Diversity Challenge

A case of good intentions but little change?

Are you discouraged from pursuing an investment banking career because you think the industry is only for straight white men? Don't be. Banks say they are doing their utmost to open their doors to candidates from all backgrounds, regardless of race, gender, and sexual preference.

A mixed approach to diversity

To feed the diversity pipeline, banks need to more hire women and other minorities as graduate trainees; hence the plethora of diversity recruitment initiatives. For example, Goldman Sachs and Lehman Brothers are among the banks backing 'Sponsors for Educational Opportunity,' a US-based initiative which feeds interns from ethnic minority backgrounds into companies across the U.S. and Europe. Deutsche Bank, UBS (and Goldman again), work with the Windsor Fellowship, a similar organisation in the UK.

Another popular tool is the internal network. Women-only drinks events are common. Goldman Sachs has a gay and lesbian staff network, which it deploys to attract gay and lesbian students; it also has a disabled network that it uses to similar effect. It also runs '85 Broads', a women's network named after the bank's New York office address, not the number of senior women on its staff! Deutsche Bank runs networks for everyone from transgender employees to family members and Citigroup does much the same.

Networks are designed to stop minority employees feeling isolated, and to put them in contact with senior people of their ilk. They also impart useful knowledge. Citigroup's parents' network, for example, runs classes on first aid, reading skills and sex education.

Abbas Jaffer, head of diversity at Morgan Stanley, says attracting diverse candidates into the industry is partly a question of raising people's awareness of the range of careers that exist in an investment bank: "Entry level positions exist everywhere from finance to operations and technology."

After attracting different people into the industry, banks are also pulling out plenty of stops to retain them and propel them on. Morgan Stanley, Lehman and Citigroup all employ actors to perform scenarios in which minority employees are badly treated with a view to discouraging discriminatory behaviour (and reducing the money spent on settling discrimination lawsuits).

A shortage of minority applicants

However, banks are still finding it hard to put their diversity aspirations into practice, thanks largely to a lack of minority applicants. As Jaffer of Morgan Stanley explains, women, for example, account for no more than 30% of graduate applicants to most banks in the City.

"It's a question of attracting women to apply," she says. "'Banking can be perceived as having a macho culture which can put people off."

It doesn't take a genius to see why. There are plenty of court cases concerning allegations that female bankers were asked to strip half naked and massage male colleagues (Nomura), that Jewish brokers were asked to dress as a Nazi after being late for work (Tullett & Tokyo Liberty), or that women are paid substantially less than men doing the same job (Investec).

Statistics confirm that women are less likely to make it to the top of the banking hierarchy than men: at Goldman Sachs just 14% of managing directors (MDs) are women; at Citigroup the figure is 11%.

"Investment banking has historically been a very male dominated environment," says Watson at Citigroup, "Women haven't been drawn to it, and where you have lots of men they tend to promote like for like."

Mostly only anecdotal results

Unfortunately, it is hard to give categoric feedback on banks' diversity initiatives to date, since few banks are willing to divulge official figures. Such evidence as there is is encouraging - for example, in 2000 10% of Goldman MDs were women; last year 25% of the people promoted to MD at Citigroup were women. For the rest, we'll keep on asking, so watch this space...