In today's turbulent economy, employers are looking to creative in-house strategies to drive diversity.
The deepening financial crisis may be causing Wall Street to tighten its purse strings, but it seems as if workplace diversity is still good for business.
For more than a year, corporate spending has come under increased scrutiny as firms look to cut costs. And in a post-bailout economy, all areas of business operations are feeling the pinch. Despite having fewer dollars for diversity initiatives, however, many in the financial industry are working hard to maintain legal departments built around inclusion. They’ve just gotten more strategic in how to go about it. Rather than footing the bill for one-day diversity seminars and pricey off-site summits, corporations are increasingly relying on more innovative, low-cost measures to promote their diversity practices.
At UBS, that commitment has led to hosting lunch-and-learns, supporting the activities of affinity groups, conducting webinars, and holding in-house speaker series featuring the company's diversity leaders. "We have vibrant employee networks that are very active," explains Rebecca E. White, managing director, senior counsel, and head of corporate legal at UBS Investment Bank. "We have All Bar None, which is the women's network; a cultural-awareness network; LEAD for employees of African descent; the Pride Network, a forum for discussion of lesbian, gay, bisexual, and transgender [LGBT] issues; and Working Parent Network, the most recently established [group]. And what we’ve found is that ongoing employee engagement with those networks is more important than ever now in this challenging business environment."
Indeed, after a long, brutal year that witnessed the fall of Lehman Brothers, the Bear Stearns buyout, AIG's near collapse, and the Citi/Wells Fargo battle over Wachovia, the financial-services landscape has been forever changed. Amid budget cuts, suspended 401(k) matches, and negative growth, managing a workforce is critical. It's a reality that prescient companies aren't taking lightly.
"Clearly, people are concerned about jobs and about how compensation will be affected, and they're looking for leadership," notes White, who is active in driving the legal and compliance department's diversity initiatives worldwide. "We've held town halls with company managers to reassure people, and to let them know what direction the firm is taking. When employees have access to senior leadership, it makes them feel invested."
Recruiting During a Downturn
With the tremendous amount of restructuring taking place in the financial sector, hiring has slowed considerably, leaving those who spearhead diversity efforts at a crossroads. How can they improve minority, women, and LGBT representation in their company's law department at a time when overhead is clearly an issue?
During the first quarter of 2009, 82 percent of large financial institutions plan to make no change at all to the size of their workforce, according to the Robert Half International Financial Hiring Index , a national survey of chief financial officers at accounting and financial companies.1 That's good news for those already at corporate legal departments. But with so few companies seeking new hires, the prospects seem dour for others who may have been sidelined after last year's string of "shotgun mergers."
"We never stop looking for talent, during stronger or weaker economic climates, especially diverse attorneys."
–Heidi Stam
Not entirely, posits Anthony Greene, a director at Herbert L. Jamison & Co. LLC, an insurance brokerage with offices in New York, New Jersey, Florida, Illinois, and Washington, D.C. "There's going to be a new approach to regulating the financial-services industry, which will create opportunities in risk management and risk litigation," he explains. "That's not a space where I see a lot of women and minority employees today. The extent to which they are proactive and go after opportunities is going to make a difference. Now is the time to network and take advantage of what's coming."
Heidi Stam, managing director and general counsel of Vanguard, agrees, noting that talented diverse candidates will continue to be sought after by companies navigating the current downturn and those looking beyond it. "We never stop looking for talent, during stronger or weaker economic climates, especially diverse attorneys," Stam shares. "We take a long-term view. We expect to come out stronger and more competitive."
Maximizing Diverse Talent
In the interim, Vanguard, like most firms these days, is concentrating its diversity efforts on employee development and retention. At the core of this effort is the company’s much-touted professional mentoring program, in which more than half of all participants are women or from a diverse racial or ethnic background.
"A lot of what makes it easy to have a great diversity initiative isn't really costly at all," explains Stam, who, as a member of Vanguard's senior executive team, is actively involved in the company's diversity programs. "Are you providing opportunities? Promoting inclusion? Developing talent? That's all done with good managers. If you're not mentoring diverse talent, you're not being successful."
In today’s tough business environment, an effective internal mentoring program is proving to be a firm's greatest asset in fostering an inclusive corporate culture. The ubiquitous and oft-cited "diversity training," while valued as a larger company objective, is far too abstract for many employees, according to research presented in MCCA's report Mentoring Across Differences: A Guide to Cross-Gender and Cross-Race Mentoring.2 Most employees are looking for a more personal, one-on-one experience through mentoring that lets them interact more closely with higher-ups.
"In the legal and compliance department, we're developing a formal mentoring program, with a particular focus on minorities and women," White shares. "It's important because there will be a light at the end of the tunnel, and firms will have to demonstrate that they are best in class, that there is a meritocracy, and that they're great places to work."
Corporate mentoring also serves as a strategic avenue for advancement. It not only gives diverse employees more visibility, but also allows them to build relationships and increase their spheres of influence on the job.
"In this environment, we've got to make talent. Why not look right here?" questions John Polanin, head of compliance for wealth management US at UBS Financial Services, where he also chairs the diversity committee for the legal and compliance division. "We get our managers to nominate people of diverse backgrounds and partner them with senior members. They talk about how to succeed at UBS, or how to succeed as a compliance officer or a lawyer. The mentors get a sense of what matters to the rank and file, which helps them be better mangers. It's an investment we think is well worth it." This diversity mentoring program is in its second year, and has been expanded to include lawyers and compliance officers stationed in the branch network in addition to the home office, which is "yet another dimension of diversity," Polanin adds.
Other big names in financial services have also created programs to cultivate in-house talent. For instance, Merrill Lynch's Management Readiness Program is designed to prepare junior-level employees for management roles. Morgan Stanley is committed to developing its next generation of leaders through its minority and women business exchanges. Goldman Sachs’s corporate mentoring program provides resources and guidance for those looking for career-management strategies.
Anthony Greene, Rebecca White, and John Polanin
Essential to the Mission
Much of the conversation surrounding diversity has focused on its return on investment, and how to measure that benefit effectively. In the past, some diversity efforts involved little more than filling quotas. The problem with that approach is that numbers don't ensure inclusion at all levels of an organization. Moreover, they have little to do with whether corporations create environments that are welcoming to diverse populations.
As early as 1999, experts had estimated that 70 percent of all new entrants into the workforce would be women and minorities.3 And many studies link inclusion programs to retention and sustained leadership development, essentially cementing the business case for diversity.4 Today, it would be difficult to identify top-level managers who aren't pushing for structures, procedures, and policies to be implemented that will hard-bake diversity and inclusion into their corporate cultures.
Nevertheless, the challenges of managing diversity exist just below the surface, from getting staff buy-in to increasing representation in the C-suite. Those challenges are compounded during a tumultuous economic period, as diversity leaders find themselves charged with having to address employee uneasiness and, consequently, low morale.
"Within my department, we have adapted our diversity programming to reflect the current environment," Polanin notes. "We have quarterly panel discussions to talk about different job profiles and to answer employees' questions. In the past, we've had people talk about doing international assignments and transitioning into other departments. This year, those may not be as relevant as a discussion on finding the next career opportunity or managing your career long-term.
"We believe that through regular meetings, employees will feel like they are part of the process, and not like we are just going through the motions," he continues. "If people see that we value diversity in a down market, then we hope to retain their loyalty in an up market."
Maintaining a Competitive Advantage
By incorporating diversity practices into their long-term business goals, organizations have the added advantage of leveraging what their employees bring to the table. With nearly 46 percent of the revenues of S&P 500 companies coming from outside the United States,5 having a workforce composed of people with varied experiences and perspectives is a smart business move. "As the leadership of the corporate world changes, human nature remains the same," states Glenn B. Fischer, vice president of wealth management at Smith Barney. "We gravitate toward those who show us empathy and those who we feel understand us. Often, having a cultural connection is that difference between a new client and a missed opportunity."
The challenge for the truly competitive company, then, is determining how to enhance its diversity footprint in an ever-expanding global marketplace–and, for the near future at least, doing so in a turbulent economic cycle.
As companies brace for a bumpy ride ahead, Greene believes it’s important for diverse employees to recognize the ways in which they can contribute to the success of their organizations. "At the root of diversity is having diversity of thought to solve problems," Greene explains. "Minorities and women bring a unique set of perspectives and experiences as firms are setting their strategic direction. There will be structural changes, and firms will be moving into new lines of business. Smart organizations are going to value a workforce that can bring new and different ways of doing things, and that will be at the root of competitive advantage over the next few years."
Just how much damage the roiling financial markets will leave in their wake remains to be seen. But as companies re-evaluate their priorities, it's clear that instead of abandoning diversity initiatives for the sake of their bottom line, many recognize that diversity is the key to improving it.
"Once we emerge from this financial crisis, it’s going to be critically important that we have the right talent in place and are poised to succeed," White concludes. "There is absolutely no question that we're going to have to be ready to leap on whatever the next boom area is, with a diverse workforce raring to go." DB
Notes
1 See Robert Half Management Resources, Press Release, CFOs Plan Modest Financial Hiring in First Quarter: Survey Finds Most Active Hiring Projected at Largest Companies , (Dec. 2, 2008), available at www.roberthalfmr.com/PressRoom?id=2363.
2 See Mentoring Across Differences: A Guide to Cross-Gender and Cross-Race Mentoring (2003), available at https://www.mcca.com/wp-content/uploads/2017/04/Book7-Yellow.pdf.
3 See Federal Communications Commission, Career Advancement Subcommittee of the Advisory Committee on Diversity for Communications in the Digital Age, Workplace Diversity: A Global Necessity and an Ongoing Commitment (June 14, 2004); Howard N. Fullerton Jr., Labor Force 2008, U.S. Bureau of Labor Statistics Monthly Labor Review (November 1999), available at www.bls.gov/opub/mlr/1999/11/art3full.pdf; Hewitt Associates, Preparing for the Workplace of Tomorrow (February 2004), available at www.hewittassociates.com/_MetaBasicCMAssetCache_/Assets/Articles/workforce_tomorrow.pdf.
4 See, e.g., Cedric Herring, Does Diversity Pay? Racial Composition of Firms and the Business Case for Diversity (December 2005), available at www.allacademic.com/meta/p_mla_apa_research_citation/1/0/1/7/9/p101792_index.html; Catalyst, The Bottom Line: Connecting Corporate Performance and Gender Diversity, available at www.catalyst.org/file/44/the%20bottom%20line%20connecting%20corporate%20performance%20and%20gender%20diversity.pdf; see also Nancy Doolittle, Diversity in leadership makes an impact on the bottom line, Cornell professor says in NYC panel discussion, WorkLife at Cornell, Office of Human Resources, Cornell University (June 28, 2007), available at www.ohr.cornell.edu/commitment/publications/Jobs_Articles/WorkLife_Diversity_Leadership.pdf.
5 See MarketWatch, Secrets of the S&P 500 (April 6, 2007), available at articles.moneycentral.msn.com/Investing/InvestingForIncome/SecretsOfTheSP500.aspx. See also Paul J. Lim, Company Profits May Soar on a Tail Wind From Abroad , U.S. News and World Report (July 8, 2007), available at www.usnews.com/usnews/biztech/articles/070708/16earn.htm.
Chana Garcia is a freelance writer and editor based in New York City
From the March/April 2009 issue of Diversity & The Bar®