Employees want diverse leadership, but change is slow

While businesses continue to talk about the need for greater diversity, equity and inclusion within their companies, diversity consultant Jina Etienne offers another key component to be included in the DEI conversation — one that many might be overlooking.

“The goal of inclusion is belonging,” Etienne said. “It’s creating a workforce where everybody feels like they’re part of the team. The data shows performance improves, turnover decreases, absenteeism decreases, all of these things drive retention. Retention drives, ultimately, development into leadership.”

Across the spectrum of financial services businesses, employees consistently say they value diverse work environments and leadership. But even as companies of all sizes, including those within the mortgage sector, have placed increased emphasis on diversity and inclusion, results from a recent study conducted by Arizent, parent company of National Mortgage News, show that plenty of work remains before reality aligns with good intentions.

“There’s more want-to than there has been in the past, and I do think it’s genuine, with some of the larger corporations trying to improve the experience for diverse employees and diversify the workforce,” said Jerome Nichols, president of commercial real estate financier and portfolio management company Standard Real Estate Investments.

Left to right: Jerome Nichols, president of Standard Real Estate Investments; Sara Rodriguez, president of National Association of Hispanic Real Estate Professionals and CEO of Titan Title


But progress in meeting those expectations on an industry-wide level continues to move at a snail’s pace. Diversity efforts may have taken on added urgency in the wake of 2020’s social justice movements, but similar discussions have gone on for years with little to show for the efforts.

“I think employees these days — they kind of want things done, not planned around. Even with genuine interest and genuine want-to, these large corporations are finding it hard to get anything done sometimes. It’s hard to effectuate the plan,” Nichols said.

In Arizent’s survey, more than half of respondents across gender and racial demographics said it was important that their company evaluate and address inclusion in their workforce, with 64% indicating they would be less interested in working for a company with a staff lacking diversity. Furthermore, the feeling of not belonging led 20% of Black, Indigenous and People of Color and Latino men and almost half — 47% — of BIPOC/Latina women to quit a prior job due to the dearth of diversity in the workplace.

The data supports similar research in recent years, including a 2017 report by Deloitte, which found that 75% of senior executives said they would consider leaving their jobs for more diverse and inclusive organizations.

On the other end of the spectrum, though, white male employees in the Arizent survey were the least likely to say workplace diversity was important, but they were more likely to think their companies were successful in their efforts.

The demographics of corporate suites also point to a large degree of homogeneity. A 2020 paper from Stanford’s Corporate Governance Research Initiative showed people of color made up only 16% of C-suite positions at Fortune 100 companies and women comprised 25%. But even in those leadership roles, women and people of color accounted for a far smaller number — 13% each — of higher-tier positions overseeing profits and losses that typically serve as pathways toward becoming CEO or a director. And 26 companies had no racially diverse executives in their C-suites at all.

With corporate leadership often developed internally, staff retention is important in creating diverse executive teams. Companies should plan to move initial hiring and inclusion efforts forward by creating a culture where staff feel they belong, said Etienne, founder and principal consultant of Etienne Consulting, based in Silver Spring, Maryland. Etienne was previously the director of diversity and inclusion at accounting firm Grant Thornton. Along with more content employees, the end result is a freer environment that facilitates original ideas.

“I don’t think people realize how much mindshare they put into fitting in and what they need to do to be in a certain company culture every day until they don’t have to and the freedom that comes with that,” Nichols said. “You don’t have to spend your time conforming. You can spend your time being productive, being creative.”

A diverse workplace culture goes beyond demographics to include openness to different ways of thinking, according to Sara Rodriguez, president of the National Association of Hispanic Real Estate Professionals. In addition to serving as NAHREP president, Rodriguez is also the owner and CEO of Titan Title, provider of settlement and other services with offices in Fairfax, Virginia, and Rockville, Maryland.

“I try to look for the path less followed,” Rodriguez said. “I try to look for people that are looking for the opportunity to grow, even if they come from different backgrounds, or they take a little more mentorship. That’s the only way that we’re going to be able to really grow a workplace.”

For those in real estate and mortgages, diversity also makes good business sense.

“There’s an entire market, primarily and particularly people of color, that have not had the opportunities in investing in real estate in homes, and if you think about what we see to be the growth in wealth and income of those communities, there’s a huge opportunity for the financial services industry to finally adapt their thinking, their approach, their methodologies, the programs and resources that they offer to attract this market,” Etienne said.

Net growth in the number of homeowners in the next 20 years will be driven almost exclusively among people of color, particularly Hispanics, according to the Urban Institute. The number of Hispanic homeowners is expected to grow by 4.8 million, Black homeownership will increase by 1.2 million and other racial minorities, primarily Asian homeowners, will grow their share by 2.7 million. But the total number of white homeowners will decrease by 1.8 million.

The number of net new renters is also expected to increase by 9.3 million households, again primarily among minorities.

Companies with diverse workforces have a leg up when it comes to reaching this market. Consumers may not only want to work with people who look like them, but also with those who understand their backgrounds.

“Those diverse points of view are what’s going to help you talk to the people — those consumers that are coming up the pipeline,” Rodriguez said.

”It’s a good business decision for them to proactively start a more diverse workplace. In turn, they can sit down and mentor some of those rising stars to get them into those positions, so that it’s not just one diverse person but there’s a whole bunch of diversity within the thought leadership part of the organization, and that’s what’s going to change the culture.”

In a 2019 report, global management consultant McKinsey & Co. also found that corporations with greater female representation among its leadership ranks financially outperformed companies with few female leaders by 25%, with similar positive results at organizations with more racially diverse roster of executives.

Diverse leadership has opened up markets in commercial investments as well. Headquartered in Los Angeles, Standard Real Estate Investments was co-founded last year by Nichols, who is Black, and its Chinese-American CEO Robert Jue, and both are able to tap into their experience as former directors at CBRE Global Investors and personal networks to find opportunities with minority developers that mainstream firms might miss.

“That’s the focus of ours, and we think that not only is there opportunity there, but these folks often have different access points, different sensibilities,” Nichols said.

Lauded for efforts to promote diversity in the workplace, mortgage-insurance provider Radian cited internal transparency for the positive reception its DEI plans have received. Radian, based in Wayne, Pennsylvania, was honored with a Mortgage Bankers Association award for organizational diversity and inclusion among non-lenders for 2020.

Radian’s DEI goals focus on the entire organizational structure from its board to staff-level employees “Some companies just focus on the top, but then what they miss out on is the pipeline isn’t strong enough behind us, and then you’re overdependent on these five or 10 key diverse leaders, towards the top of the house,” said Mary Dickerson, Radian’s chief people officer.

“So we’re pushing on the whole pipeline to get it all to be stronger,” she added.

Among Radian’s inclusivity tools is a DEI roadmap, which states company goals through 2024, as well as published recruitment benchmarks meant to mirror national demographics — targeting 50% of candidates to be female and 40% non-white.

“I think it starts with having a plan, having a focus and being intentional about growth and development, not only among minority populations but also for the entire company,” said Justin Foster, Radian’s senior vice president, people experience.

Staff engagement also plays a large role in fostering a workplace where employees feel comfortable to express their opinions, according to Foster.

“I think good leadership requires that you surround yourself with people of diverse perspectives and lived experiences. It’s really important — that lived experience environment, where you can disagree without fear of retaliation,” he said.

But even in companies with well-designed plans and missions, obstacles remain in diversifying the C-suite that have nothing to do with the quality of leadership talent. The turnover of executives is slow, a situation without an easy remedy, but one that larger companies need to address or risk losing future leaders.

“Until it’s done, it’s not done, so you have to put leadership in place. I think what frustrates people is having a plan to change the board or change leadership within 10 years,” Nichols said.

“A lot of folks aren’t wanting to wait 10 years. They believe that they’re ready now.”

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