By Debra CopeA public outcry for racial equity and inclusion has amplified the steady drumbeat of calls for banks to diversify their leadership, starting in the boardroom.
“It is very hard for anyone to argue that you cannot find diverse candidates these days. They’re out there,” says Alexander Lowry, a professor of finance at Gordon College in Wenham, Massachusetts, who hosts a podcast series called Boardroom Bound.
These risks include damage to reputations resulting from missteps that could impact customers or employees and additional reputation and revenue risks as a result of leadership stances and behaviors on topics like Black Lives Matter and political giving, Wright says. A former U.S. Bancorp executive, he has also served on the board of advisors of $1.4 billion-asset Sunrise Banks, St. Paul, Minnesota.
A key question banking organizations need to ask, he says, is whether they mirror their markets. Having a board that reflects the diversity of the community can help them compete. “We know for a fact that organizations fare better when they have diversity,” Wright emphasizes. “They experience higher growth and are significantly more likely to capture new markets and are more likely to bring a product from idea to completion.”
Mounting pressure for banks to better reflect their communities is prompting banks to rethink director recruitment. “In most community banks, the search is an informal and inadequate process,” says Terrie Spiro, president and CEO of Cecil Bancorp, Elkton, Maryland. “The smaller the bank, the likelier it is to fall to a couple of directors and their social or business circles of influence,” which tend to be white and male.The challenge is to “get outside the comfort zone of ‘who Bob knows’ and attack the search from a problem-solving perspective,” says Spiro, who is also a founder of Bank on Women, which is working to expand the representation of women on community bank boards and in C-suites. She believes that community banks tend to face less public pressure to diversify, and have more to gain than large national commercial banks from being able to look at an issue from different perspectives.
Wright notes that banks have been talking about diversity for a long time but could deepen the discussion. Racial, ethnic and gender diversity all help improve the functioning and profitability of organizations, he explains, but there is a tendency to focus primarily on the advancement of white women.
“As humans, we like things that are like us, and we hire people who look like us and think like us,” Wright says. He says it’s important to “name” what diversity means by getting specific about expanding leadership to include African Americans, Asians, Hispanics and other cultures. Otherwise, “the conversation about diversity simply blurs out what we’re talking about. We need to get very specific, even when that is uncomfortable and challenging.”
It’s also time for banks’ focus to move to outcomes, not merely actions. “Diversity, equity and inclusion is the only place in business where activity equals progress,” Wright says.
Not Sure Where to Start?
A Sampling of Resources for Identifying Diverse Board Candidates
This guide, while not comprehensive, suggests paths for finding potential board of director candidates. Some have formal programs designed to foster board candidacy; others are valuable for networking. Veterans organizations will be featured in the next issue.
- American Bankers Association. Diversity, equity and inclusion resources are available on the ABA website. They include self-paced training modules, research papers and practical guides, including “Tips for Recruiting a Diverse Work Force.”
- ALPFA (Association of Latino Professionals for America). Formerly Association of Latino Professionals in Finance and Accounting.
- Ascend. Nonprofit pan-Asian organization for business professionals in North America with 18 professional chapters.
- Bank on Women. Nonprofit organization dedicated to educating the community banking industry on the importance of adding qualified women to the board and C-suite. Sponsors conferences and research and maintains a director database.
- Catalyst. Global nonprofit that works with CEOs and leading companies to create “workplaces that work for women.” Its Catalyst Women On Board initiative works to increase the number of women on corporate boards by matching CEOs and board chairs with exceptional women board candidates.
- Director Diversity Initiative. Maintains a computerized database of potential diverse directors nationwide. Has run board of directors programs since 2006. Housed at the Center for Banking and Finance, University of North Carolina School of Law.
- Executive Leadership Council. Membership organization that seeks to nurture and amplify Black excellence and leadership in business. Has several special programs for women, including a partnership with Women Corporate Directors.
- Historically Black colleges and universities.
- National Association of Black Accountants.
- National Bar Association. Network of predominantly Black lawyers and judges.
- National Gay and Lesbian Chamber of Commerce.
- Out Leadership. National LGBTQ+ business network. Quorum is its program to increase representation at the corporate board level.
- Sigma Pi Phi Fraternity (The Boulé). Exclusive Black professional organization with approximately 5,000 members in 139 chapters nationwide. Not an undergraduate fraternity.
- South Asian Bar Association of North America.
- Women Corporate Directors. A foundation for board members that also sponsors BoardNext, an initiative to identify and develop experienced, highly qualified, board-ready women.