Diversity, Equity and Inclusion (DEI) has been one of the key corporate themes of recent years, but female CEOs remain a rarity at America’s largest banks.
The issue of C-suite diversity has been thrust into the spotlight following news that James Gorman is planning to step down as CEO of Morgan Stanley
Attention has been focused on the three executives who run Morgan Stanley’s main business lines as potential candidates to succeed Gorman. All three are men.
So, what needs to happen to increase diversity? Companies, including those in the banking sector, need to include DEI initiatives as part of their performance/score card, according to Luisa Montoya, CEO of DEI consulting firm Diversity Matters. If that happens “we could see an improvement towards achieving this key [diversity] goal,” she told MarketWatch.
At the end of 2021, the U.S. banking industry had more female than male employees, but fewer than 5% of publicly traded banks had female CEOs, according to data from S&P Global Market Intelligence. Of the 10 banks with women at the helm, the largest is Citigroup
which appointed Jane Fraser its CEO in March 2021.
“ “It is imperative that they understand that DEI is an integral part of their strategy.” ”
Set against this backdrop, banks should include diversity equity and inclusion initiatives in their near- and long-term objectives and goals, according to Montoya. “In that way they can represent the workforce accordingly, not only in the U.S. but worldwide,” Montoya told MarketWatch. “It is imperative that they understand that DEI is an integral part of their strategy.”
“Even though the description of DEI is new, the concept has been practiced for years, and data validates its importance for the success of all the organizations,” added Montoya, the former head of diversity, equity, and inclusion engagement at Santander U.S.
In a report released in 2020, Deloitte said that in order to increase the diversity of their candidate pools, financial-services firms need to recruit more women to jobs in the areas CEOs have historically come from, such as business, finance and operations. “This can be part of a company’s comprehensive effort to achieve greater gender diversity in leadership and throughout the organization to better reflect their workforce, customer base and society as a whole,” Deloitte said. “It will likely require some significant changes in culture, talent development and succession planning.”
In 2021, a McKinsey & Co. report highlighted gender and race gaps in North American financial services. “While women have a slight edge at the entry level (comprising 52% of the industry workforce), their representation falls off at every step of the corporate pipeline,” the report said. “This slide is particularly steep for women of color (Black, Latina, Asian): from entry level to the C-suite, the representation of women of color falls by 80%.”
Also in 2021, the Committee for Better Banks released a racial equity report that urged the banking industry to widen its talent pipeline and increase training opportunities for diverse employees. Banks should also tie executive pay to diversity metrics, with transparent enforcement, the report said.
Steve Gelsi and Emily Bary contributed to this report.