Transforming an Industry: How the Federal Reserve made Inclusion a Priority
Please know that the answers below are personal views and perspectives are not expressly the views and perspectives of the Federal Reserve Bank of Boston.
How much recruiting is done at HBCU’s or through their alumni organizations?
MB: The Federal Reserve System does partner with HBCUs and their respective alumni organizations to source, recruit and attract diverse talent. HBCUs are an important part of the System’s diverse talent outreach and engagement strategy.
How do you design a building or create public space with diversity and inclusion at top of mind?
KS: I assume this is a question about inclusion in creation of the building or space. I deconstruct the design, construction and operation of the challenge and identify the universe of diverse individuals that can participate and then cast a national net to capture diverse talent and companies to participate in execution.
What is the correct course of action for business owners who are willing to serve and bring a unique in the field perspective when interested in board opportunities?
KS: There are several board advisory groups and consultants. Executive Leadership Council, Black Directors Group, Diversified Search and others at Russell Reynolds. Be forewarned that this is a long process.
What suggestions would you have for diversifying the CRE industry in Boston, which historically is grossly under-represented by POC in Boston? Do you bring in talent from outside the market or ramp up recruitment and training?
KS: See our article on the CRE eco-system. I will share for distribution.
If your company is not set up that they can gather a diverse outside group (think it was referred to as EDAC at the Fed), do you think that kind of company needs an outside diversity consultant to help them move the DEI initiative along?
KS: As with anything, if you don’t know how to do it partner with someone that does
With an external advisory committee — would you expect that a private sector company would compensate the members?
KS: Why not? We compensate board members for all types of other advice. It is meaningful work worth that will improve for-profit companies.
Marques [and Kirk] provided a historical [and recent] account of FRBB, both successes and setbacks, but what is the optimistic view of the work going forward?
KS: The recent response by 1500 companies to Dept of Labor’s attempt to exclude ESG investing criteria from retirement plan investment is an optimistic fore telling of alignment of doing well and doing good
My experience with ERGs is that they become affinity groups of like-minded people who are “preaching to the choir”. Unless senior management participates, and employees who are not part of the ERG’s particular demographic also participate, the ERG can’t change anything. How do you run the ERGs to make sure diverse ears participate?
MB: All of the Bank’s ERGs are open to all Bank staff. It is critically important to encourage staff to consider joining different ERGs as a great way to build cultural competence, empathy and ally-ship. The ERGs are supported by a Bank officer with the rank of VP or higher. Additionally, we deliberately encourage and support collaborative ERG initiatives and programs that address gender, ethnicity, veteran, LGBTQ+ and other intersectional aspects of diversity that exists in the workplace. For example the Bank’s Black, Women’s, LGBTQ and Veterans ERGs collaborated on an event with a motivation speaker named “The Fly Girl” who is a Black, female, LGBTQ and veteran fighter pilot.
Can you speak to the importance of federal regulation (Dodd-Frank) to your success? How would you advise our industry where we don’t have those incentives or compliance requirements?
KS: we are driven by carrots and sticks. Carrots are a migration by investors and occupiers to socially responsible organizations. Sticks include exclusion of non inclusive organizations as CalPERS has.
Access to capital and CREDIT is one of the biggest challenge facing African Americans and other ethnic minorities, particularly in commercial real estate. How can the Fed work with its member banks to ensure that there is an intentional effort to provide access to bank lines, working capital lines and other credit facilities to help diverse entrepreneurs create wealth?
MB: Fair access to credit, capital and mainstream financial services is an important issue the Federal Reserve System takes seriously. We are also focused on issues impacting low-and moderate-income unbanked and under-banked communities, families and individuals. I will bring this issue to the System’s OMWI Council, comprised of my Chief Diversity Officer (CDO) and OMWI Director counterparts at the other 11 Reserve Banks and at the Board of Governors. Please now that my (CDO and OMWI Director) colleagues are a great resource of diversity, equity and inclusion knowledge, and they would be wonderful partners to help support your DE&I journey.
Two questions: (1) Can you talk more about supplier diversity efforts at the Fed, and (2) Can you discuss any legal constraints to making progress (use of goals that approach numerical quotas, e.g.)?
MB: We have a very strong supplier diversity program at the Bank led by an amazing supplier diversity leader. The program is evolving to focus more on diverse professional services providers. A lot of effort goes into doing outreach and providing technical assistance to diverse vendors to make the Bank’s procurement process more transparent and accessible.
While legal constraints to setting specific numerical goals, in advance conducting technical discrimination assessments, do exist the negative stigma associated with setting specific supplier diversity goals can also result in complicated and unintended consequences. We focus on helping our procurement staff and department buyers to understand the Bank’s commitment to supporting diverse businesses, and we also show them the value of building these new business relationships.
Curious to hear more about the affinity groups. How do these “grassroots” efforts connect with the senior-level discussions you’ve talked about? Any examples of changes in policies as a result, or evidence of better employee retention?
MB: About five years ago we arranged for the leaders of our ERG groups to have one hour breakfast meetings with the Bank’s President and CEO. These meetings take place annually and the goal of these meetings is to have a candid two-way dialogue about what is and is not working regarding the Bank’s DE&I progress and culture of inclusion. We actually hired a full-time senior diversity sourcing specialist directly motivated by the information that came out of several ERG Breakfast meetings, with the CEO, indicating we needed this additional resource to make more progress.
Can you address how you trained and motivated employees to promote within the organization.
MB: One of the Office of Diversity, Equity and Inclusion’s key strategic focus areas is focused on creating a culture of equity and inclusion in our workplace that we operationalize through staff engagement. Roughly 40% of the Bank’s staff are a member of a grassroots employee led ERG. Additionally, we have a Diversity and Inclusion Working Group focused on initiatives to advance the Bank’s culture of inclusion. We also have a Diversity Dialogue series that tackles different aspects of diversity through quarterly meetings open to all Bank staff. Moreover, we have integrated diversity, inclusion and equity into our workforce and procurement policies. The Bank’s strategic values along with other inclusion initiatives are designed to decentralize the importance and need for everyone in the Bank to live our DE&I values every day. People leaders have an additional expectation to work on role modeling inclusive leadership behaviors in what they say, how they behave and how they operate.
Is the Fed planning to do a white paper on the need for workforce training and the current and new areas of job opportunities?
MB: This is an important question. I hope the answer is yes, but I don’t know the answer to this question. I will reach out to my colleagues in the Research Department to find out.
Looking at the Financial Services and Business ecosystem in Boston and The Commonwealth, besides the great work accomplished at The Fed, what companies and/or leaders are executing successful DE&I strategies as great next stage models? MB: I have personally been impressed with different aspects of DE&I work done by many of the firms that participate in our New England Financial Services CEO Roundtable.