The CEO of Wells Fargo came under fire last month when, in acknowleding the bank had work to do on improving its diversity, it emerged that he earlier this year wrote that “while it might sound like an excuse, the unfortunate reality is that there is a very limited pool of Black talent to recruit from.”
We would be lying if we said we hadn’t heard this from others C-Suite leaders, as many people are eager to blame their lack of diversity on the “pipeline problem.” While hiring managers at financial services firms may believe they are not seeing a proportionate amount of applications from people of color and other underrepresented groups coming through their applicant tracking systems—that’s not where the issue of diversity is born, but that’s certainly where it dies.
In an industry built on collegiate elitism, referrals, and family ties, it’s no surprise that Black, LatinX, and other people of color don’t see a path forward. If firms really want to move the needle on hiring more diversely, they must invest heavily in tactics to do so.
One approach is to not make it an artificial requirement to be enrolled or a graduate of an elite university. Delineating between “target” and “non-target” schools for entry-level recruiting is a perfect way to keep diverse talent out, considering only 6% of freshmen at elite universities are Black (let alone studying finance), and many firms compete for them at once. People in the industry prefer to hire from these schools because they feel like they are taking less of a risk; they understand that the academic rigor at these universities provides a certain level of discipline and preparation.
Additionally, some skeptics may argue that anyone can technically apply to these roles at financial institutions. While true, the fact that banks commit resources to hiring students from a small subset of colleges gives candidates at those “target” institutions an advantage throughout not only the hiring process, but also in ongoing career development. Sometimes, the only way in for a candidate at a non-target school is by way of a recommendation, which serves as an assurance that they are deserving of consideration.
Prestige, however, does not equate to potential. More often than not, it relates directly to privilege. But these shortcuts are straightforward, safe, and before the invention of things like artificial intelligence, even understandable. It’s not easy to sort through every single résumé, especially if you have no other way to determine candidate quality or potential for success. We have watched our A.I. software champion for five times more highly qualified candidates who are people of color, and five times more highly qualified “non-target” school candidates, than what firms would normally be directly exposed to in their processes. It’s simply a matter of believing that there are highly qualified candidates at every school, and bringing their résumés to the top of the stack.
Most medium- to large-scale financial institutions have world class training programs for their incoming classes of new hires. These programs have the ability to level set the technical skills required to perform well on the job, regardless of their prior school or curriculum of study. In addition, the entire career path for bankers and other finance professions is effectively an apprenticeship model, with continual on-the-job learning throughout. Hiring a diverse entry-level class, investing in strong training programs, and committing to an atmosphere of mentorship, inclusion, and on-going career development gives firms the opportunity to ensure their own internal pipeline of diverse future leaders for their organizations.
While this is a multiyear proposition to addressing a very real, important, and immediate issue, financial institutions must make this change now or they will continue to see the problem perpetuated. The first step is admitting that this is an inequity of their own making, and to stop creating a scapegoat by blaming the “pipeline.” Their historical hiring practices and single-minded set of core beliefs have created the problem, and only by changing their process will they begin to unwind the damage it has done.
Matthew Spencer is the co-founder, CEO, and chairman of the board of Suited, Inc., an A.I.-powered, assessment-driven recruiting network designed to help the most promising candidates from all backgrounds access highly sought-after opportunities in the professional services industries.