The success of Carnival Cruise Line is no surprise to Arnold Donald, Carnival’s chief executive or his supporting executive staff, seven of which are women or nonwhite men, and were recruited from a variety of industries. Donald’s strategy of creating a diversified workforce where differing opinions are welcome and respected has contributed to an 80% increase in stock price and rave reviews from customers.
More broadly, it’s clear that companies whose diversified management teams reflect their customer base
C-suites that represent a wealth of knowledge across different genders, race and experiences are on the rise within today’s world of digitization and innovation. Banks are aware of this, talk about it and write it in their annual reports and strategy handbooks — and yet they struggle to make it happen. Why is that?
While there is truth that demand for experienced, diverse executives within banking far outstrips the supply, there is no excuse for the lack of creativity that still permeates executive recruiting strategies.
One perceived challenge is space. There are only so many boxes that are
Institutional fortitude is needed to ensure banks look, feel, act and communicate as society does. It takes grit and guts. Some are tempted to ignore or debate this simplistic solution, but on the front lines it becomes obvious that resolve is a key factor in success. Financial services companies put in the effort at the beginning of an engagement, but often fail to find solutions that end in a diversified hire.
Too often we are asked to ensure we have a diverse slate if they fall within the lengthy list of competencies that one would only gain — wait for it — from years of experience within banking. This generates a candidate pool that is predominantly white and male, and whose experiences are centered within banking, thus doubling down on a lack of diverse candidates and diversity of experiences.
Old-guard executive recruitment strategies do not square with the needs of an increasingly diverse customer base. Qualifications and competency designs too often come from traditional job specifications that focus on the job at hand with limited vision. They often focus on current needs and fixing sins of the past, instead of considering what a role can become or should aspire to accomplish in a digitally led, customer-obsessive world.
See the recent Most Powerful Women rankings:
Decades of filling senior roles with executives from inside the industry have dulled the skills necessary to attract, assess and successfully assimilate talent from wide-ranging industries and experiences. Recruiting efforts that start with a wide range and scope inevitably end at frustratingly similar results. A lack of courage and innovation has led us to where we are today: an industry thirsting for the diversification of talent.
Executive searches uncover a variety of talented diverse candidates that often do not perfectly fit the specific role but would be a current and future great hire. Industries such as retail, digital and technology have strong track records at bridging this “perfect fit” gap and finding room for qualified diverse talent across gender, race and experience. On average, banking struggles to create these solutions.
Amazon’s worldwide consumer businesses services are led by general managers who have responsibility for product, technology and operations. These executives have been recruited over the years from every industry under the sun, many of which are not digitally native. It matters not whether they are engineers, operators, technologists or business leads.
Amazon has enough digital experts not to concern themselves with consistently hiring more digital experts. The same holds true in financial services: Banks house a lot of bankers and recruiting more of the same to improve experience and drive innovation is not a recipe for success.
JPMorgan Chase found success within their industry-leading card business by hiring executives from PepsiCo, Kraft and Campbell’s. USAA, the highest-ranking financial services company in the nation in customer satisfaction and customer service, has leaders who hail from retailers and design and strategy houses. In each situation, these senior hires are more than 50% nonwhite males.
The problem for banks is that a homogeneous team cannot deliver the quality products and services that successfully answer the call of an increasingly complex and demanding set of consumer segments. Improved representation of diverse executives and those from a wide range of experiences lead directly to a more rounded view of customers.
Since the end of the financial crisis, banks have dedicated themselves to the financial well-being and health of their customers. Marketing campaigns trumpet banking’s focus on the holistic needs of the customer with products and services designed to spur and support long-term financial stability.
The efforts are sincere and have begun to re-establish trust. Yet, most of these products look and feel like the cookie-cutter templates that developed from the same playbook by the same people. That is because, for the most part, they are.
Banks must become brave, with leadership willing to break free from outdated beliefs that role qualifications for executives are so specialized that only people who look like them and come from their current professional network can produce success.
It may help to look toward role-model companies and leaders in other industries — Arnold Donald’s rewards far outstrip the risks he took, and it is time banks follow in his wake.
This BankThink post is part of a series that also features
