By Sheri Crosby Wheeler
In June 2015, six federal financial regulators, including the Consumer Financial Protection Bureau (CFPB), issued a final policy statement under Section 342 of Dodd-Frank establishing joint standards for assessing the diversity policy and practices of financial institutions and other entities regulated by the agencies. Almost a year and a half later, in November 2016, the CFPB and the Mortgage Bankers Association (MBA) hosted a roundtable of mortgage industry and federal agency representatives to discuss diversity and inclusion initiatives and practices within their organizations. Participants included large banks, mid-sized and smaller companies, and nonbank financial institutions. The CFPB published the resulting readout from the roundtable in April of 2017.[i] The readout report was intended to summarize what the CFPB learned and share some of the diversity and inclusion practices used by the participants.
A review of initiatives and practices detailed within the readout report reveals that many mortgage industry participants are beginning to utilize strategies and initiatives that have been in place outside of the mortgage industry for decades. And now, there is even more of an opportunity for the mortgage industry to be transformative and innovative in the diversity and inclusion space while complying with the pronouncements of Section 342.
Tracking some of the broad topics discussed at the November 2016 meeting and memorialized in the readout, this article outlines ideas on how to disrupt the current practice, what I’m calling “Diversity 1.0,” to create more diverse and inclusive workplaces and expand the availability of mortgage services and products to a broader group of potential customers, or “Diversity 2.0” initiatives.
Diversity 1.0: Roundtable participants emphasized that buy-in from top leadership was an important component of a successful diversity and inclusion program.
Diversity 2.0: Not only should leadership buy-in be stressed, but middle management buy-in and participation should be emphasized and enforced, as well. Middle managers interface with a larger number of employees and as a result have the biggest impact on the pipeline of employees within an organization. Middle managers largely determine who comes through the door, who gets to stay, and who is allowed to move up. If middle management does not get “it” and buy-in, then all an organization’s efforts could be for naught.
Defining Diversity and Inclusion Within the Organization
Diversity 1.0: The roundtable readout highlighted that the definitions of diversity and inclusion needed to be fleshed out so that employees and consumers can more clearly understand the broad nature of both issues. It then went on to expound upon the definition of “diversity.” The readout did not include a corresponding explanation of “inclusion.”
Diversity 2.0: The terms “diversity” and “inclusion” should not be conflated as they are two separate and distinct theories and practices that are equally important. An organization that is “diverse” but not “inclusive” will not attain an optimal state of diversity and inclusion.[ii] “Diversity” is representation, whereas “inclusion” requires action—creating an atmosphere in which all people feel valued and respected and have access to the same opportunities.[iii] Leaders can exhibit inclusiveness by ensuring that team members speak up and are heard; making it safe to propose novel ideas, empowering team members to make decisions, taking advice and implementing feedback, giving actionable feedback, and sharing credit for team success.[iv] The fact that “diversity” and “inclusion” are two different things needs to be continually reinforced within organizations. As noted diversity expert Dr. Steve L. Robbins states, “Diversity is sometimes about counting people. Inclusion is always about making people count.”
Recruiting and Hiring
Diversity 1.0: With respect to recruiting and hiring, some roundtable participants stated that they had forged partnerships with minority trade organizations and local colleges and universities. Others have started internship programs to expose more students and recent graduates to the industry, and some continue to “utilize and adapt longstanding internship and recruiting programs to access new talent pools.”[v]
Diversity 2.0: Notably absent from the roundtable report was discussion of “unconscious bias.” Unconscious biases affect our judgment, sometimes in undesirable ways. According to Francesca Gino, professor at Harvard Business School, unconscious biases can “cause us to make decisions in favor of one person or group to the detriment of others … [and this] … can stymie diversity, recruiting, promotion and retention efforts.” [vi] “Left unchecked, biases can also shape a company or industry’s culture and norms,” states Iris Bohnet, director of the Women and Public Policy Program at the Harvard Kennedy School.[vii]
Practical steps that can be taken to reduce bias in the hiring and promotion process include:
- Providing unconscious bias awareness training[viii]
- Rewriting job descriptions to minimize or eliminate gendered language[ix]
- Utilizing software programs to blind the resume review[x]
- Asking candidates to take work-related tests or solve work-related problems[xi]
- Engaging in structured, standardized interviewing[xii]
- Dispensing with resume-based screening altogether[xiii]
Inclusion, Retention, and Employee Engagement
Diversity 1.0: Roundtable participants noted that “employee engagement programs that support inclusion are essential to their retention efforts for all employees, and most notably for members of under-represented groups, who tend to leave organizations if they do not feel fully included in its everyday modes of business.”[xiv]
Diversity 2.0: In addition to employee diversity and inclusion engagement programs, such as employee forums, employee resource groups, employee networks, mentoring, social events, and diversity councils, organizations should strive to practice “everyday inclusion” in an effort to weave diversity and inclusion into the fabric of each company. Leaders should take actions each and every day that exhibit inclusiveness (as noted in the examples above), and employees should be encouraged to do the same. Something as simple as smiling and greeting anyone that comes within 10 feet could make employees feel more included.[xv]
Within the mortgage industry, the quest for truly diverse and fully inclusive workplaces has just begun, but it will be aided greatly by those organizations that are forward-thinking and unafraid to break the mold when it comes to successful diversity and inclusion strategies.
Sheri Crosby Wheeler is VP of corporate social responsibility at Mr. Cooper. She can be reached at Sheri.CrosbyWheeler@MrCooper.com.
- [i] Diversity and Inclusion in the Mortgage Industry: Readout from an Opening Roundtable (2017, April 27). Retrieved from https://www.consumerfinance.gov.
- [ii] Sherbin, Laura and Rashid, Ripa (2017, February 1). Diversity Doesn’t Stick Without Inclusion. Retrieved from https://hbr.org.
- [iii] Riordan, Christine M. (2014, June 5). Diversity is Useless Without Inclusivity. Retrieved from https://www.hbs.com.
- [iv] Sherbin, Laura and Rashid, Ripa (2017, February 1). Diversity Doesn’t Stick Without Inclusion. Retrieved from https://hbr.org.
- [v] Diversity and Inclusion in the Mortgage Industry: Readout from an Opening Roundtable (2017, April 27). Retrieved from https://www.consumerfinance.gov.
- [vi] Knight, Rebecca (2017, June 12). 7 Practical Ways to Reduce Bias in Your Hiring Process. Retrieved from https://hbr.org.
- [vii] Id.
- [viii] Id.
- [ix] Id.; (e.g. Textio- a Seattle-based company that offers client organizations a predictive engine that provides feedback on how likely a job description is to draw diverse candidates by searching 40 million job listings for gendered language.)
- [x] Id.
- [xi] Id.
- [xii] Id.
- [xiii] Parsi, Novid (2017, January 16). 5 Leaders Who Are Disrupting Diversity. Retrieved from https://www.shrm.org. (e.g. Gap Jumpers – an online blind-audition process where applicants are given a job-related assignment—for example, Web developers are asked to create a webpage—and then hiring managers assess the completed task without seeing any personal identifiers, including name, gender, work experience or educational background.)
- [xiv] Diversity and Inclusion in the Mortgage Industry: Readout from an Opening Roundtable (2017, April 27). Retrieved from https://www.consumerfinance.gov.
- [xv] Parsi, Novid (2017, January 16). 5 Leaders Who Are Disrupting Diversity. Retrieved from https://www.shrm.org.