Banks and insurers got the highest overall score in The Wall
Street Journal diversity rankings
By Maitane Sardon
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (October 28, 2019).
The financial industry, 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 companies 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 communication-services sector finished a
close second in the study, while consumer staples was third.
The push for change in the banking industry has come from a
variety of sources.
Banks have agreed to narrow pay disparities and actively recruit
a more diverse workforce to settle racial- and
gender-discrimination claims brought by employees over the past few
decades. Post-financial-crisis regulations, meanwhile, encourage
financial companies to do annual self-assessments of their
diversity policies and practices.
More recently, banks and insurers have faced growing competition
to attract and retain millennial workers, 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 putting mandates on them to say,
'Look, we want you to look like us,' " says Nadia Jones, former
senior diversity officer for Morgan Stanley Wealth Management and
now a principal at Culture Cipher Consulting.
A desire to harness the investment power of women, in
particular, has inspired financial firms to polish their D&I
strategies, Ms. Jones says. Although they control a significant
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 companies] being sued, but they also
realized 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
The efforts helped banks and insurers achieve an average score
of 50.4 out of 100 in the study, from The Wall Street Journal's
environment, social and governance research analysts.
Communications-services companies were second, with an average
score of 49.5, followed by consumer-staples firms at 48.8. In all,
six banks and two insurers were among the study's 20 most diverse
companies in the S&P 500, with Progressive Corp. and JPMorgan
Chase & Co. claiming the top two spots, with scores of 85 and
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
independence. (See the full methodology.)
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 interest and taxes as a percentage of
sales) above the financial-industry average of 5.8%, the project
found. And shares of Progressive and JPMorgan, the study's top two
scorers, outperformed both the financial-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,I ethnic diversity at the top is considerably
lower. Pam Lipp-Hendricks, head of executive talent management and
diversity, says that is something the company is working to
"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 levels of the company."
Citigroup, meanwhile, said earlier this year that its female
employees earn 29% less than men without adjusting for factors like
job title and seniority. The company, which disclosed the data
following pressure from activist investor Arjuna Capital, has now
set a goal to have at least 40% of its mid- and senior-level roles
filled by women by 2021.
"This analysis underscores the importance of our goals to
increase the representation of women and U.S. minorities in senior
and higher-paying roles at Citi by the end of 2021," says Terry
Hogan, global head of diversity and talent management at Citi. "We
are focused on this work and empowering teams to implement new
programs to increase diversity across the company, to learn from
each other's successes and to scale these approaches across the
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.
"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 strategies, says Cynthia
Bowman, chief diversity and inclusion and talent acquisition
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.
Ms. Sardon is a reporter for The Wall Street Journal in
Barcelona. She can be reached at firstname.lastname@example.org.
(END) Dow Jones Newswires
October 28, 2019 02:47 ET (06:47 GMT)
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