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Insights From Filene’s First DEI Practices & Policies Survey, 2021

In March 2021, we launched a study to explore DEI practices and policies within the credit union system, focusing on documenting the reach of established DEI efforts and how those efforts create value for organizations. What we found, however, has the potential to transform how DEI is practiced in credit unions and well beyond.

In January 2020, when Filene launched the Center of Excellence for Diversity, Equity, and Inclusion (DEI) in partnership with Fellow Dr. Quinetta Roberson and a leading cohort of credit union leaders, we laid out a five-year agenda of original and applied research to advance our understanding of DEI initiatives and opportunities among credit unions.

Filene's first annual survey of credit union DEI policies and practices establishes a foundation for these efforts. But even more importantly, in exploring how credit unions have pursued DEI at the organizational level, Dr. Roberson and her collaborator, researcher McKenzie Preston, have identified a new paradigm for the implementation of DEI, one that emphasizes the importance of enterprise-wide alignment and the transformational power DEI for the credit value proposition and business model.

In conversations about DEI, no matter what the industry, leaders are often searching for “best practices.” But there has been little research confirming what practices are in fact “best,” for particular organizations and their employees and stakeholders. Similarly, while there have been many studies linking DEI efforts to enhanced organizational outcomes, there has been no effort to understand the extent to which DEI practices and policies matter to credit union performance—nor why they matter. Our system-wide survey sought to understand what practices and policies drive performance and to begin to paint a picture about why and how.

The indexes aggregate individual credit union responses to identify where they fit within the credit union system as a whole and provide specific recommendations for next steps.

We recently published the underlying theory of this research and the survey findings in a report accompanied by a guide summarizing which DEI practices matter most for credit unions and credit union performance. We also hosted a webinar to share high-level results.

Now, participating credit unions are beginning to receive their individualized indexes. The indexes aggregate individual credit union responses to identify where they fit within the credit union system as a whole; the indexes also provide specific recommendations for next steps and thus will help credit unions take a more informed and strategic approach to advancing their DEI efforts.

What we found is that DEI policies and practices are best implemented in particular clusters or bundles—that an integrated, strategic approach to DEI will produce the most impact for organizations.

The following takeaways emerged from our findings

What practices make the difference for credit union performance?

We found that individual practices do not matter on their own. What mattered most were bundles of connected practices. Many credit unions, we found, are already implementing bundles of practices towards a common purpose. Specifically, we discovered that three bundles drive credit union financial performance more impactfully than others:

  • Strategy: practices that focus on DEI leadership and the alignment of DEI efforts with credit union business strategy and activities
  • Goals: practices that focus on goal-setting around workforce representation, inclusion and engagement, equity and fairness, etc.
  • Tracking: practices that focus on collecting and tracking DEI-related data to ensure progress towards DEI goals

What are the effects of DEI bundles?

Accounting for as many factors related to financial performance as possible (including asset size), we found that credit unions that implement fewer practices in each of these three critical bundles—strategy, goals and tracking—tend to underperform credit unions implementing more of those practices.

We found that individual practices do not matter on their own. What mattered most were bundles of connected practices.

A new paradigm for implementation seems to be "scaffolding" for DEI within credit unions. Scaffolding is critical to be able to realize the benefits and value of DEI for the organization and magnifying its impact for employees and other stakeholders. For example, if your credit union has a bundle of practices associated with employee resource groups, designed to drive staff retention and inclusion, those goals may be amplified by the implementation of strategy, goals, and tracking bundles. Similarly, implementing recruitment, selection, and career development bundles may be important for diversifying your talent pipeline and workforce, and the implementation of strategies, goals, and tracking along with those practices may enhance those effects.

What have we learned?

This type of research is new—and we are just getting started. The big takeaways from our analysis include the following:

  • Having a DEI strategy matters. It was important validation to learn that the most impactful practice bundle for organizational performance was the strategy bundle. Thinking through how your credit union is going to leverage DEI towards the organization's overall strategy is critical.
  • Diversity is important, but even more important is what you do with that diversity. Our research moves beyond the assumption that if credit unions can simply diversify their leadership or workforce in one or more ways, they will magically be able to realize the benefits of diversity. What matters, if you are looking for impact, is what credit unions do DEI initiatives.
  • Asset size does not matter. Our analysis found credit unions leveraging practice bundles to improve performance across asset classes, and asset size was not a relevant factor in implementation. Credit unions of all sizes have options available to them. Can’t afford to create a new Chief Diversity Officer position? Delegate key leaders and create a DEI council to be accountable for your DEI strategy, goals, and tracking. There are cost-efficient ways to set and implement new practices and policies.
  • Practice bundles help create impact, and they also reinforce each other. The greatest performance gains were found among credit unions who took a comprehensive approach to DEI. Practice bundles addressing strategy, goals, and tracking tended to amplify each other in creating operational gain.

What’s next?

We are now beginning preparations for the second annual Filene credit union DEI policies and practices survey. We have identified two research questions to build upon findings from 2021,

  • First, what other success metrics do DEI practice bundles affect, beyond standard measures of financial performance such as ROA and net income?
  • Second, how do DEI practice bundles affect firm performance—is it from enhanced internal operations, improved services or messaging to members, or both, or something else?

Mark your calendar for March 2022 when we launch our second annual survey. All credit unions will be invited to participate! Help contribute to the research and receive your own personalized index.

Mark your calendar for our next event featuring the Center for Diversity, Equity, and Inclusion on April 5-7, 2022. We will share fresh research findings and bring in thought leaders from inside and outside the credit union system to help advance your DEI efforts.

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