Workforce diversity is a significant challenge for the American financial services industry—especially in the Chicago region, where representation of African-Americans and Latinos has remained stagnant since 2009. And if hiring, promotion and attrition rates remain stable, the presence of African-Americans and Latinos in the sector’s leadership in five years will be even lower than it is today.
That’s according to the Financial Services Pipeline Initiative, which has released a comprehensive report on diversity and inclusion in Chicago’s financial services sector.
The Financial Services Pipeline Initiative (FSP) is a collective effort among several of Chicago’s financial institutions, working with The Chicago Community Trust, to increase the representation of Latinos and African Americans, at all levels, within the industry.
Created by Mercer, “Bridging the Diversity Gap: Building African-American and Latino Talent Pipelines for the Financial Services Industry in Chicago” aggregates the findings of over a year of research and presents recommendations for individual employers, and for the industry as a whole, to address inclusion gaps.
Key findings from the report include:
- Retaining African-American and Latino talent proves more challenging for employers than hiring. Attrition rates are higher among African Americans and Latinos than among other professionals in the industry.
- African Americans and Latinos experience favorable rates of promotion from professional-level to managerial-level positions—but their exit rate from the managerial level is higher than the exit rate for white managers.
- African Americans’ and Latinos’ interest in financial services emerges earlier: career interest often crystallizes during their high school years, compared to college years for whites.
- Opportunity to achieve long-term career goals is the strongest factor influencing African-American and Latino professionals to stay in the industry. For white professionals, staying in the industry is more strongly influenced by relationships, and by considerations of prestige and status.
Research for the study began in mid-2014, with interviews of experts and leaders from the FSP member organizations; in addition, a survey of nearly 10,000 professionals explored their experiences in the industry. The research also included an aggregated Internal Labor Market map of data on hires, promotions and exits, as well as projections for the next five years.
Image from the Financial Services Pipeline Initiative
The report recommends that the industry must work to improve retention of diverse talent, with top leadership at financial firms taking action to demonstrate genuine commitment to inclusion. Individual employers are encouraged to fill senior leadership positions from within.
In addition, the sector must enlarge the pool of talent for recruitment into the industry. Building community relations will give African-Americans and Latinos early positive exposure to the financial industry, which correlates with later professional interest. And recruitment efforts should seek out more diverse new graduates—including those outside financial tracks who offer skills transferable to the sector.
Using this research, along with a series of focus groups, a literature review and a program scan, the FSP Steering Committee is working to develop an action plan for making measurable progress toward systemic workforce diversity.