The Wall Street Journal - 28.10.2019

THE WALL STREET JOURNAL. Monday, October 28, 2019 |R15

MIKEL JASO

JOURNAL REPORTS | DIVERSITY & INCLUSION

BYMAITANESARDON

T

he financial in-

dustry, once seen

as a stronghold of

older, mostly

white men, now

leads the S&P 500

index in terms of

overall workforce diversity.

Banks and insurance compa-

nies received the highest score

on average in a ranking by The

Wall Street Journal’s research

analysts of the most diverse and

inclusive industries in the S&P 500,

based on 10 metrics. The communi-

cation-services sector finished a

close second in the study, while

consumer staples was third.

The push for change in the bank-

ing industry has come from a vari-

ety of sources.

Banks have agreed to narrow pay

disparities and actively recruit a

more diverse workforce to settle ra-

cial- and gender-discrimination

claims brought by employees over

the past few decades. Post-financial-

crisis regulations, meanwhile, en-

courage financial companies to do

annual self-assessments of their di-

versity policies and practices.

Client first

More recently, banks and insurers

have faced growing competition to

attract and retain millennial work-

ers, as well as reach an increasingly

diverse customer base.

“Banks have to adapt to the

global changing demographics of

their clientele: They are younger,

more diverse in terms of gender and

ethnic diversity, and they are put-

ting mandates on them to say,

‘Look, we want

youtolooklikeus,’”

says Nadia Jones, former

senior diversity officer for Mor-

gan Stanley Wealth Management

and now a principal atCulture Ci-

pher Consulting.

A desire to harness the invest-

ment power of women, in particular,

has inspired financial firms to pol-

ish their D&I strategies, Ms. Jones

says. Although they control a signif-

icant portion of household wealth,

women as recently as a few years

ago were a large untapped market

for the financial-advice industry.

“Not only were [financial compa-

nies] being sued, but they also real-

ized that diversifying their boards

or their approaches to wealth will

ultimately create a better bottom

line for them,” she says. “Those two

things alone helped push them into

that space.”

The efforts helped banks and in-

surers achieve an average score of

50.4 out of 100 in the study, from

The Wall Street Journal’s environ-

ment, social and governance re-

search analysts. Communications-

services companies were second,

with an average score of 49.5, fol-

lowed by consumer-staples firms at

48.8.

In all, six banks and two insurers

were among the study’s 20 most di-

verse companies in the S&P 500, with

ProgressiveCorp. andJPMorgan

Chase&Co.

claiming the top

two spots, with scores

of 85 and 80, respectively.

The financial sector earned high

marks versus other industries in

categories such as age diversity

among senior management, ethnic

diversity in the workforce, and

number of diversity and inclusion

programs in place. However, the

sector trailed many others in terms

of gender and age diversity among

board members, as well as board in-

dependence.

Eight of the 10 most diverse

banks and insurers in the research

have an operating profit margin

(the profit a company generates

from its core business before inter-

est and taxes as a percentage of

sales) above the financial-industry

average of 5.8%, the project found.

And shares of Progressive and JP-

Morgan, the study’s top two scor-

ers, outperformed both the finan-

cial-industry average and the S&P

500 on a five-year and 10-year

basis through June.

Even the best performers,

though, have room to grow.

While women currently make

up 30% of the senior leadership

globally at JPMorgan, ethnic di-

versity at the top is considerably

lower. Pam Lipp-Hendricks, head

of executive talent management

and diversity, says that is some-

thing the company is working to

improve.

“In the U.S., 50% of our firm’s

workforce is ethnically diverse,”

she says. “That said, we know

we have work to do to increase

the representation of ethnically

diverse employees at senior lev-

els of the company.”

Some say incumbent firms are

facing additional pressure to

hire, promote and retain diverse

talent from fintech startups.

Fintech companies are

smaller, more flexible and highly

adaptable to societal changes, so

they are able to have conversations

around diversity and inclusion in a

way that traditional institutions

sometimes can’t, says Ms. Jones.

‘Not beholden’

“These new companies can have a

stand on #MeToo and Black Lives

Matter and be very vocal about it,

and they can do so because they are

not beholden to the parameters of

the old guard,” she says.

Financial companies also have to

keep up with traditional peers who

are rolling out diversity initiatives.

“The reality is that there is a lot

of competition” within the financial

sector to have the best D&I strate-

gies, says Cynthia Bowman, chief di-

versity and inclusion and talent ac-

quisition officer at Bank of

America.

“You have to ensure that over

time you are becoming much more

granular and targeted, identifying

areas of opportunities, being more

transparent around how you use

data,” she says.

Financial Industry Leads the Way

Banks and insurers

got the highest overall

score in The Wall

Street Journal

diversity rankings

Financial firms face

growing competition

to attract and retain

workers and reach an

increasingly diverse

customer base.

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