There’s an undeniable business case for DEI with two related parts:
1. Market access. Advancing DEI promises access to a growing market for credit unions. Within the next two decades, the U.S. Census Bureau projects people of color will become the majority in the U.S.
We know that people of color often are underserved, face additional barriers, and may have different preferences and needs for financial services.
A DEI approach to market expansion calls on credit unions to understand the changing marketplace and create more equitable financial products and services by using a DEI lens to consider who benefits from and who bears the cost of earnings and growth strategies.
A DEI approach also means credit unions need to become more diverse, more equitable, and more inclusive at all levels of the organization to show members they are valued and that they will receive equitable service.
In turn, this helps build the trusting relationships and loyalty needed to better understand and meet the needs of these groups to achieve their financial goals.
The bottom line: Advancing DEI promises access to a growing market for credit unions. But to do it right we need to understand and be responsive to these groups.
2. Business performance. This focuses on how DEI in the workplace is good for business. There is abundant evidence DEI is good for organizations and their employees.
CUNA research finds credit unions that expand their Hispanic/Latinx outreach with tailored products and services and increased staff diversity perform better than those without such efforts. Specifically, credit unions that joined Coopera’s Hispanic Outreach Program had higher growth in membership (33%), loans (44%), and assets (31%) as well as greater earnings (0.32%) and lower delinquencies and charge-offs.
CUNA conducted similar research on credit unions with the Juntos Avanzamos designation—a classification indicating a commitment to serving and empowering Hispanic and immigrant consumers—and the results were similar.
According to a study by Deloitte, 69% of executives rate DEI as an important issue and 78% of executives report it increases competitive advantage. At the same time, 85% of CEOs whose organizations have a diversity and inclusion strategy say it has enhanced their organization’s performance.
Mounting evidence shows organizations with diverse leaders perform better. A McKinsey study finds companies in the top 25% for gender diversity on their executive teams were 21% more likely to have above-average profits.
Further, companies with more culturally and ethnically diverse executive teams were 33% more likely to see above-average profits.
The McKinsey study also finds there are costs associated with opting out. Companies in the bottom quartile for gender and ethnic/cultural diversity were 29% less likely to see above-average profits.
Another body of research finds that more gender diversity on boards is associated with 20% higher risk-adjusted returns and higher board effectiveness, including fewer regulatory enforcement actions and less fraud.
An important caveat the researchers point to is that simply adding one woman to a board is not sufficient. The positive effect emerges when organizations add a woman to boards that already enjoy some level of diversity.
Other studies find that diverse and inclusive teams are 20% more innovative and better able to detect “blind spots,” and are 30% more effective at avoiding risks. As individuals’ sense of inclusion increases, this translates into an increase in team performance (17%), decision-making quality (20%), and collaboration (29%).
At the same time, diversity and inclusion can be a double-edged sword, generating creativity but possibly creating friction and discomfort because people must consider different perspectives, and the team cannot easily fall back on groupthink.
Diverse and inclusive organizations are more successful at attracting and retaining top talent. According to a survey by Deloitte, 80% of respondents say inclusion is an important factor when choosing an employer, and 39% say they would leave their current employer for a more inclusive employer.
In addition, the Institute for Public Relations finds that 47% of millennials say a diverse and inclusive workplace is an important factor in their job search.
Moreover, research finds that inclusive work environments are associated with enhanced job performance and work engagement. Perhaps this is because inclusion makes employees feel like they belong, are valued, their voices are heard, they are safe, and they can fully contribute to the organization.
Research examining the relationship between staff diversity and customer satisfaction finds that customer satisfaction is higher when the level of staff diversity reflects that of their customer base.
This translates into a healthier bottom line. The study suggests a more representative staff signals to customers the company doesn’t discriminate in hiring, and that customers would receive equitable service.
Perhaps customers who see employees like themselves will be more inclined to view the organization as acting in their best interest and/or in a position to better understand their experiences.
CUNA is a founding organization of the Credit Union Diversity, Equity, and Inclusion (DEI) Collective, a group devoted to furthering DEI, a shared cooperative principle. The collective launched June 19, or Juneteenth, the day commemorating the end of slavery in the U.S.
The collective’s mission statement reads in part, “The CU DEI Collective stands in solidarity with the African American and Black community, and pledges to fight alongside against systemic oppression and racism. Our mission is to bring forth social, economic, political, and legal justice for combating centuries of violent oppression and systemic racism everywhere.
“We call on all members of the Credit Union Movement to apply our cooperative principles to create real, meaningful, transformative, and sustained change. We want to be a catalyst for this change.
“Together, we are stronger. Together, we can create a better world where all members of our communities can take part in our democracy, live free of fear from violence, and enjoy physical and financial well-being.”
Learn more at cudeicollective.org.
NEXT: The policy and compliance case