in this job where the vast majority of coworkers were men and it was very isolating.”

“Working from home is great, but is that really going to fix everything? It’s not childcare that pushes women
out – it’s almost like we’re avoiding the things no one wants to talk about.”
– Contributor #1, a female executive who formerly worked for three of the largest financial services firms in the US.

The barriers to “getting people from the senior manager to director level were about having people figure out work/life balance. Getting from director to VP and certainly from VP to SVP or beyond was all the culture and the biases against women.”
– Contributor #2, a female executive who previously held senior roles at one of the 20 largest US insurance firms.

2. Biased behaviors and processes are still prevalent and often unchecked

Study Findings

Bias and a lack of inclusion inhibit employee experience in the workplace. We took a deep dive into the five barriers to D&I where men and women have the greatest differences of perceptions. Our data shows that men underestimate the impact of barriers to D&I strategy compared to women.

Executive Viewpoints

“I could never be my authentic self at work. My blackness is always prevalent when I walk into a room, or go into a meeting. Whatever the case might be, no matter how people may try to suppress it, it’s always there, and it’s always something that’s readily apparent.”
– Contributor #3, an African-American male executive who worked for large Wall Street and private equity firms.

Wearing braids in my hair for an extended period was “a big decision at the executive level. I remember warning my boss a couple months before I did it that I was going to do it… It’s just the additional work that has to be put in to make your presence feel acceptable to those who may not fully understand it. That’s just the daily existence. So I don’t know that I consider it a barrier, it is an additional rock in the backpack that we just learn how to carry.”
– Contributor #4, an African-American female executive who previously worked for one of the 10 largest banks in North America.

“My former organization had a very hyper-masculine culture where individuals regularly raised their voices and shouted at each other. I am not a yeller but I can be very direct and straightforward – and I got on my last review that I was strident in my discussion with others. So, there was just not a way to be productive there as a female.”
– Contributor #2, a female executive who previously held senior roles at one of the 20 largest US insurance firms.

3. The D&I strategy does not effectively engage the whole organization

Above all, many D&I efforts fail to engage the majority in actively creating solutions, leaving a large portion of the organization without a clear understanding of why cultural changes are needed or how to approach them. Eleven percent of male executives in FS feel there are no barriers at all to their organizations’ D&I strategy, versus only 4 percent of women. Many others may be sympathetic to the barriers, but unaware of how deeply they affect people or what they can do to help break them down.

This lack of engagement and awareness has real consequences. While nearly everyone in the organization says they are committed to D&I in the abstract, it quickly drops to the bottom of the list when executives are asked to force-rank it against other corporate priorities.

Executive Viewpoints

“The organization wanted to make a big splash when they hired me by hiring a highly visible, successful African-American from one of the top Wall Street firms. They wanted to show how they were committed to diversity by bringing somebody in to lead this big new business unit that they were starting. However, when I got there, it was a really lonely place because people didn’t do anything to help me feel more comfortable…That doesn’t always create the best environment for you to do your best work.”
– Contributor #3, an African-American male executive who worked for large Wall Street and private equity firms.

“I think, generally speaking, people want to do the right thing. But I’m not sure [D&I is] really top of mind for folks. If it served their needs, they’d be more up for efforts around D&I. But, if they don’t directly see how it could serve their needs, then they’re not that into it.”
– Contributor #5, an African-American male executive who previously held senior roles at a consumer financial services firm.

What financial services leaders can do better when it comes to fostering D&I

1. Stop checking boxes: Leading organizations realize there is no magic silver bullet or list of best practices that will work for every organization or every leader. In reality, inclusion means different things to different people. To make progress on D&I, it is important to first understand the unique culture of an organization and develop solutions that work for it.

2. Practice and reward inclusive leadership: Our past research shows that the most effective leaders role-model behaviors that help employees feel included, and help coach leaders toward them. The best ones recognize and reward inclusive leadership in their organizations.

3. Engage majority groups in the D&I agenda: Effective leaders balance their strong focus on the inclusion of minorities with their ongoing efforts to keep the entire organization engaged. This could translate into simple practices such as cross-cultural sponsorship pairings, cultural awareness or celebration days, ally groups, or other simple mechanisms that give majority groups the opportunity to be part of the organization’s D&I agenda.

Executive Viewpoints

“Really strong leaders value diverse perspectives and opinions and are not afraid to have people challenge their thinking. [They] are the ones that are the most open minded, that continually learn, continually grow. If you have one of those leaders and they set that as the standard, it becomes part of success.”
– Contributor #6, a female executive who previously worked for a large insurance company.

“[Inclusion] is about ensuring that leadership understands the business case, understands that it is something that has to be practiced actively, and then equipping them with the tools that they need to hone the skill. Just like anything else, if you don’t give people the opportunity to practice, they won’t hone the skill. It’s some of that basic blocking and tackling that you would do along any other competence that you’re trying to build in your leadership in the organization.”
– Contributor #4, an African-American female executive who previously worked for one of the 10 largest banks in North America.

Guiding questions for financial services leaders

Inclusive leaders recognize that the D&I journey never ends for an organization. At each stage, they ask themselves – and their organizations – some key guiding questions:

AUTHORS

BRADLEE BENN is a member of Russell Reynolds Associates’ Consumer Financial Services and FinTech practices. He is based in New York.

HARSONAL SACHAR leads knowledge for the firm’s Diversity & Inclusion practice. She is based in Toronto.

MARK TEMPLE leads the firm’s Financial Services practice knowledge team. He is based in London.

CHARLOTTE WALSH is a member of the firm’s Financial Services practice knowledge team. She is based in New York.

LIMORE ZILBERMAN leads the Russell Reynolds Associates’ global Insurance practice and is a member of the firm’s Diversity & Inclusion practice. She is based in Chicago.

Footnotes:

1 In its 2018 D&I Pulse, Russell Reynolds Associates surveyed 1857 executives around the world about their perceptions and experiences of D&I in the workplace. In this paper, we focus exclusively on responses from the 339 financial services executives – 224 males, 110 females, and 5 who did not identify a gender – who participated in the survey. We combine our survey results with insights from conversations with six executives who recently left the financial services industry.

Russell Reynolds Associates is a global search and leadership advisory firm. Our 425+ consultants in 46 offices work with public, private and nonprofit organizations across all industries and regions. We help our clients build teams of transformational leaders who can meet today’s challenges and anticipate the digital, economic and political trends that are reshaping the global business environment. From helping boards with their structure, culture and effectiveness to identifying, assessing and defining the best leadership for organizations, our teams bring their decades of expertise to help clients solve their most complex leadership issues. Find out more at www.russellreynolds.com. Follow us on Twitter: @RRAonLeadership

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