diversity in banking leadership:
locking arms on a bolder path
Welcome to Equicratic!
Our purpose is to help transform banking leadership; to make it look more like the people it serves.
Senior leaders across the financial industry continue to be mostly U.S.-based, mostly white, and mostly male. Our analysis (below) of global Managing Director promotion data holds a mirror up to the finance industry to lay out what we all know anecdotally: it is harder to be promoted when you’re from an underrepresented group, whether a person of color, not cisgender, a veteran, someone differently-abled or living in a location considered to be secondary to headquarters.
We invite you to reflect on what the data reveals about becoming an MD— the senior-most leaders at the world’s top financial institutions— and the very clear signals that we- as an industry— are stalled in our aspirations for diversity, equity and inclusion (DEI).
Keep in mind, this data is based on public records, pulled from published announcements, articles and other public data and resources. Our ambition is to keep it current, enrich it with the help of partner institutions, and to leverage it in the ongoing dialogue about improving DEI on the Street.
By Gender
Across banking’s 10 largest institutions, less than a quarter of promoted MDs in 2022 were women. And that is with most of those institutions having aggressive public and internal commitments to sponsoring up-and-coming women leaders.
The problem is substantive enough as to seem structural (as indicated by the Gender, M/F graph— further down the page— which shows that there was a higher absolute number of promotions in 2021 and 2022 for women, but this was still not enough to offset the small number of women MDs).
Note that this data does not indicate positive factors, such as success attributed to generational wealth or education level. It is also unclear how many have gaps in their work history, which is known to disproportionately impact women as caregivers. So, let’s look at a more simple statistic: In 2020 the total number of women who left the workforce was 2.3 million, as compared to 1.8 million men during the same time period. (Source: Bureau of Labor Statistics)
In addition to more women leaving the workforce than men, the percentage of participation of women in the workforce hit 57%, which is the lowest it has been since 1988.
By Race
We have a long way to go on this one. While the total pool of male and female MDs includes people of color, the composition of this talent group includes a large concentration of talent from India (working outside of India) and a growing presence of women of color (including Indian, LatinX, and Black), yet the state of equity for Black men remains stark.
According to the Bureau of Labor Statistics (2018 Bls.gov report) Whites make up the majority of the labor force at 78%, while Blacks are 13%, Asians are 6%, 2 or more races are 2%, and American Indians and Alaskan natives are 1%.
The labor force participation for Asian men was recorded at 74.9%, higher than White men at 71.8% yet there is an incredible absence at the MD level of Asian men, particularly in countries with sizable employee populations.
Two points can be gleaned from this - even with a larger labor force population than Asians, Blacks are continuously underrepresented at the highest ranks of leadership. It's imperative to focus on the breakdown of hiring viable talent and eventually being unable to promote that talent.
Separately, Asians join the workforce at a higher concentration but taper off and do not make it to the highest leadership positions, beat out by White counterparts.
By Geography
While all of the financial institutions represented in this dataset operate globally, the career progression of their regional talent definitely suffers from their not living in NY and London.
This is especially stark in APAC where— over the last few decades— financial services has seen massive growth in employee populations. Even though most of the banks in the dataset have more than half of their tech and operations employees in lower-cost locations (i.e., India), the senior leadership at those sites continue to be framed as region-specific roles; as opposed to owning global functions.
Addressing the disparity in promotions between the US/UK and India remains one of DEI’s toughest challenges.
By Education
The current snapshot of MDs here shows us that there is less of an emphasis on higher education, which could indicate a greater emphasis on work experience. Popular sites like Investopedia or LinkedIn have several articles with different views about which will get you farther in your career. Perhaps to start your career, education credentials could propel you to get an interview. But it seems that tenure of at least 10-14 years at a firm is your best bet at getting promoted. This is reflected in the data as those with a JD/PhD/MBA/MS are overshadowed by those who simply have graduated college.
Also, one can infer there is either a point where an individual is priced out due to higher tenure or eventually burns out - as indicated by those who have been in the same company for more than 20 years.
An interesting side note: the top 5 schools attended by this cohort were 1) NYU Stern, 2) Columbia Business, 3) Wharton, 4) Cambridge and 5) the University of Chicago’s Booth School of Business. Two of these schools are in NYC and the third is about an hour and a half away from NYC. Arguably it is easier to have people who are closer geographically that can intern and spend their summer close to where they will eventually be hired. The data also signals a disadvantage for those who study at excellent schools that are outside of the NYC metro area is clear.
By Age
The obvious insight here is that— with some minor exceptions— an MD promotion is the crowning achievement of decades spent within the industry. So one could argue that the industry’s challenges with promoting diversity today started decades ago.
The data on tenure shows that promoted MDs spent significant portions of their career at their respective institutions. Specifically, 34% spent between 5 and 15 years in their companies, 57% spent between 15 and 20 years, and 9% spent 20+ years.
Clearly, tenure matters. So much so that it seems to be actively dampening cross-industry mobility of up-and-coming talent. If you’re not yet a Managing Director, the data suggests that you would be better served staying in your current company until you’re promoted; rather than jumping to another bank.
The less obvious insight here is that recruitment strategies for diverse talent should focus on those populations outside the bank that have been recently promoted to Vice President (VP) and/or Executive Director (ED); because once the candidate is on the verge of their next promotion, it makes little sense to jump and reset the clock.
Overall, Year Over Year
2022 saw a slight uptick in promotions for diverse candidates but not one that is statistically significant— or anywhere near the stated ambitions of the top players in financial services. Despite well intentioned commitments to DEI, the Street continues to struggle to put its values into practice.
Note that Goldman Sachs only promotes every 2 years so there’s no data missing for 2020 and 2022.
Not all banks are failing equally. Bank of America, for instance, promoted well in 2019 and then had significantly lower promotion rates in the following 2 years. This indicates an MD bench too junior for promotion over the next two years, and at the time created risk for burnout where EDs were picking up MD work and not getting promoted for it.
Another way to look at this data is that potentially, there were more people who exited in 2022 from smaller companies or large ones like Barclays and JPMorgan Chase, and then moved to other companies.
In summary, given the rate at which financial institutions are progressing on their DEI goals, achieving equity in banking leadership will take decades. The industry needs to recognize that our marginal gains in promoting diverse talent is a structural failure of investment in growing that talent and a sector-wide failure in attracting more diversity from outside the industry. It is a pronounced failure in institutionalizing sponsorship, and ultimately, a failure of imagination and will— two qualities that the world of finance has plenty of— even as it continues to struggle to actively remove bias from its promotion processes.
Our Call to Action
You measure what you want to change. That’s step 1.
There’s a ton of raw, publicly-available data that we’ve gathered across dozens of financial institutions. If you work in DEI, we welcome your partnership in enriching and analyzing that data. Together, we can leverage the insights behind the trends we find; we can help articulate an industry benchmark; and we can hold ourselves and our institutions accountable to making the Street more diverse, more equitable, more inclusive.
Together, we can use data to help us all better live our values.
You connect with people who share your values. That’s step 2.
If you’re up-and-coming diverse talent in any industry and you aspire to rise in the ranks of finance, we’d like to connect you with seniors across the banking world who could serve as mentors and sponsors. Every institution on the Street offers this kind of coaching as an internal opportunity for their own talent. We’d like to do that across banks and extend that service to other sectors.
And when you’re ready, you lock arms with those to your left and right on a mission that matters.
That’s every step after.
Until we get to a more equitable industry.
Together.