Three ways to diversify your business

Besides the COVID pandemic, the ongoing political strife in Washington D.C. (and across the country) and the costly natural disasters striking from coast to coast, 2021 may be remembered as the second year in a row that racial injustice remained on the front stage of our national attention. That makes the way we celebrate Black History Month 2022 that much more poignant for Americans of all backgrounds.

Indeed, recognizing the many important contributions of Black Americans to all aspects of life in the United States is a tradition that goes back to 1976. Every President since then—regardless of party affiliation or political outlook—has designated February as Black History month.

For this very reason, Black History Month can be considered a time-honored institution in this country; one that we can enjoy together, regardless of the different colors of our collective skins. This year, it may also be a time for all of us to reflect on, and recommit to, an ideal the founders of our republic set forth in the Declaration of Independence:

“We hold these truths to be self-evident; that all men are created equal; that they are endowed by their creator with certain unalienable rights; that among these are life, liberty, and the pursuit of happiness.” (Bolded words our emphasis.)

While you are pausing to consider the meaning of these 36 words through the context of Black History Month, your thoughts might turn to your business and what you can do to support the diverse and inclusive society that is the principal upon which our country was founded, the bedrock upon which it was built—and perhaps one of its greatest strengths as the global leader it is today, financially, politically and culturally.

As a successful, entrepreneurial-minded financial professional, you might see how a strategic approach to diversity and inclusion may benefit your business and help create new revenue streams. The good news is, your employees, your suppliers and your clientele offer three channels where you may be able to take meaningful action.

And even better news, you don’t need to wait until February on an annual basis to make diversity and inclusion a productive part of your business plan. There are ample opportunities throughout the year to observe and commemorate the many walks of life that are just steps away within your local community.

Understand the diversity and inclusion business case

The Council for Inclusion in Financial Services (CIFS) is a non-profit organization committed to increasing industry awareness of the social and economic benefits of multiculturalism in employment and supplier choice.¹ It also helps promote financial literacy to help all Americans understand how to grow personal wealth. In a recent article, the CFIS offers details on the following benefits and best practices regarding diversity and inclusion for business owners.¹

Ten benefits

1. Accelerate business growth and financial performance
2. Increase innovation and creativity
3. Improve corporate reputation
4. Make more informed business decisions
5. Attract high-quality employees
6. Improve knowledge sharing
7. Improve employee engagement
8. Decrease employee turnover
9. Increase employee empowerment
10. Increase employee loyalty

Ten best practices

1. Establish a feeling of belonging
2. Be fair toward all employees
3. Offer growth opportunities
4. Rewrite job descriptions
5. Support innovation and creativity
6. Educate employees on diversity and inclusion
7. Support teamwork and collaboration
8. Support flexibility in the workplace
9. Restructure your recruitment process
10. Promote diversity and inclusion at all levels

How many of these benefits would help improve your bottom line? And how many of these best practices are part of your business today? The answers to these questions may help you determine where to focus your strategic efforts.

Seize an opportunity with considerable potential . . .

If you think back to the last (pre-COVID) industry conferences you attended and recall the knowledgeable presenters you listened to, the vendor representatives you spoke to and the peers you socialized with, what do you remember most about these people? From this, as well as from many examples taken from your day-to-day routines, you probably already know intuitively what the current state of the financial services industry looks like.

Mostly white. Mostly male. And mostly middle-aged or older.

Sound familiar? Remind you of the faces of some of the popular people from your high school yearbook? All kidding aside—and in case you want or need to verify the facts—we do have a somewhat serious problem when it comes to diversity and inclusion. A February 2020 U.S. House of Representatives Committee on Financial Services report on diversity in the financial services industry examined self-reporting data from the 44 largest banks and bank holding companies in the United States.² The authors found that:

• Banks’ boards of directors are not diverse;
• Banks’ senior employees are not diverse; and,
• Banks have limited spending and investments with diverse firms. 

. . . But don’t delay, because progress is being made

Data from the Securities Industry and Financial Markets Association (SIFMA) bear these findings out for the investment industry. Yet written testimony provided by Kenneth E. Bentsen, Jr. on behalf of SIFMA before the same U.S. House of Representatives Committee on Financial Services hearing where the banking report was released shows that while gaps exist, they are closing.³

According to results of a 2018 SIFMA survey of securities firms employing approximately 500,000 people (about half of the industry workforce), Bentsen reported that:

• All firms reported having a diversity strategic plan, 95 percent of which explicitly addressed gender, gender identity, race, and ethnicity. Sexual orientation and veterans are also commonly covered (80+ percent).
• Leaders at all levels in the industry are actively engaged in diversity and inclusion efforts, particularly senior leaders. Senior leaders believe there is a business case for D&I, and all indicated their senior leaders are actively involved in D&I programs and initiatives.
• Representation of women in the industry was 44 percent. The overall industry hire rate for women is comparable to the rate for men, as is the overall turnover rate, indicating that while both populations are growing, the share of women in the industry relative to men has remained steady.
• People of color make up roughly one-third of the overall industry. The overall industry hire rate for people of color exceeds that for whites by more than five percentage points, while the turnover rate is about two percentage points higher for people of color than for whites, indicating that the percentage of people of color relative to whites in the industry has been increasing.

Practical ideas to explore in your business

Like eating an elephant, if you are hungry to put diversity and inclusion best practices to work in your business, you might want to start by simply taking one bite at a time. Trying to accomplish too much at once may be overwhelming and may make follow through more difficult.

In terms of diversifying your clientele, you may want to start by prioritizing. Is there a diverse segment that you already have an affinity with? Perhaps there is a large population of people from a diverse demographic in your area. Or perhaps there is a diverse group of people in your area who are currently underserved. Similar to how you may segment your book of business, choosing an appropriate diverse population segment to serve requires careful research and thought.

In an article on immediate ways businesses can better support diversity and inclusion, the CIFS suggests community involvement as a natural way to begin building relationships with diverse individuals.⁴ The CIFS states that supporting non-profits and programs that work to end racism and/or help underrepresented and multicultural communities can be a powerful “brand” building tool that can also help produce lasting change.

As an example, it cites how PayPal created a $500 million fund to support black and minority businesses by strengthening ties with community banks and credit unions serving underrepresented communities—plus other funds to invest directly in black- and other minority-led start-ups, assist black-owned businesses affected by COVID and increase internal efforts to create more diversity and inclusion efforts.

But you don’t need deep pockets to make a difference. The CIFS also cites examples of how investment firms turn smaller capital outlays into investments in the community that may help pay dividends both in terms goodwill and business opportunities.

If you have employees who are from multicultural backgrounds—or who are interested in diversity and inclusion—consider forming an employee group for them. These employee groups often help deliver the best practices that may benefit your firm outlined by the CIFS.

According to a PwC Diversity & Inclusion Benchmarking Survey Financial Services Data Sheet nearly two-thirds (64 percent) of organizations surveyed say the purpose of their diversity and inclusion strategy is to attract and retain employees and/or fulfill legal requirements.⁵ Only one in five (18 percent) say the purpose is to achieve business results and only one in twenty (6 percent) say the purpose is to respond to customer requests.

So if you establish an employee group to support HR goals (or several groups, depending on the size and needs of your firm), consider also tapping employee group members for insights that may help you boost your efforts to attract diverse clients and suppliers. Because this is a competitive advantage offered by employee groups that few firms appear to be seizing.

Other helpful resources

Many diverse communities have their own chamber of commerce to help promote business and economic activity. Examples include the African-American Chamber of Commerce, the Hispanic Chamber of Commerce, the Gay and Lesbian Chamber of Commerce, and so on. After you determine which diverse segment of your community you wish to support, a quick internet search will help you locate the local chapter.

You may also wish to contact community service organizations serving diverse audiences. For example, the Urban League and the National Association for the Advancement of Colored People (NAACP) have chapters across the country that may have activities you can support and participate in as part of Black History Month.

In addition to helping you make connections with potential clients, these organizations may also help introduce you to highly qualified prospective suppliers and employee candidates.

A quick internet search may help you find calendars of diversity events and multicultural holidays. The Parent Teacher Association offers a diversity calendar for 2022 that can give you a thorough look at the broad range of opportunities to celebrate diversity throughout the year, including links to resources for more information about the event you may wish to recognize. You may also want to consult a diversity calendar regularly to help understand key dates to avoid scheduling business activities for various diverse employee, supplier and client segments.

Plus, local colleges and universities may have student organizations that are chartered to serve the unique needs of students from various multicultural backgrounds. These groups may be a source of future clients, suppliers and employees for your business-building pipeline.

Consider contacting these organizations to offer financial literacy training and curriculum to help their members learn the fundamentals. This is also an age group that may be eager to find out about careers in financial services. So you could make a life-changing impression on young people who may not have pictured themselves as financial professionals.

SIFMA provides an online forum to help member firms develop diversity initiatives to increase inclusion in the workplace and expand services to diverse customers. In addition to delivering benchmarking data and industry best practices, it recognizes industry achievements in diversity and inclusion. Throughout the year, it offers webinars, podcasts, videos and blogs from a variety of authoritative sources who share insights you may be able to put into action at your firm.

What you can learn from RBC

Our parent company, Royal Bank of Canada (NYSE:RY) ranked number four in the global “Top 100 Most Diverse & Inclusive Companies” in the 2021 Refinitiv Diversity & Inclusion Index.⁶ The Diversity & Inclusion index ranks more than 11,000 publicly listed companies with environmental, social and governance (ESG) data, based on a composite of metrics collected from publicly available information sources that define diverse and inclusive workplaces.

To learn how RBC accomplished this ranking—and for ideas that may help you accomplish your own diversity and inclusion business goals, browse the RBC Diversity & Inclusion Blueprint.⁷ This enterprise-wide strategic document established the direction for our priorities, objectives and commitments in Canada, the U.S. and the countries in which we operate.

The Blueprint aligns with our organizational purpose and focuses on attracting and developing the best talent, providing advice and solutions for diverse client markets, and enabling the social and economic development of our communities through partnerships, research, volunteerism and corporate citizenship.

Or check out the RBC diversity and inclusion website, which features real life success stories, plus videos, podcasts, special reports and other resources that may offer insights you can apply in your own diversity and inclusion strategic planning.⁸ 

How our cultural competence will help make a difference in your business

When you and your firm depend on RBC Clearing & Custody for services, solutions and insights to help you build, run and protect your business, you also benefit from our diversity and inclusion. It truly is one of our strengths—and perhaps what makes us different from any other clearing and custody provider.

Why is that? Our client-first culture attracts professionals who are creative thinkers and excel at service. And our management carefully hires for the soft skills that are transforming how business is done in the 21st century, in addition to selecting for the experience and hard skills that are reshaping the financial services landscape.

Our people are among the best and the brightest. And it shows in their commitment to excellence. Our team is comprised of people of all ages, equally balanced between genders and is welcoming to people who want to bring their authentic selves to work in terms of sexual identity and/or orientation.

Look around our office and you’ll also see our people represent many, many different racial, ethnic and national backgrounds. Plus, our diversity of thought is on display with the technology and service innovations we deliver, such as RBC BLACK,⁹ our all-in-one financial professional productivity dashboard featuring solutions from leading fintech providers.

To learn more about how we’ll make a difference in your business, please contact us to speak with your business development manager.