This article originally appeared in the April 2017 issue of The MReport
And male. And a rich mix of races and ages. A brighter future for the mortgage industry, where the leaders are representative of the borrowers they serve, depends on embracing diversity, inclusivity, and pay equity—now.
By Debora Aydelotte
What can you buy for 19 cents? According to the U.S. Bureau of Labor Statistics, in 1979, women made 62 cents for every dollar earned by their male counterparts. By 2015, this had risen to 81 cents for every man-earned dollar. That’s an improvement of just 19 cents
in 36 years. By that pace, women won’t reach pay equity with men until 2033—another 16 years.
That puts us a decade behind the U.K., according to one recent study, and ranks us 20th out of 30 countries in Bank of America Merrill Lynch’s 2015 Transforming World Atlas report. Worse yet, the bureau’s figures may be too generous. More recent data from the Institute for Women’s Policy Research suggests that women in the United States earn only 78.3 cents for every man-earned dollar and won’t achieve pay equity until 2058.
Pay equity for women and underrepresented minorities is closely linked with their level of representation in the workforce, which is one reason 2010’s Dodd-Frank Act included language that encourages federal agencies to assess the diversity policies and practices of the entities they regulate, including banks and mortgage lenders. The correlation between employee pay equity and diversity in a company’s executive ranks is especially strong because executive leaders in general—and chief executives in particular—wield great influence over recruitment, hiring, compensation, and other diversity and inclusion practices within their organizations.
Unfortunately, our progress toward a more diverse executive landscape has been abysmal. In fact, the percentage of female CEOs actually dropped in 2016 compared to the previous year, and it was already incredibly low to begin with.
When it comes to the mortgage industry and other parts of the financial services sector, women and minorities are even more underrepresented. According to the Government Accountability Office, as of 2013, women hold about a quarter of senior management jobs in financial services, and of those women, 86.5 percent are white.
Statistics from the Urban Institute’s Housing Finance Policy Center show that women make more reliable mortgage-holders than men. And according to Fannie Mae, new household formation will be driven chiefly by ethnic and racial minorities in the coming years. How can our industry expect to understand and adapt to the needs of the next generation of homebuyers when our workforce is such a poor reflection of the borrowers we serve?
Over the years, speakers and authors have coached women that they can succeed despite staggering inequities if they would only stand up, speak up, take initiative, lead like a man (or better yet, like a woman), take back their power, know their worth, or just “lean in.” While I believe such guidance is generally well intentioned, it’s simplistic to think that if you’re dissatisfied with your lot, you merely haven’t leaned in enough. These same messages get repackaged over and over, and meanwhile, the progress we’ve made as a society remains woefully quantifiable: just 19 cents in 36 years.
Findings from a November 2014 Pew Research survey may explain why so few women are CEOS. According to the study, most people recognize that men and women make equally good leaders (though stigmas persist around certain industries), and many respondents even believe that having more women leaders would benefit the businesses they serve and society at large. Yet, according to a January 2015 Fortune article, “corporate America still isn’t ready” to hire women for top executive positions: “Even in 2014, some 50 percent of women and 35 percent of men agree that many businesses aren’t ready to hire women for top executive positions.” And so the underrepresentation continues.
Survey findings like these clearly convey a problem that “leaning in” can’t solve: There is resistance by those in powerful positions to promote women. Yes, women need to persist in their determination, but you can’t get through the door if it’s being held shut from the other side.
In other words, it’s not that women aren’t ready for leadership roles; it’s that many of today’s companies and CEOs need to shift their thinking. We are asking the wrong question when we entreat women to look within themselves for the answers. Instead, we should be asking companies and executives what steps they are taking to get ready for greater inclusion.
Those in positions of power— company executives, board members, and those who sit on hiring and risk committees—must make a conscious decision to act differently. If they choose to do it, these leaders can accelerate pay equity, exert enormous influence over hiring, and insist on diversity in their executive teams. Their actions or inactions will shape the focus and
success of their companies and industries for years to come.
Below is a primer CEOs can use to open the door to a more inclusive work place—starting today.
Developing an Inclusive Executive Team
GET READY: Get over it—and get on board.
The typical CEO exhibits business acumen, leadership skills, and a preference for action rather than inaction. Executives set clear goals and expect people to exceed them. So why all the hand-wringing and foot-dragging when it comes to tackling diversity and inclusion in the organization? Of all the complex decisions CEOs make on a daily basis, this has to be one of the easiest. Inclusivity is not complicated; it simply requires commitment and a plan. The following actions can be set into motion today and, with focus, can be completed within a matter of weeks.
STEP 1: Understand Your Baseline (Two Weeks)
Start with a current-state assessment. Give your human resources (HR) executive two weeks to provide detailed data describing your firm’s current diversity position. Does your company reflect the population it serves? When you compare hires made in the last year to your overall employee population, do you find you’re trending toward greater diversity or greater uniformity? How big are the pay gaps between men and women and between white employees and underrepresented minorities?
It’s time to get real and identify your top concerns and priorities without making excuses. A critical look at the data will help you identify where the problems lie. Perhaps your biggest diversity and pay equity challenges occur within certain job levels, geographies, locations, or positions, or they may happen under the watch of a particular hiring manager. A plan can be built to address any of these issues; however, if your company is like many of the organizations I’ve worked with over the years, there’s a good chance your most egregious diversity and pay disparities center around your management and executive leadership teams. Let’s talk about how to address that.
STEP 2: Assemble a Plan with Measurable Goals (Two Weeks)
Thank your HR executive for casting light on the diversity and pay equity issues within the organization—without pointing fingers. Like any other corporate function, HR takes its cues from executive leadership. Instead of blaming your HR leader for failing to make diversity and inclusion a priority in the past, solicit his or her commitment to help you make it a priority going forward. Communicate why diversity and inclusion are goals for your firm and part of the culture you want to build, and describe the role you expect HR to play in that effort.
Then ask your HR and recruiting executives to propose a plan for identifying, recruiting, and promoting diverse management and executive candidates. The plan should include HR’s
recommendations for specific goals against which progress can be measured at regular intervals over the next six to 12 months. These goals might range from assessing a larger, more diverse candidate pool when filling new executive positions to redesigning career paths within your firm to ensure equal access to executive leadership opportunities.
HR has two weeks to develop the plan and present it to you. Don’t let it wither on your desk; schedule a working session to review HR’s recommendations, make any necessary adjustments, and reach consensus. Don’t put it off for the next budget or performance management cycle—the time to engage is now. Communicate with your management team, encourage their input, and adjust where needed. The plan doesn’t have to be perfect
to be executable. You can—and should—revisit the plan every six to 12 months to make any necessary adjustments.
STEP 3: Hold Everybody, Including Yourself, Accountable (Ongoing)
Don’t stop with your implementation plan. Build diversity and inclusion goals into performance plans for executives and managers, and assign a weight to these goals that reinforces the criticality of creating a diverse and inclusive environment. Add diversity and inclusion objectives to the charters of your hiring and risk committees. Ask the board of directors to help ensure you set and reach your goals. Demand regular and active reporting of results. Make the topic a frequent point of conversation.
STEP 4: Assess and Course-Correct as Needed (Every Six Months)
One of the goals of a diversity and inclusion program is to recruit diverse candidates reflective of our national composition. Doing so has many documented benefits, from reduced turnover to greater innovation. Companies that recruit from a diverse set of potential employees are more likely to hire the best and the brightest in the labor market and position themselves
to capture a greater share of the consumer market.
In other words, inclusivity is closely related to business success, so if your fledgling diversity and inclusion program is not meeting its goals, your business may not be living up to its potential either. If you’re not seeing the results you expect six months in, consider the following possibilities:
You’re not walking the talk. If your diversity and inclusion activities are chiefly designed to make your company and its leaders feel good or look good, they’re unlikely to achieve tangible results.
Litmus test: Are your diversity and inclusion activities and communications designed to engage line-level employees rather than managers or leaders? Is management involvement limited to handing out awards or participating in other occasional photo ops? Have you made changes to actual policies and practices? Successful change requires more than a publicity stunt.
You’re not holding people accountable. Nothing to measure means no accountability, and no accountability means no action. Revisit both the goals and the accountability plan you set when you started and modify as needed.
Litmus test: When is the last time your HR executive provided a progress report comparing today’s workforce, including management and executive teams, with the one you had six months ago? When is the last time you gave your board of directors a status update? Sweeping lackluster progress under the rug may spare you a few minutes of discomfort in a board meeting, but it won’t do anything to help you move closer to your goals.
You’re targeting the wrong results. Often, companies get fixated on correcting a particular department or job description where women and minorities are especially underrepresented. While I applaud these focused efforts, I can’t emphasize enough the trickle-down benefits of building a more diverse executive leadership team. It’s the most effective way to fast track your company’s diversity and inclusion efforts.
Litmus test: How has the composition of your management and executive teams evolved? Open your firm’s web- site and go to the page that showcases your leadership team. Does it look diverse? This may be a wholly unscientific way of judging diversity, but
it is what you’re presenting to clients, potential job candidates, your industry, and your community. Be honest with yourself: What do you see?
Achieving a diverse and inclusive workplace can be complex, but getting started is not. Too often, we hide behind excuses and create artificial challenges. By taking simple steps today, CEOs can make real progress and feel good about passing the baton to their successors—who, with any luck, may not look anything like themselves.
DEBORA AYDELOTTE has helped shape diversity and inclusion programs for national and global firms both in the United States and abroad—including Germany, India, and the U.K.—over the course of a decades-long career as an executive and advisor in the mortgage, banking, and fintech industries.