Advocates for diversity hiring on Wall Street worry that the financial crisis will derail progress
Increased diversity on Wall Street could be another victim of the financial crisis.
In recent years advocacy groups have pushed up the number of blacks and other traditionally underrepresented minorities being hired and promoted by financial firms. Now, as financial firms downsize or disappear, many of those new hires may find themselves competing with more senior employees in the search for new jobs.
"As we all know, when anything goes wrong in this country, black employees are hit harder than most," said Barbara Thomas, president and CEO of the National Black MBA Assn., which held its annual conference and job fair in Washington, D.C., earlier this month. "There's a saying: 'When America gets a cold, black America gets pneumonia.'"
Diversity hiring in the finance and insurance industries has been on the upswing in recent years. Blacks made up 13.1% of the total industry workforce and 6.4% of managers in 2006, compared with 12.9% and 6.4%, respectively, in 2003, according to the U.S. Equal Employment Opportunity Commission. Hispanics were 7.6% of the total industry workforce and 4.4% of managers in 2006, vs. 6.9% and 4% in 2003.
Looking Outside Finance
Of the top 50 firms for diversity listed by DiversityInc. magazine, 11 were financial firms, with Bank of America (BAC), Merrill Lynch (MER), and American Express (AXP) in the top 10, said co-founder Luke Visconti. Visconti added that the actual effect on diversity when companies merge or downsize will likely vary according to the companies' layoff and retention policies.
Thomas said the Black MBA organization has been trying to refocus on industries less affected by the financial crisis: health care and biotech, global media and entertainment, energy, and food and beverages. "We've been encouraging our members to pursue these industries," she said.
Yvonne Hart, associate director of MBA student programming at the Robert Toigo Foundation, which awards fellowships to minority students at business schools, said her organization has been keeping a close eye on how the financial crisis is affecting minority students. "We always have concerns about that, and definitely those concerns have intensified over the past 12 months," Hart said. "One of the things people are worried about is the increased competition that is going to be out there. There will be more people for fewer seats, and experienced people, who maybe out of desperation might be more amenable to taking a role for a junior person. So what does that do to that junior person out there? It's one of our main concerns."
Women Also Hurt
Hart said her organization has changed its programming in response to the recent turmoil of the past two weeks, adding six sector-focused Web seminars on navigating industries other than investment banking and intensified interview and mentorship guidance. The group also held a town hall-style conference call meeting last week, in which four professionals from the investment banking industry—including two former Toigo fellows—spoke to 130 minority business school students considering careers in finance, giving them insights and career tips on how to move forward in the new financial landscape.
It's not just racial minorities who are concerned. When word broke of Lehman Brothers' bankruptcy filing, the Forte Foundation, which encourages female MBA candidacies, sent out an e-mail to all the women in their database, reminding them of the career resources the group offers. Staffers also tried to contact alums who have been personally affected by the layoffs, and they will be helping them find job leads in the coming months, said Elissa Ellis-Sangster, the group's executive director.
Apart from the direct impact of layoffs, diversity advocates fear many financial firms will eliminate or cut back human resources or diversity programs. Ellis-Sangster said she has already seen the departure of some top diversity advocates at several leading investment firms and worries that there will be more to come in the next few months. "It's more that the people that are gone are the ones who were around for years and knew the place and really got what diversity was about," she said. "There's going to be a lot more scrutiny at these companies. If they keep pulling staff, they can't always justify keeping the programs and partnerships they are supporting."
Much at Stake
Also at stake is continued corporate sponsorship of diversity organizations. For instance, Management Leadership for Tomorrow, an organization that trains black, Hispanic, and Native American young people for business leadership positions, lists insurance giant American International Group (AIG) and investment banks Lehman Brothers, Merrill Lynch, and Goldman Sachs (GS) as among their corporate sponsors. (McGraw-Hill (MHP), publisher of BusinessWeek and owner of investment ratings and research firm Standard & Poor's, is also a corporate sponsor.)
Amanda Roberts, MLT's vice-president for marketing and business development, said she's concerned but hasn't seen any direct impact so far. "We're still being cautious, because we have a number of partners in the financial services sector. But our portfolio as a whole is very diverse, with partners like Google (GOOG), Kraft (KFT), and PepsiCo (PEP)."
Ella L.J. Edmondson Bell, a professor at Dartmouth's Tuck's School of Business who runs Ascent, a nonprofit dedicated to helping multicultural women rise to top management positions, said she is keeping a close eye on how the financial crisis will affect her group's members.
Recent Gains Can Be Lost
Only 6.3% of the U.S. corporate managers are women of color, according to the EEOC. Bell said companies are going to have to work hard to maintain those numbers. "The last to enter are the first to leave," she said. "If I'm at the bottom of the pecking order because of when I've come into the company, then guess what? That makes me more vulnerable, and women are more vulnerable, particularly women of color."
Bell said the woman who oversees diversity programs at one New York bank has told her she is trimming programs. "It's because of the economy," Bell said.
Bell is making the rounds at companies to make sure they maintain their diversity programs. She and her staff will soon talk to executives at companies such as American Express and PepsiCo about how her group can continue to work with them, and they plan to visit more companies in the coming weeks.
"In this environment, companies are going to have to be very, very savvy and very smart in terms of maintaining talent in their pipeline that is not just white males and even white females," she said. "If you want to really be ahead of the curve in your workforce, you have to pay attention to demographics."