With a recovery on the way (despite occasional bumps and bruises), it's time for a diversity update.
Have financial institutions revived their efforts to increase the number of professionals among under-represented minorities and women? Is there a steady pipeline of blacks, Latinos, Asians and women joining banks, hedge funds, brokerage firms, asset managers, private-equity firms and insurance companies? Is diverse talent coming to Wall Street in growing numbers? Are they starting out in fast-track roles with ample opportunity to become vice presidents and senior managers?
In financial services, what grade does diversity as an agenda topic deserve in 2011?
Did progress slow down during the crisis and is stalled while the environment is better? Are institutions taking advantage of talent flow made possible by the Consortium and other programs--MLT, Toigo, InRoads, SEO, Jumpstart, NBMBA, NHMBA or 85 Broads?
Granted, diversity seems sometimes to be a cyclical phenomenon. Financial institutions devote time, attention and energy to open their doors, and then something impedes progress or slows it to a crawl. Attention is diverted, or energy dims. Mergers, reorganizations, and restructurings can douse enthusiasm. So can bad corporate performance, indifferent management, or a corporate culture that caters to nepotism and cliques.
Most financial institutions made laudable progress in the 2000s. But then came the financial crisis. All of a sudden, diversity committees were tabled, didn't have time to meet or were no longer a priority. The Executive Vice President, who convened a monthly meeting to address topics raised by senior women or senior bankers of color, suddenly cancels sessions. The investment firm that supported pipeline organizations and advertised everywhere its support of such programs suddenly withdraws sponsorship.
Senior managers focused on the survival of institutions. They focused on reviving sagging businesses and attracting capital and clients. Many firms curtailed recruiting--sometimes because resources were gone, other times because competent leaders of diversity efforts were no longer around.
Through it all, however, a few firms, worthy of praise, stuck through. They fought for their lives to survive a downturn and remain viable, but diversity remained a priority. The best firms understand that diversity is not a short-term project. They believe in the long-term payout.
As many financial institutions have rebounded and put turmoil behind them, has diversity revived, too? Is it an important, legitimate part of the corporate agenda?
In 2011, major financial institutions don't dismiss the agenda. Many have permanent programs in place. Smaller firms sometimes neglect its importance, because they are struggling to grow and expand and may not appreciate the value of diversity. Or they may not yet value talent, input and experience from those with different backgrounds.
In 2011, major institutions are likely rearranging the diversity agenda in various ways. Most--like a Goldman Sachs, Wells Fargo, New York Life, Citi, or Bank of America--hire diverse talent into entry-level programs in satisfactory numbers. They hire Consortium and Toigo MBA graduates. They recruit at HBCUs, and they sponsor programs to encourage women to seek opportunities in finance. They examine whether they can improve recruiting among all groups--blacks, Latinos, gays, women, and Asians.
But in 2011, larger institutions notice something else that requires fixing. Some worry about what to do; some are not sure what to do. They say they need to replenish diverse talent at middle and upper levels. They say it and know it. They just aren't sure of a solution. Where are the Latino senior associates, the black vice presidents or female heads of trading desks, all of whom will one day become managing directors, sector executives, presidents of international divisions or chief financial officers? Who will be the next Kenneth Chenault?
The financial downturn depleted the ranks of mid-and-upper-level diverse talent at many institutions. Some were dismissed, some retired, some reassigned to roles with less responsibility, and many others opted out, electing to explore other less-pressured areas. At some banks, brokerages, investment firms and funds, there are fewer people of color in mid-to-upper roles today than five years ago.
Why have they been successful in hiring into entry positions, but watch the numbers at higher echelons? Some institutions whine they can't find and retain mid-level talent. They complain, aren't sure what to do, and stumble in forming strategies to do something. Other institutions take action and do something.
Citi, for example, sponsored the Consortium Finance Network event in Feb., primarily because it hoped to identify experienced diverse talent, people whom they can hire now at senior-associate and vice-president levels in many areas of corporate- and investment-banking. JPMorgan has appointed recruiting officers to find diverse talent, who can move laterally onto trading desks, into research spots, into operations and financial management, or into corporate-finance roles.
The crisis took its toll. It could have been a traumatic memory for many early-career professionals from under-represented groups. So the challenge to boost numbers in the upper ranks might continue. Many MBAs who were once willing to do whatever it takes to secure a position in private banking, private equity, mergers & acquisitions, equity research or derivatives trading may have second thoughts or may have discovered other appealing opportunities, where they can deploy the same skills.
Others may no longer want to guess at or pull their brains to figure out the intangibles necessary to move up the ranks. Hard work, productivity, deals, and new clients, they learned, don't always guarantee promotions to managing director or sector head. Networking, special ties, and "the right vibes" are also factors or variables--based on subjective impressions of performance.
Those starting out today may also be subject to more pressure to produce and generate revenues faster than in years before. At many companies, there is no more apprentice period or chance to learn the business first.
For some MBAs, there could be a looming fear of another market collapse around the corner, an interruption that would once again jeopardize job security and long-term careers. Some from under-represented groups might prefer the security of other industries or opportunities--especially after an investment of two years in business school.
But some in under-represented groups are just as motivated and interested as ever. They want long-term careers in private banking, venture capital, and corporate finance. So the talent is out there.
In finance circles, institutions finally achieved, say, a B+ grade in improvements in the 2000s. That grade slipped to C- or D at many organizations during the two-year crisis period. A renewed interest in trying to do the right thing merits a B- grade. Diversity still appears cyclical. Some firms keep the momentum going, others still need the occasional push or thrust.