Managing Diversity at Cityside Financial Services Founded in the late 193s, lCityside Financial Services was a successful midsized bank serving an urban community in a predominantly white, uppermiddle-class neighborhood. When middle-class families began moving to die suburbs in the lQFEIs, white-owned businesses closed, and Cityside's owners put the bank up for sale. It was purchased by a lacially diverse group of investors, including Ron Wilkins, a young black investment banker. In an effort to rebuild the community and grow the bank's dwindling client base, the new executive team developed a two-pronged strategy of reinvesting deposits into neighborhrxid businesses and housing development while also attracting investments from a wealthier clientele nationwide. By 199'}, Cityside operated two units in the Sales Division: Retail Dpemtions and External Deposits. Retail lUperations offered Hie local community personal savings accounts, smallbusiness loans, and home and real estate mortgages. External Deposits serviced all other investors, offering a portfolio of money market accounts, IRAs, and CDs. By the early Es, ie External Deposits business had serviced thousands of clients nationwide and accounted for 52% of total deposits. Initial Success As more and more workingclass AfricanAmencan families moved into the neighborhood and increasing numbers of women owned personal bank accounts, Wilkins and his partners noted a mismatch between Hie client demographic and the predominantly white male professional staff inherited from the bank's previous ownership. Arguing that a more diverse staff, at both service and managerial levels, would appeal to local clients and lure them away from competing banks in the city center, Wilkins convinced o'ler bank directors to institute an aggressive minority hiring program. By 1999, lEityside Bank had increased the number of female employees to total nearly half of the workforce. Fifty three percent of middle managers, 42% of senior managers and 25% of executives were AfricanAmelicans, Cityside's support staff was about 911% AfricanAmerican. Retail Operations hired mostly black employees, many of them from Hie local community. External Deposits hired mostly white, middleclass college graduates. Nearly equal numbers of managelial pin-sitions existed in each unit, giving whites and blacks similar advancement opportunities. In general, bank employees agreed, \"If you do yourjob well, you'll be recognized and promoted for it.'r Members of both units felt that their racial makeup helped them attract and retain their respective customers. Sue McMillen, the white head of External Deposits, explained: If the bank were all white, our relationship with the community would be extremely strained, and the retail business would be threatened. The customers would be saying, 'What are all these white people doing running a bank in the middle of our community?' And they'd be right-that would be pretty hypocritical. McMillen's black counterpart in Retail Operations, Bernard Thomas, agreed: "Having people in the organization who actually know how to relate to the people that are in the neighborhood-that understand how they feel and how they communicate-gives the community a certain level of comfort." Some Cityside employees believed that similarly External Deposits' white clients were probably "more comfortable" with the white staff that serviced them. Over the years, Cityside Bank developed a reputation for being a high-functioning, multicultural organization. Wilkins was invited to address audiences about the "business case for diversity," showcasing the Bank as a model of how a culturally diverse staff can add value to a business by helping it to connect with diverse markets. The Schism By mid-2004, Wilkins began to question whether the Sales Division was optimally structured. Red flags were first raised when several long-term customers-wealthy individuals who had moved out of the immediate neighborhood but who still maintained accounts with the bank-complained to him about the limited services they were being offered. Through another source, they had learned about investment products that the bank had never offered to them. When Wilkins investigated, he learned that these customers had been categorized as "local" and were therefore in a different category from the bank's wealthy clientele, the targeted group for such products. This distinction was apparently not lost on other Retail customers either. According to a staff member in Retail, her clients felt "overshadowed by the hoity-toity treatment that External Deposits' rich white clients get," and were quitting the bank as a result. Recent developments in both groups threatened to further compromise the bank's quality of service. Retail Operations added a corporate banking function designed to service corporate accounts in other neighborhoods citywide; in the meantime, External Deposits began marketing its investment packages to some wealthy investors within the city. As one staff member in External Deposits observed, the services overlapped, and it was not clear which of the two units was best equipped to handle the new market segment. "Historically, the Retail customer base has been defined as the neighborhood. Anything else in the city by rights should be ours if we use that definition," he explained. "So what happens if we get a law firm downtown that needs corporate banking services, and we bring them in? Whose account is that? We really can't service it, but Retail, that's their stock and trade." The lack of coordination between the two units started to compromise the bank's efficiency. An External Deposits staff member commented, "It might take me seven hours to do something that I could have taken to Retail and gotten done much more quickly. But they are very guarded," she added. "They don't believe that I really want their help." Wilkins wondered whether some sort of cross-over career track or other means of cross- fertilization between the two groups could gradually achieve functional integration. When he broached the subject with McMillen, she described the two units as essentially "two different banks,"each with a unique culture. In her view, this chasm came about because her predecessor promoted an ambitious agenda, insisting on providing the highest quality services and duplicating functions that were already performed by Retail if their services did not meet his standards. "You had this sort of cracker- jack group that worked for him," said McMillen. She explained: [External Deposits positions] were the absolute perfect job for the sort of white, smart, dedicated, loyal workaholic. And not the perfect job for the sort of black, hard-working, needs a salary, will do a good job, but not that kind of worker. There was absolutely no place for people who wanted a 9-to-5 job. Retail staff countered that white workers would not be able to handle the demands of the Retail unit. A black officer in retail noted: If they put all of [External Deposits] down here [in Retail] for a week they would be really whipped and surprised, and they would probably run back to their department and never look back because that's an all white department, and they wouldn't know what to do with people in this neighborhood. When Wilkins raised the idea with Thomas of cross-over career tracks for employees across the Sales Division, the discussion turned quickly to race. Thomas spoke plainly: "If you're black, and you want to become an officer, you come over to Retail." The pronouncement rang true; there had never been a single black officer in External Deposits. When one of the few African Americans who worked in External Deposits was due for a promotion to an officer position, he was invited to the Retail side to take up that role. McMillen offered a different perspective on the race dynamics at the bank: The problem is that what is expected of senior management here has a cultural bias towards whites. And if you're in that cultural modus, you don't understand why it's exclusionary. Everyone is expected to work a lot of hours. There is this emphasis on perfectionism-this emphasis on intellectual discussion and debate. People are very, very mission-driven. And that's not to say that African Americans aren't also able to do all that. But because of historical racial issues, they have been limited. So there aren't a lot of people from the neighborhood that would be senior management level, and there are an awful lot who would be in those low- paying, pretty routine, white-collar jobs. Anxious to learn more about how the black workforce viewed its career prospects at Cityside, Wilkins approached several long-time employees and asked them to speak with him candidly. A black officer in Retail acknowledged that while he was treated respectfully by his white colleagues, "the jury was still out" on how they valued his contributions to the firm. He explained: One of the things that I take a measure of pride in is the fact that we can all live and work together. And that's OK. But I think sometimes the problem comes in the division of the duties. You know, how do you perceive me? Do you perceive me as someone who brings something to the table, who is a decision maker? Someone who understands our customer base and whose thoughts should be taken seriously? Or do you see me as someone who is good at operationally making things work and making sure that the paperwork is together and the files are in order and the report is complete and typed and photocopied and all that stuff? Another employee related the following story about his experience working in External Deposits before moving over to Retail:We were at a staff meeting talking about the problems we were having as a department trying to be all things to all people. And I remembered this thing my boss had said about a year earlier that we have to select the battles that we want to fight, and I took that to mean that we have to decide strategically what we will pursue and what we won't pursue. And I just happened to think about that quote, and so I said, "I think that we ought to be real careful not to bite off more than we can chew." And I got the response: "Well, what do you propose? We do nothing?" So I saw right then and there that I was misunderstood. I said, "No, of course not. I'm saying that we need to select the battles we want to fight and fight those." And being pretty new to the organization then, I felt that it wasn't the right time for me to be forthright about what I meant. When a white man disagrees, he's being strong. He's taken with respect. When a black man disagrees, he's being negative and whiny, militant and kind of like Malcom X. So you have to be really careful about how you walk that line so that you don't get labeled and you don't sabotage your career. Following the interviews, Wilkins was disturbed by what he learned. He was proud of the firm for having reached impressive numbers of minority employees, even at the highest management levels, and he was convinced that diversity in the workforce had helped the bank attain its excellent customer service record. Yet he was acutely aware of the challenges that lay ahead: he believed that neither local nor national markets were being optimally served under the current Sales Unit structure. With competition increasing in both markets, the problem could only get worse. How could these two units work collaboratively in the future? Would Wilkins be able to solve the problem by integrating the functions, or would a top-down restructuring reveal a host of racial tensions brewing beneath the surface