Wells Fargo’s first diversity report shows progress, but more work remains

  • Wells Fargo released its first diversity report, which showed gains.
  • The bank made progress in hiring executives from underrepresented groups last year.
  • But, like its peers, Wells Fargo still struggles with diversity in many of its leadership positions.

The number of Wells Fargo executives from underrepresented backgrounds grew last year, but the bank, like its peers, still has some way to go to make the upper echelons of the industry representative of the country.

In its first diversity and inclusion report, released Wednesday, Wells Fargo said the bank increased its share of female executives from 41.7% in 2020 to 44.3% last year. Its number of black executives increased from 5.8% in 2020 to 8.9% in 2021, and its share of Latino executives increased from 3.9% to 4.7%. Yet there is a lack of diversity at the top of the bank: A majority of executives — 73.3% — are white.

Nationwide, census figures show that 60% of Americans are white, 19% are Hispanic/Latino, 13% are black, and 6% are Asian.

Diversity challenges are not unique to Wells Fargo. More than three-quarters of JPMorgan’s executives, 77%, are white, according to its most recent data, which is from 2021. At Bank of America, that number is 77.5%, according to 2021 figures. And at Citi , it’s 73%, based on its latest report, published in 2020. The majority of executives are also men in the industry.

Wells Fargo’s diversity report comes as advocates call on Wall Street to deliver on promises made after the May 2020 murder of George Floyd. In addition to committing billions of dollars to racial equity in the economy, banks reaffirmed their promises to improve diversity within their organizations. and make their businesses more like the American population.

To do this, Wells Fargo has taken a number of steps, including tying executive compensation to increasing diversity within its ranks. But the numbers from the San Francisco Bank’s first report, in addition to numbers from other

best banks

show that more work is needed to make the upper echelons of the country’s financial heavyweights more representative of the country’s population.

Kleber Santos, head of various segments, representation and inclusion at Wells Fargo, acknowledged the work that remained.

“As I said before, it’s a marathon, not a sprint, so we know there’s a lot of work to be done in the years to come,” he said. “We need to continue to measure our progress based on data and engage diverse talent within the company, as well as external stakeholders, for their feedback and suggestions.”

People of color and women in general are concentrated in lower paying roles

As in other banks, Wells Fargo’s population of non-executive employees in the United States is more diverse than its management. The slight majority, 53%, are women and 45% are non-white. This mirrors the industry, where women, especially women of color, are underrepresented except in entry-level positions, according to a 2021 McKinsey study.

Salary differences between entry-level positions and higher positions are significant in the

banking industry

. According to US government data, a financial analyst, a typical entry-level corporate banking position, earns an average of $81,000 per year. A CFO, a senior level position, earns nearly $132,000.

The difference between non-corporate and corporate jobs is even greater. Bank tellers, for example, earn a median of $36,000 in the United States. An adult without children earning this wage would be earning below living wage in New York, Los Angeles and Chicago, for example, according to MIT’s Living Wage Calculator.

Some say banks need to invest more in low-wage workers if they are to deliver on their promises to make their businesses fairer. According to a 2021 poll of 1,200 people by the nonprofit Just Capital, 77% said racial equity could not be achieved without all workers receiving a living wage.

According to a study by the Economic Policy Institute, the Society for Human Resource Management and the National Women’s Law, increasing minimum wages in low-wage jobs would significantly reduce the gender pay gap and black and Latinx workers versus white workers. Center.

Diversity in banking is a work in progress

Wells Fargo’s Santos said the bank is focused on improving diversity among executives. In 2020, the banking giant instituted a rule that for all job postings in the United States with annual compensation over $100,000, at least half of interview candidates must come from a historically underrepresented group.

The rule works, Santos said. In 2019, before the rule was implemented, 36.9% of hires of people earning $100,000 or more were racially or ethnically diverse – Black, Latino, Asian American, Pacific Islander, Native American or Alaska Native . By 2021, that figure has risen to 42.3% of executives, according to Wells Fargo.

But there appear to be growing pains, at least according to recent reports. Seven current and former Wells Fargo employees said they were tasked with interviewing black and female candidates to meet diverse candidate recruiting goals after the company was already ready to hire another candidate, the report reported. New York Times last month. Santos responded to the report, saying the bank takes any such allegation seriously.

Separately, the bank rejected nearly half of all black mortgage refinance applicants in 2020, Bloomberg reported in March. Santos, in response, told Insider that the bank also accepts more black mortgage applicants than any other bank and must turn applicants away based on industry-wide regulations. He said he hoped to work with federal agencies to change those rules to allow more black applicants to be accepted.

Wells Fargo’s report highlighted other areas the bank was focusing on. Since 2020, the company has helped 115 professionals re-enter the workforce after taking months or years off to raise families, care for someone or take sick leave. Of these, 94% came from historically underrepresented communities. And 88% went from interns to full-time employees.

“We are making real progress and working hard. But we also know that it takes time to create lasting change in any workplace,” Santos said.

In May 2021, Wells Fargo joined the OneTen Coalition. The group of CEOs and their companies set a 10-year goal to train, hire and promote 1 million Black Americans without four-year degrees into jobs that would help support their families and provide career opportunities. advancement.

“Our diversity, equity and inclusion work extends beyond our walls into the communities we serve,” Santos said. “We are very focused on opening more pathways to economic opportunity for underrepresented communities.”

Maria D. Ervin