Middletown-based Liberty Bank has made attempts to promote diversity in the communities that it serves.

Some industry officials say banks in New England are not doing enough to promote diversity among staff and upper-level management. Some local bankers, meanwhile, say promoting diversity through hiring is not always easy and at times is not necessarily a top priority.

At last week’s National Association of Black Accountants annual conference in Boston, NABA executives focused their programs and seminars on diversity by discussing ways in which NABA, through its corporate partnerships with local banks, can assist banks and financial institutions with their diversity recruitment efforts.

Verna Greer, who recently served as vice president of mass market operations in the Small Business Services Division of FleetBoston Financial and currently serves as national director of resource development for the Boston metropolitan chapter of NABA, said diversity among staff lends itself to good business practices and has a profound impact on the community the bank serves.

“Diversity is critical in the financial services industry because it lends to … good business [practices],” said Greer. “More and more minorities are making good money, investing in the market, buying homes. And when they do business with banks and financial institutions, it is nice to know [bankers] understand their culture.”

But bank consultants say reaching high levels of diversity can be a challenge, especially for small community banks.

“Large banks are much more sensitive and conscious of diversity … there is an image to think about, and larger banks are in the spotlight more. Larger banks tend to be in more urban, sophisticated areas where there is a much more significant mix of people in the population,” said Wil Sheehan, senior vice president and bank consultant for Clark/Bardes Consulting. “Smaller banks typically can’t afford to maintain a full-time focus on diversity.”

Executives at Commonwealth National Bank, a $58 million-asset community bank based in Worcester, Mass., say as the bank grows, so does the culture and diversity of its staff, but in the interim, the bank is more focused in bringing in and retaining assets.

Andrea White, senior vice president of human resources at Commonwealth National, said when hiring employees, the bank tries to mirror the community and “hire the people from different cultures and races that mirror the community.” One of every the branch employees currently employed by the bank comes from a diverse background, she said.

“As a new bank, it is a little bit difficult [to focus on diversity] because we [are] a small organization, but as we continue to grow it creates more opportunity and we currently have a staff with 15 to 20 percent ethnicity,” said Charles Valade, president and chief executive officer of Commonwealth National. “Also as a new bank, we’ve hired people we worked with previously. It was almost a set group at the beginning but as we grow as a bank we can become more diverse. It makes it easier to hire a more diverse staff as we expand branches.”

Setting Goals

But regardless of bank size, some industry insiders say having a diverse staff is not only important for the community, but also necessary for bank profitability.

“Diversity absolutely builds bank assets,” said Paul Young, senior vice president of community banking at Liberty Bank, a $2 billion bank based in Middletown. “The community is made up of all walks of life and unless [the bank] can communicate with them and relate to them, the bank will not be successful.”

Liberty Bank promotes diversity by recognizing an individual each year who has made a significant and ongoing contribution to the cause of promoting and celebrating diversity in the communities served by Liberty Bank. The award is a donation of $5,000 from the Liberty Bank Foundation made in the winner’s name to the nonprofit organization of his or her choice.

“Promoting diversity on the outside of the bank and within the bank is all related. Diversity is good for the community, the bank and the employees,” said Young. “At the customer level, our population is a diverse community. We live and breath diversity everyday … we understand our communities will succeed because of their diversity and [the bank] needs to be part of that.”

But other bankers insist the top factor in hiring a bank employee is assessing the best candidate for the job, not necessarily the candidate with the most diverse ethnic background.

“We’re looking for the best people. When you’re looking for people who are going to serve a particular market, there is no question that if I walked into a place to do business that I am going to feel more comfortable doing business with someone who can help me through the process of, for example, understanding the mortgage process and be able to communicate effectively,” said John Hamill, chairman and chief executive officer of Sovereign Bank New England.

Hamill said that given the mix of Sovereign’s clientele, it is essential for the bank to have bilingual and ethnic staff on board because “it makes for a more successful organization.”

According to the U.S. Department of Labor’s Bureau of Labor Statistics, the national unemployment rate for June 2003 is 6.3 percent. An examination of national unemployment figures by race and ethnicity reveals that the rate for black professionals is almost double the rate for whites at approximately 11 percent, while the white unemployment rate is at 5.5 percent. The unemployment rate for Asians and Latinos is also higher than whites at about 7 percent and 8 percent, respectively.

That presents an opportunity for banks to reinforce initiatives for recruiting professionals of color, fostering formal training and development programs for minority employees and partnering with professional organizations aimed at diverse groups, according to Greer.

While the opportunity for increasing diversity among staff is available, some industry consultants say the direction needed to focus on that goal is absent from some financial institutions. Direction from the top is needed but not always forthcoming bank boards of directors, many of which also have a lack of diversity in makeup.

“From [Clark/Bardes’] experience, we have found that banks are conscious of their responsibility to diversity. However, I don’t know whether that conscience has reached the point of achievement of what would be diversity goals and that would be relevant in the lack of diversity in bank boards and senior management,” said Sheehan.

At Commonwealth National Bank, Valade said when getting the 2-year-old bank up and running, the focus was on establishing a bank board that was well-known in the banking community and could help solicit funds to get the bank up and running.

Since the bank has been established, Valade said the governance committee on the board looks at employee diversity.

“There was a huge amount of risk to [start] a new organization like this, and we looked to the strength of the community to build the bank,” said Valade, who noted that out of the five-member senior management team, three are minorities and there is currently a female member on the bank’s board of directors. “We’d like to add a couple of more branches in the next year and that will create more opportunities to hire a more diverse staff.”

“There is an old African phrase – the fish first rots in the head. What that means for banks is that boards are where the problem is. It’s an old boys’ club,” said Greer. “It’s important to keep things honest and open the doors to diversity in the board. Whether we believe it or not, everything is a top-down approach from the board down to the management.”

While issues surrounding diversity remain debated topics amongst bankers, top industry executives said they do rely on their boards of directors to point them in the right direction.

“There have been a lot of issues around diversity … we have about 18 members on the board and of that, four members are minorities,” said Hamill. “They [the board] are accurate in that they give us good advice and because of the expertise they bring from their various business and also by providing us with a perspective that is indicative of the role of women and how minorities view people in the company. It’s an unstated issue, but it’s real.”