Published: Aug 19, 2014
Although Wall Street is still considered, in some corner cubicles, to be an “old school,” “Waspy,” “predominantly Caucasian male-dominated” industry filled with “ex-Ivy Leaguers,” it has slowly been growing more diverse with respect to gender, race, and sexual identity. In fact, in the past five years, the industry has gone from not wanting to even talk about diversity issues to downright blasting them over loudspeakers. And if Vault’s latest Banking Survey results are any indication, Wall Street has indeed been making a fair amount of progress when it comes to diversity recruiting and fostering a more inclusive, accepting work environment.
Take the below chart. It shows the average ratings, on a scale of 1 to 10, that Vault’s Banking Survey participants have given their firms in various areas of diversity recruiting in the past five years. You’ll see that, across the board, in every category (diversity with respect to women, racial/ethnic minorities, GLBT individuals, individuals with disabilities, and military veterans), ratings rose versus last year. With respect to women, scores rose 1.5 percent; with respect to racial/ethnic minorities, they rose 2.1 percent; and with respect to GLBT individuals, they rose 2.3 percent. (This past spring and early part of the summer, nearly 3,600 banking professionals at the top investment banking firms in North America took part in our survey).
Further, if you compare the results from Vault’s 2010 Banking Survey versus its 2014 survey, female diversity scores rose by 8.1 percent (7.52 to 8.13), racial/ethnic diversity scores rose by 7.7 percent (7.58 to 8.16), and GLBT diversity rose by an impressive 12.1 percent (7.20 to 8.07). Looking a bit deeper into these increases, you’ll see that there were large jumps in all categories in 2011 (which happened to be the year the New York State Senate approved a bill that legalized same-sex marriage).
What all this means is that Wall Street is perhaps catching up with other industries when it comes to diversity and promoting open, inclusive cultures. Indeed, numerous survey participants told us that their firms are “committed to fostering the growth and success of a diverse population through mentoring and training programs and affinity networks,” that “diversity is typically at the top of the hiring agenda,” and that “hiring managers understand the effectiveness of diversity and the need for ideas coming from different backgrounds, cultures, and experiences.”
More specifically, here’s one bulge bracket banker who took the Vault survey explaining diversity at his firm: “We’re focused on finding the best person for every job and creating an atmosphere in which they can succeed, regardless of the person's background. As a gay man with lots of friends at other financial services firms, I feel like there isn't another big firm that’s doing as much in the [GLBT] space—and I'm proud to work in such a positive environment. My team not only goes to all of the [GLBT] network events, but also those hosted by the Asian network, women's network, and all of the other affinity groups. Interestingly, I've only had female bosses during my time on different teams throughout the firm.”
Here’s another banker expressing similar sentiments, albeit with one caveat: “I’m proud of our efforts to promote GLBT rights. We fly the rainbow flag outside our office, and for us to come out so publically in support of a still-controversial issue really means something. However, I work on a sales team with four senior salesmen and no women. We need more women in senior positions.”
Indeed, despite scores of survey participants telling us that there are a lot of female analysts and associates throughout their firms (“My firm has really revamped its focus on diversity in the workplace and as a woman I have really noticed this,” one trader at a major Wall Street bank told us. “There are a number of great networking and other opportunities for women to gain senior-level attention.”), common survey comments also included versions of “we have difficulty retaining women,” “there aren’t a lot of senior women at the firm,” and “although we believe in diversity and are trying to be more successful in this regard, we're still only focused on it at the junior level.”
Another common comment, one which we received from participants at all sizes of Wall Street firms, from boutiques to bulge brackets, but primarlly from Caucasian males, was a version of this: “we focus too much on diversity.”
Here’s a bulge bracket banker explaining the diversity dilemma as he sees it: “The firm is over-committed to hiring a diverse population. They sacrifice quality and good fit in candidates by shortcutting the hiring processes and hyper-focusing on schools and conferences that have a high population of ‘diversity’ candidates. The number of individuals that later leave or are managed out of the firm based on performance ends up being a waste of everyone's time. A more realistic approach to hiring needs to happen.”
And here’s another big-firm banker on the subject: “It seems that the firm's diversity policy limits the ability for men to progress in the company. If a man and woman are both eligible for a promotion, it will almost always be given to the woman. Employees that meet diversity targets are paid better and retained better than those that do not.”
Yet another banker, who works at one of the so-called boutiques on the Street, puts it like this: “We sacrifice intelligence for diversity.”
In any case, be sure to check back in two weeks when we’ll be releasing the new Vault Banking 50, which ranks those firms deemed the “best to work for” in investment banking. That same day we’ll also be releasing our Quality of Life and Diversity Rankings, which ranks investment banks in categories such as compensation, hours, business outlook, and training, as well in the five diversity categories mentioned above.
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Goldman Sachs’ ‘Protected Saturday’ Policy Might Be Working After All
Are Boutiques Replacing the Bulge Bracket as Most Prestigious on the Street?
How Gay-Friendly Are the Big 4 Accounting Firms?
Last fall, in the wake of Goldman Sachs’ announcement of its new policy preventing young bankers from working on Saturdays (unless working on a live transaction), I wrote about Why Goldman Sachs’ New Saturdays-Off Policy Won’t Work. Now, some nine months later, after several other banks have followed Goldman’s suit and enacted their own “Protected Saturday” policies, I’m happy to report that I might’ve spoken too soon.
Long before the subprime mortgage-backed securities hit the fan, a handful of relatively small investment banking firms, often referred to as boutiques, regularly competed with the likes of Goldman Sachs and Morgan Stanley for talent. There was Stephen Schwarzman’s Blackstone Group, perhaps best known for its private equity offerings, although for decades its advisory unit has been well known for winning big deals and recruiting top-tier talent from top-tier schools.
Although accounting isn’t the first industry you think of when you think of liberal, open, accepting workplaces, it’s now relatively open and accepting of minorities into its ranks, and even more gay-friendly than you might guess. Which doesn’t mean there’s still not a lot of progress to be made when it comes to diversity in the industry, both at the Big 4 (Deloitte, PwC, KPMG, and Ernst & Young) and at the mid-sized accounting firms.