Even though Wall Street investment banks have made diversity a top priority for the past decade, it may take several more years before women and minorities gain a foothold in the ranks of senior management.
That forecast comes from industry experts, investment bank diversity chiefs and trends in hiring data.
Minorities and women continue to be squeezed in Wall Street’s promotion pipeline when it comes to attaining senior positions—those at the managing director level and above that reaped multimillion-dollar bonuses this year.
On an upbeat note, Barry said she would be surprised if Merrill Lynch’s diversity in the middle to senior management ranks doesn’t mirror in five years the composition of the company’s board of directors. Its board includes several women and minorities, including Chairman Stan O’Neal, who is black.
For nearly a dozen years, Barron Harvey has watched Wall Street put its best foot forward mentoring, recruiting and hiring black students at Howard University in Washington D.C.
Harvey has a front row seat as the dean of Howard University’s business school. While there’s plenty more to do, he said Wall Street companies have done a good job of increasing awareness among undergraduate and graduate students about careers in investment banking.
Wall Street companies say they put considerable effort into building diversity within their ranks. “Our commitment to diversity is unparalleled,” No. 2 investment bank Morgan Stanley says on its Web site.
Not to be outdone, Goldman Sachs Group Inc. , the world’s largest investment bank, says its work force represents 150 nationalities and speaks 84 different languages. “. . . At Goldman Sachs, diversity is a business imperative.”
From 1993 through 2004, overall diversity at the management level in the financial services industry changed only slightly, the U.S. Government Accountability Office said in a report this year. African-Americans, for example, only increased their representation in management a percentage point to 6.6 percent. White females were at a little more than one-third.
In 2004, the share of management positions held by white women, for example, varied from a high of 41 percent in the insurance sector to a low of 27 percent among securities firms, the GAO said. Minorities held 15 percent of management-level positions in the brokerage industry, compared to 18 percent at commercial banks, the GAO said.
A 2005 diversity survey commissioned by the Securities Industry Association showed that women accounted for 44 percent of the industry’s work force, up from 37 percent in 2003. Women account for 46.4 percent of the total U.S. civilian work force, according to the U.S. Labor Department.
“The fact that the percentage of white men is decreasing and the representation of women of all races is increasing is an optimistic sign that the industry is moving toward parity with the general work force,” the SIA said.
Still, Adam Klein, an attorney at Outten & Golden LLP in New York, said there are several reasons why minorities and women may not see investment banking as a good fit. For one, he said they may not get paid the same as their white male counterparts for doing the same job.
Klein also said informal networking, such as playing golf and strip bar outings—also prevent equal treatment because minorities and women may feel uncomfortable in those settings.
“There’s no way to monitor these because they operate outside the formal constraints of a company’s diversity program,” he said.
Others cite a lack of flexibility.