The Black Lives Matter (BLM) movement has spotlighted racial injustice and inequality that exists across the country, including in workplaces and executive suites in far too many industries. Perhaps the most glaring dearth of Black employees and executives exists in the most powerful and wealthiest firms on Wall Street.
A series of reports in the wake of the nationwide reckoning on race following George Floyd’s homicide have laid the systemic problems faced by Black Wall Street employees in stark relief.
The Statistics Are Abysmal
The underrepresentation of Black employees at all levels within Wall Street firms has long been a problem. This may help to explain why so few banks on Wall Street publicly share their full workforce data. The available data, however, reveals how few Black employees work on Wall Street. For example, the Washington Post reported late last year that:
- At JPMorgan Chase, the country’s largest bank, with $2.7 trillion in assets, Black employees account for just 3.7% of senior executives in 2018;
- At Wells Fargo, Black employees made up 4.1% of senior roles in 2018;
- At TD Bank, there was one black woman among 72 senior executives in 2015. There were no black women in its top ranks in 2018 out of 42 senior executives overall;
- Capital One’s senior executive ranks included only 2.6% of Black employees in 2018;
- At Morgan Stanley, the share of Black executives rose to 2.2% in 2018.
And unfortunately, more recent statistics do not show much, if any, meaningful progress in increasing diversity within the upper ranks of these banks. CNBC recently noted that “[a]t Goldman Sachs, just 2.7 percent of executives, senior officials and managers are Black. At Citi, 2 percent of executives and senior managers are Black.”
Discrimination Lawsuits Against Wall Street Firms On The Rise
For years, Black employees have fought against unequal pay, lack of promotion opportunities, and hostile work environments on Wall Street and against major banks. By way of example, in 2017, Wells Fargo entered into a $35 million settlement with Black financial advisors who alleged that a glass/concrete ceiling on promotions existed for them.
In 2018, JPMorgan Chase reached a settlement for approximately $24 million to resolve a lawsuit brought by Black advisors. As reported by Investment News, the lawsuit claimed that JPMorgan would send “white advisers to wealthier places while assigning black colleagues to less lucrative branches and denying them opportunities. They had few licensed bankers to support them, were mostly kept out of a program for richer clients and got paid less[.]”
Perhaps most notably, Bank of America’s Merrill Lynch was forced to pay $160 million in 2013 to resolve claims by its Black employees. The complaint alleged that Merrill Lynch “had a segregated workforce, including policies that steered black brokers into clerical positions and reassigned their accounts to white workers[,]” according to Reuters’ reporting.
And earlier this year, Morgan Stanley’s Head of Diversity, Marilyn Booker, sued the firm and its top executives. Ms. Booker asserts that Morgan Stanley fired her after 26 years of service because she pushed “a plan that she said would help promote career advancement for Morgan Stanley’s Black employees. The suit alleges that Booker’s firing reflects a pattern of widespread discrimination against Black and female employees at the investment bank.” Morgan Stanley has denied the allegations in the lawsuit. Until Wall Street can demonstrate real progress on racial diversity, these types of discrimination lawsuits will continue to be necessary change agents.
What Can Be Done?
Tone At The Top Is Key
Wall Street executives, up to an including the CEO, must be enthusiastic supporters of greater racial diversity within the company and in its top ranks. Without this clear commitment, it’s doubtful that others will make it a priority.
On the other hand, where the CEO and top leaders make it clear that diversity is both important and will also help the company grow and succeed, then the rest of the workforce is far more likely to work towards that goal. Tone at the top matters.
Tying Bonuses To Diversity And Anti-Discrimination Initiatives
Wall Street can take a page out of Silicon Valley’s playbook and start linking executive bonuses to how well these senior leaders advance and champion the company’s diversity and anti-discrimination policies. And doing so makes sense because if an objective is important, then the company should ensure (1) its employees know about it and (2) that their performance in meeting this goal will be measured along with the company’s other core values and targets.
On Wall Street of all places, few carrots better achieve desired results than money. Accordingly, banks can adopt the recommendations made to Uber, which incorporates “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.
Effective Mentoring Programs
A huge predictor in whether a candidate ultimately receives a top-level position can be the opportunity to talk with, learn from, and make lasting connections to the senior leaders in the company, and this is particularly true on Wall Street. Unless the bank has a robust program providing Black employees with access to and personal connections with senior leaders, then it will continue to be very difficult for these employees to win the support of and vocal advocacy from these senior leaders that are needed to get the promotion.
Companies with more diverse top leadership often have strong mentoring systems in place to foster these important connections. Similarly, companies that are committed to using (and listening to) a diversity task force or diversity manager tend to see more positive, significant increases in management diversity.
If You See Something, Say Something
The burden of assuring equal treatment at work too often falls squarely on the shoulders of the employees who are discriminated against. While White employees may agree that a more diverse leadership team is necessary and will help the company, it is not enough to simply hope this happens. Rather, White employees must call out and object to discriminatory statements, jokes, and stereotypes, unfair standards or criteria used when making selection decisions, and other forms of unequal treatment. Only then will all employees begin to see that discrimination at work will not be tolerated, and only then can real change occur.