The proportion of African-American managers in financial services companies has actually decreased from 2007 to 20015, according to a Government Accountability Office’s (GAO) report released in November 2017.
The report also outlines best practices to help combat the glass ceiling through changes to companies’ recruitment and retention efforts.
HT to Joe Davidson of the Washington Post who covered the report as well.
The GAO report’s findings
The GAO found some areas of improvement for overall representation of minorities (Asian, Hispanic, African-American, etc.), including that their presence in “first-, mid-, and senior-level management positions in the financial services industry increased from about 17 percent to 21 percent from 2007 through 2015.”
This increased representation in management, however, varied depending upon the race/ethnicity as well as management level. For example, as shown by the figure below,
“representation of African-Americans at various management levels decreased while representation of other minorities increased during this period.”
Representation of Specific Races/Ethnicities in Various Management Levels in the Financial Services Industry, 2007 and 2015
Note: The “Other” category includes Native Hawaiian or Pacific Islander, Native American or Alaska Native, and “two or more races.”
For women, their overall representation remained generally unchanged during this period. More specifically, the “[r]epresentation of women among first- and mid-level managers remained around 48 percent and senior-level managers remained about 29 percent from 2007 through 2015.”
Ways to address the continued glass ceiling within financial services
The GAO’s report noted two recurring challenges in breaching the glass ceiling: recruiting diverse talent and retaining diverse employees.
How to address challenges in recruiting diverse talent
To better recruit talented, diverse employees, the report surveyed a variety of sources and identified some practices designed to improve the hiring process in the financial services industry:
- Engaging in broad-based recruiting. This includes “recruiting students from a variety of academic disciplines, such as liberal arts or science and technology.” Other firms “noted the importance of recruiting at a broad group of schools, not just a small number of elite universities.”
- Establishing relationships with student and professional organizations. Doing so “helps expose diverse students to careers in financial services. Additionally, to help recruit women and minorities who may already have graduated from college or graduate school, representatives of most financial firms and two trade groups described establishing relationships with professional organizations that represent women and minorities.”
- Intentionally recruiting diverse candidates. “For example, representatives from one firm discussed the importance of including diversity in a firm’s recruiting strategy and establishing relationships with schools and organizations that can increase women’s and minorities’ exposure to financial services.”
- Offering programs to increase awareness of financial services. “Several financial firm representatives told us that they establish relationships with high school students to expose diverse students to the financial services field. For example, representatives from one firm described a program that pairs high school students with a mentor from the firm.”
Ideas to help retain diverse talent within companies
Retaining diverse employees and managers is another persistent challenge that must be confronted by companies. The report suggests the following practices to help with retention:
- Establishing affinity groups. “Affinity groups—sometimes referred to as employee resource groups or networking programs—provide forums for employees to gather socially and share ideas outside of their particular work unit.” And firms reiterated “that it is important for affinity groups to have meetings with firm leadership.”
- Training managers and employees on inclusion and unconscious bias. “Training on inclusiveness, emotional intelligence, and unconscious bias were specifically noted by two financial firm representatives as being helpful for both managers and staff.”
- Establishing management-level accountability. A variety of practices were described here, including that “tying senior managers’ compensation to diversity goals has been an effective practice for retaining women and minorities.”
- Offering staff mentors and sponsors
- Implementing family-friendly policies
Tying financial compensation to diversity and inclusion goals
One of the ideas mentioned above is to connect senior managers’ pay to how well they meet the company’s goals on diversity and foster an environment of inclusion. This same concept has also been touted by Uber in a report by former Attorney General Eric Holder.
And this concept is gaining traction because in the corporate world, few carrots better achieve desired results than money. Accordingly, the Holder Report suggested, “incorporating ethical business practices, diversity and inclusion, and other values from Uber’s Business Code of Conduct into its executive compensation program.”
Experience shows that compensation provides a powerful tool for creating incentives for behavior, and reinforcing a company’s values. Many leading companies have incorporated similar metrics into the compensation packages for senior executives as a way of ensuring that their compensation practices reward conduct that is consistent with the cultural environment that they hope to create.
Another aspect of the recommendation advised that, “[k]ey members of senior management could be subjected to a probation period during which they must achieve certain minimum levels of performance in order to retain their compensation awards or to continue employment with Uber.”
For many people, money is the ultimate motivator and if Uber and financial services companies can successfully improve their workplace culture by tying diversity and ethical business practices to financial gains, then it will be exciting to see what ripple effects this may cause across corporate America.
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