Federal Report Finds Regression for Black Managers in Financial Services Industry

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The GAO examined diversity trends in the financial services industry from 2007 through 2015. It found good news and bad.

Lumped together, the representation of African Americans, Latinos, Asians and others in lower-, mid- and senior-level management positions in the financial sector increased from 17 percent to 21 percent in the period.

Before diversity advocates cheer, they should read on.

While overall diversity increased, the percentage of black managers dropped. Meanwhile, at 48 percent, women were close to parity with men in lower- and mid-level management slots. But among the top positions, the glass ceiling largely prevailed. Upward mobility to senior-level management remained stagnant for women, at about 29 percent over the eight-year period.

The GAO drew from Equal Employment Opportunity Commission (EEOC) data. The agency collects information annually from private employers with at least 100 staffers, including federal contractors. In a report on financial sector diversity seven years ago, the GAO found that “without a sustained commitment among financial services firms to overcoming challenges to recruiting and retaining minority candidates, limited progress would be possible in fostering a more diverse workplace.”

But even limited progress escaped black people seeking power within the financial sector.

“Since 2007, Asians had the largest gains, increasing their representation among managers from 5.4 percent to 7.7 percent,” the GAO reported. “Hispanics made smaller gains. In contrast, the proportion of African-Americans in management positions decreased from 6.5 percent to 6.3 percent.”

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Beyond being asked for the research by the Democratic legislators, why did the GAO, a congressional watchdog agency that generally focuses on federal agencies, look at the financial services sector? The agency examines a wide variety of subjects “so long as there is some connection to a federal oversight role or federal dollars,” said GAO spokesman Chuck Young.

“Firms of a certain size are required to supply workforce information annually to the EEOC,” added Daniel Garcia-Diaz, the GAO’s director of financial markets and community investment. “In addition, Dodd-Frank Act requires financial regulators to promulgate standards for assessing diversity among regulated financial institutions. And finally, such firms can serve as federal contractors — some fulfilling regulatory requirements for federal business with minority- and women-owned businesses. So, it’s an area with multiple federal connection.”

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While “diversity” is widely touted these days, that is not enough. The report points out that inclusion is key. That means power in top-level, decision-making positions.

For more than a decade, “researchers and the federal government have recognized that a focus on inclusion in the workplace is an important component of creating and sustaining a diverse workforce,” the GAO report said. “For example, the Office of Personnel Management notes that optimal performance is based on both diversity and inclusion.”