Diversity in the Financial Services Industry at the Management Level Did Not Change Substantially from 1993 through 2008, and Diversity in Senior Management Positions Is Limited

As discussed in our 2006 report, overall diversity in management-level  positions did not change substantially from 1993 through 2004. Specifically, figure 1 shows that diversity in senior positions increased  from 11.1 percent to 15.5 percent during that period. Revised EEO-1 data for the period 2005 through 2008 show an increase in  minority representation in management positions from 15.5 percent to 17.4  percent (fig. 2). Management-level  representation by white women and white men both decreased by about  one percentage point from 2005 through 2008. Recognizing this limitation, starting in 2007 EEOC revised its data  collection form for employers to divide the “officials and managers”  category into two subcategories: “executive/senior-level officers and  managers” and “first/midlevel officials.”
EEOC’s revised data, as reported in 2008, indicate that minorities  accounted for 10 percent of senior positions in the financial services  industry. In contrast, African Americans held 2.8 percent of such senior  management positions, while Hispanics held 3.0 percent and Asians 3.5  percent. However, the recent financial crisis has raised questions about their  ongoing commitment to initiatives and programs that are designed to  promote workforce diversity. Since the  mid-1990s, some financial services firms have implemented a variety of  initiatives designed to recruit and retain minority and women candidates  to fill key positions. Some firms and trade  organizations had also developed partnerships with groups that represent  minority professionals and with local communities to recruit candidates  through events such as conferences and career fairs. A 2007 industry trade group  study and some officials also noted that some companies were linking  managers’ compensation to their progress in hiring, promoting, and  retaining minority and women employees. These challenges include the following:    Recruiting minority and women candidates for management  development programs. However, some financial services industry officials said that middle  managers may be focused on other aspects of their responsibilities, such  as meeting financial performance targets, rather than the importance of  implementing the organization’s diversity initiatives. An official from an investment bank  told us that the bank had been reaching out to middle managers who  oversaw minority and women employees by, for example, instituting an  “inclusive manager program.”
In closing, with the implementation of a variety of diversity initiatives over  the past 15 years, diversity at the management level in the financial  services industry has improved but not changed substantially. Initiatives to promote  management diversity at all levels within financial services firms face  several key challenges, such as recruiting and retaining candidates and  achieving the “buy-in” of middle managers. Without a  sustained commitment to overcoming these challenges, management  diversity in the financial services industry may continue to remain largely  unchanged over time.
Why GAO Did This Study

As the U.S. workforce has become increasingly diverse, many private and public sector organizations have recognized the importance of recruiting and retaining minority and women candidates for key positions. However, previous congressional hearings have raised concerns about a lack of diversity at the management level in the financial services industry, which provides services that are essential to the continued growth and economic recovery of the country. The recent financial crisis has renewed concerns about the financial services industry's commitment to workforce diversity. This testimony discusses findings from a June 2006 GAO report (GAO-06-617), February 2008 testimony (GAO-08-445T), and more recent work on diversity in the financial services industry. Specifically, GAO assesses (1) what the available data show about diversity at the management level from 1993 through 2008 and (2) steps that the industry has taken to promote workforce diversity and the challenges involved. To address the testimony's objectives, GAO analyzed data from the Equal Employment Opportunity Commission (EEOC); reviewed select studies; and interviewed officials from financial services firms, trade organizations, and organizations that represent minority and women professionals. To the extent possible, key statistics have been updated.

What GAO Found

EEOC data indicate that overall diversity at the management level in the financial services industry did not change substantially from 1993 through 2008, and diversity in senior positions remains limited. In general, EEOC data show that management-level representation by minority women and men increased from 11.1 percent to 17.4 percent during that period. However, these EEOC data overstated minority representation at senior management levels, because the category includes mid-level management positions, such as assistant branch manager, that may have greater minority representation. In 2008, EEOC reported revised data for senior-level positions only, which showed that minorities held 10 percent of such positions compared with 17.4 percent of all management positions. The revised data also indicate that white males held 64 percent of senior positions in 2008, African-Americans held 2.8 percent, Hispanics 3 percent, and Asians 3.5 percent. Financial services firms and trade groups have initiated programs to increase workforce diversity, but these initiatives face challenges. The programs include developing scholarships and internships, partnering with groups that represent minority professionals, and linking managers' compensation with their performance in promoting a diverse workforce. Some firms have developed indicators to measure progress in achieving workforce diversity. Industry officials said that among the challenges these initiatives faced were recruiting and retaining minority candidates, and gaining the "buy-in" of key employees such as the middle managers who are often responsible for implementing such programs. Without a sustained commitment to overcoming these challenges, diversity at the management level may continue to remain generally unchanged over time.