The financial services industry has struggled with compliance management for decades, and it is just within the past few years that it embraced compliance as an integral and valuable component of good business practices. Diversity and inclusion in our industry, while well-known as a standard of fair employment and the ‘right thing to do,’ appears to be in its ‘tween-age’ years, as far as full integration into corporate business management.
Section 342 of the Dodd–Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) mandated the creation of an Office of Minority and Women Inclusion (OMWI) in all agencies covered by the Act. Each OMWI entity is responsible for all matters of the agency relating to diversity in management, employment, and business activities. Section 342 further directs each OMWI to develop standards for assessing the diversity policy and practices of entities regulated by those agencies. In June 2015, the Consumer Financial Protection Bureau (CFPB) and five other federal regulatory agencies finalized joint standards for assessing the diversity policies and practices of the institutions they regulate.
An OMWI is responsible for all matters relating to the Agencies’ diversity in management, employment, and business activities, and the offices were created to bolster diversity within the Agencies and the entities they regulate. OMWI is required to develop standards for equal employment opportunity and the racial, ethnic, and gender diversity of the workforce.
In addition to workforce diversity, the OMWIs are charged with seeking increased participation of minority-owned and women-owned businesses in the programs and contracts of each Agency. The OMWIs are responsible for establishing procedures to determine if agency contractors and their subcontractors have made good faith efforts to include minorities and women in their workforce.
We’ve come a long way, or have we?
In April 2016, Mreport cited a shift in the mortgage profession from the historical male and white-focused. It identified trends to women and minorities for select positions and promotions. According to data from the Bureau of Labor Statistics, as of 2014, women make up 46.9 percent of the entire workforce. African-American or blacks occupy 11.4 percent of the workforce, Asians make up 5.7 percent, and Hispanics or Latinos make up 16.1 percent.
There appears to be an even larger disparity between different ethnic groups in the mortgage industry.
In the financial activities sector, African-Americans or blacks account for 9.1 percent of this workforce, Asians make up 6.3 percent, and Hispanics or Latinos make up 11.3 percent, the data showed. The data also found that in the real estate workforce, African-Americans or blacks make up 7.8 percent of this group, Asians account for 3.8 percent, and Hispanics or Latinos make up 14.9 percent. Those numbers reflect a disparity from the 2014 data from the Bureau of Labor Statistics, that show women make up 46.9 percent of the entire workforce. African-American or blacks occupy 11.4 percent of the workforce, Asians make up 5.7 percent, and Hispanics or Latinos make up 16.1 percent.
In April 2017, the Consumer Financial Protection Bureau (CFPB) released a report summarizing strategies for promoting diversity and inclusion used by mortgage industry participants. It highlights the business case for diversity along with current approaches and practices used in the mortgage industry, such as establishing buy-in from top leadership, integrating principles of inclusion in recruiting and hiring, and the importance of data in assessing the impact of diversity on keeping organizations competitive. The report is the result of the CFPB’s collaboration with the financial services industry to raise awareness of the importance of strengthening diversity and inclusion within organizations.
The report highlights issues raised by the roundtable participants, including current approaches, and underscores the need to develop a strong business case for diversity and inclusion. The speakers stressed how their businesses were being affected by the changing demographics of their customer base. They noted that a diverse and inclusive workforce was especially important to help them attract and retain the talent and perspective they need to solve new and complex problems, create innovative solutions, and improve business outcomes in face of this growing challenge. The report discusses strategies and practices on topics including:
- The business case for diversity and inclusion: The roundtable participants shared that embracing diversity and inclusion made business sense for their organizations. Participants that analyzed how diversity and inclusion can strengthen organizations found that it improved overall performance and leads to a more positive and productive workplace.
- The importance of leadership buy-in and accountability: A strong theme was the importance of the “tone from the top” of the organization, without which many speakers said it is virtually impossible to sustain a successful diversity program. Strong leadership on diversity and inclusion issues aligned organizations to build in diversity and inclusion as fundamental principles.
- Recruiting, hiring, inclusion, retention, advancement, and engagement: Participants shared that principles of inclusion are vital in developing and sustaining a diverse workforce over time. Organizations noted that they sought to boost retention levels and advancement prospects of people with different backgrounds and viewpoints. Another goal reported by participants is to make sure that discussions and decisions within the organization reflect the more robust analysis and broader understanding that can result from multiple viewpoints.
- Broadening the customer base with new business products: Participants explained that a more diverse workforce fosters greater understanding of the particular needs and situations of a more diverse customer base, including tailoring products to the needs of different consumers. Participants saw this as a key approach to attracting and satisfying a broader base of customers.
- The importance of data: Data collection and analysis play an integral role in supporting many of the participating organizations’ business cases for diversity. Some participants noted that understanding the demographics of an organization’s workforce is key to ensuring that it reflects the available talent pools and remains competitive and effective.
MPA – Mortgage Professional America observed that diversity and inclusion are advantageous to the mortgage industry. MPA also noted that the CFPB is promoting diversity and inclusion in the workforce to lead to “a more positive and productive workplace,” and the influence of company leadership as imperative in sustaining diversity. According to the report, a diverse workforce is also vital in recruitment, and more importantly, in boosting retention levels.
Diversity and inclusion are standards of fair employment and the ‘right thing to do.’ Understanding diversity and integrating it into the business also helps in widening the customer base, as well as constructing products that will tailor to the various needs of consumers.
Around the Industry:
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On the Horizon:
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