Apart from the obvious benefit to investment banks of having a workforce that mirrors their myriad markets, there's a pressing reason for these firms to consider candidates from groups other than the old-fashioned banking template of highly qualified white male.
McKinsey and Company published a report in April 2001, stating that the number of workers in the U.S. who are 35-44 years old will decline by 14% over the next fifteen years. The situation is worse in Europe, with a 21% drop in the U.K., 27% in Germany and 24% in Italy, according to the U.S. Bureau of the Census.
What this means is that, as baby boomers retire, there will be a smaller number of workers to fill their positions. There is little doubt that investment banking's senior talent pool will likely shrink dramatically, as this demographic shift creates a management black hole for some institutions. Conversely, it may also open up opportunities for a far wider range of candidates suitable for top-notch careers in finance in banks with a keen eye on the future.
Financial Market Implications
The data has huge implications for all business, banking included: There's a gaping hole where a hefty percentage of the financial world's future professionals need to be. That hole has to be plugged, and a positive side effect of this is the opening up of financial career opportunities to women and ethnic minorities.
Enlarging the talent pool to include people of all backgrounds has significant upside for employers. In an increasingly globalized world, the markets for sophisticated financial products are expanding dramatically, and it makes sense for banks to hire people who understand and can participate in those growing markets. Restricting options to a particular group of individuals means that firms cannot compete with organizations that have adapted and transformed themselves to mirror the marketplace. And if hiring options for the management stratum will shrink by 14% in the next fifteen years, expanding the available talent pool is the only way forward.
It isn't so very many years ago that women in banking were considered to be more suited to secretarial and clerical work, to many women's intense frustration. Now there are more women climbing the corporate ladder, and some of them scaling dizzying heights. It is the same for people of color who are advancing in the banking world.
The banks are hungry for graduates of color, and that hunger may only increase as the baby boomers retire. As more minority employees enter the financial arena, there is a need to underpin this progress with a strong supply of future employees, and outreach programs are in place to identify, encourage and support these students.
ML4T: Management Leadership for Tomorrow
In a push to help more minority candidates apply to top business programs, diversity organizations such as ML4T (Management Leadership for Tomorrow: www.ml4t.org) are challenging young students to consider a field traditionally considered difficult for minorities to enter. Programs designed to help students make the right educational decisions, and to gather skills they will need in pursuing their dreams, are reaping rewards.
ML4T CEO John Rice comments, "ML4T's Career Preparation program prepares high-achieving minority college juniors for placement in the leading entry-level business-related jobs that lead to admission to top MBA programs and positions of influence in business and the community."
College juniors in the program begin a comprehensive curriculum designed to identify career opportunities that fit best with their interests and strengths; develop the skills, competencies and attributes that hiring organizations require; and prepare them for the job search and interviewing process during senior year, Rice added.
Robert A. Toigo Foundation
The Robert A. Toigo Foundation (www.toigofoundation.org) supports exceptional minority business degree students and alumni within the finance industry through scholarships, mentoring, internships and job placement. Working in partnership with the nation's leading academic and financial institutions, the foundation seeks to foster diversity in the global marketplace and to promote ethics, integrity, community service, and business leadership skills through the careers of talented individuals.
The foundation provides financial support and mentoring for students, alongside leadership development, with a view to bring more diverse populations into finance. It offers an expanding network of peers, professionals and friends sharing their business know-how and contacts, according to the organization's website.
Sponsors for Educational Opportunity
Sponsors for Educational Opportunity (SEO), founded in 1963 (www.SEO-usa.org), has helped over 3,500 students of Black, Hispanic/Latino, Asian and Native American origin from New York City public high schools. According to the organization's website, SEO helps motivated students of color with "academic enrichment, college guidance and leadership development" and provides them with the help they need to gain admission to and succeed at selective colleges and universities. Some 700 high school students are helped in this way each year, with over 93% of those going on to graduate from high school in four years. Of those students graduating, 90% continue on to college.
Assistance with study skills, essay writing, debating, and entrepreneurship, is given to eligible students to enable them to navigate the process from school through to their chosen career.
All Things Being Equal...
Programs such as these are making a great difference to students who would not otherwise have considered careers in finance, encouraging more and more able youth to expand their horizons into hitherto undreamed-of areas. Those who secure jobs in financial careers will be well-positioned to advance and develop in the coming decades.
All things being equal, financial institutions will have prepared a raft of diverse employees ready, willing, and able to reach the upper echelons. They will then be able to fill the management and skills gaps created by the baby-boom flight into retirement. When the time comes, banks will be in much better shape to field a truly diverse and representative workforce.