It's confession time: I've been a fan of Sallie Krawcheck since her Sanford Bernstein days. Under her leadership, it was one of the few Wall Street firms that realized an "independent" research department was not independent if it took its marching orders from the investment banking side. Krawcheck knew that the only thing a research firm has to sell is its reputation for honesty, integrity and intelligence. She guarded Sanford's reputation like a mother lion. When then-New York attorney general Eliot Spitzer sued to create a true Chinese wall between the research and banking sides of the biggest financial firms, Bernstein emerged unscathed in no small part due to Krawcheck's principled stand.
Krawcheck's willingness to take an ethicalalthough less profitablestand is one of the qualities that research now shows is a particular strength of women leaders. So is consensus building and negotiation, patience and long-term thinking. That is why diversity of senior teams is now widely acknowledged as something of a secret sauce.
A recent study on diversity at public companies by economist Sylvia Ann Hewlett's Center for Talent Innovation discovered that firms with a diverse employee base and senior leadership team were 45% more likely to report improved market share in the past 12 months than non-diverse companies. Wealth management firms know this. That's why they're doubling down on recruiting women and minorities. And they've been successful at finding them. Raymond James boasts that one-third of the trainees that it hires today are women.
The larger problem is that firms can't hold on to them. Even at the senior level, women who make it to the top don't seem to last. Krawcheck saw it first hand: "I truly believe there is real interest and desire to have diverse individuals in senior roles. But when push comes to shove, particularly during a crisis, we all default to people like ourselves, and that's what happened at the end of the day," she told OWS.
We're all tribal. Right now in wealth management, that tribe is white, middle-aged men. These well-meaning executives don't realize they've created a culture that can be exclusionary of non-white, non-male people because they don't realize they have a "culture." Leadership needs to analyze the environment it's created and take a closer look at how it is being unconsciously but continuously propagated, rather than focusing all its efforts on finding diverse job candidates. Failure to do so will prevent it from leveraging one of the most profitable business strategies availablecreating truly, deeply diverse organizations.
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