Diversity Survey Identifies Key Issues for Improving Retention of Minority Professionals Within Finance Firms

OAKLAND, Calif.--(BUSINESS WIRE)--The Robert Toigo Foundation, in collaboration with Heidrick & Struggles, today released findings from its “Retention Returns: Insights for More Effective Diversity Initiatives” survey of more than 300 young professionals of color working in finance. The findings point to a distinct pattern of events that ultimately lead to the voluntary departure of professionals of color and offers finance firms recommendations to help reverse the trend.

The Toigo Foundation conducted Retention Returns to provide finance firms with insights into current diversity initiatives and ways in which retention efforts might be improved. Conducted in collaboration with Heidrick & Struggles, a global executive search firm that works closely with major corporations to address executive talent recruitment and retention issues, the survey captures viewpoints of professionals of color within the field of finance — the very individuals finance firms’ diversity programs are designed to attract and support.

“Retention Returns findings echo the challenges many finance firms have long grappled with in building and retaining diverse teams. It is clear from the findings, new approaches and new thinking are needed if finance firms are to create an environment in which professionals of color can thrive and contribute,” said Nancy Sims, president of the Toigo Foundation. “The strong response to the survey by young minorities underscores their passion for building their finance career. We want to remain a valued source of input to industry on these issues.”

“Understanding and finding ways to effectively address the workplace challenges that professionals of color are experiencing is imperative for today’s finance firms that want to employ teams as diverse as the client markets they serve,” said Michael Franzino, Chairman, Global Markets and Practice Managing Partner for Heidrick & Struggles’ Global Financial Services Practice. “First-hand feedback from the best and brightest minority talent working in finance underscores the need for finance firms to carefully evaluate what is working, and what is not, and move forward with different approaches.”

Key Survey Findings

Survey findings coupled with insights and actions for addressing the issues are presented as part of four key themes:

• Cycle of Departure: While the circumstances leading to the decision to leave are different for each individual, Retention Returns’ findings and focus group discussions showed that most voluntary departures fall into a predictable, often avoidable, pattern. For young professionals of color, the cycle typically begins with limited access to key deals, which in turn leads to lack of visibility, and lack of proportionate rewards/recognition. Ineffective advocacy or internal support was also identified as an important factor in the cycle. Recognizing the pattern, identifying what triggers the cycle, and adopting focused approaches for addressing the issues are important initial steps to address retention challenges. The report identifies several areas in which firms should consider as part of their efforts to address the “domino effect” of departure and improve retention.
• Mentoring Matters: Mentoring and networking have long been considered cornerstones of talent development. However, the survey findings indicate that it may be time for organizations to carefully evaluate programs to realize better returns. Of those surveyed, 75%-plus indicated a feeling that mentoring was considered as moderately important or not at all important in their organizations. Based on the survey responses, one-third of employers invest time and resources to actively monitor their mentoring programs. The structure of a formal mentoring program, who is involved, how accountability is assigned and reviewed are all factors in the overall success of the program.
• Performance Management: Survey respondents viewed their employers’ delivery of clear and consistent feedback on their job performance as adequate, with only 33% indicating either “extremely” or “very” clear and consistent feedback. Informal modes of communicating feedback relating to job performance and recognition — including email exchanges with supervisors, office discussions and one-on-one meetings outside of work — were identified as inconsistent when compared to those used for non-minority peers. Too often, young professionals of color are outside the informal circle of exchange and, as a result, feel disconnected from their workplace. Knowledge and informal exchanges critical in the workplace and professional development are too often out of reach.
• Institutional Priority: Finance firms truly committed to reversing the cycle of departure by professionals of color need to go beyond stand-alone solutions and examine deeper, more systemic issues. While more than one-third of survey participants indicated their firms communicate a diversity mandate from the most senior levels of leadership, a nearly equal number of respondents indicated their firms have no institutional efforts in place to address minority retention. Fewer than 20% indicated that their firms effectively utilize diversity committees as a way to solidify diversity efforts. To make diversity an integral part of the culture will require a wholesale shift in the way many aspects of performance assessment and rewards compensation and bonuses are awarded.

“Linking retention goals and practices to a manager’s compensation sends a clear critical message that retaining a diverse workforce is a critical part of a firm’s success, and those who contribute to the effort will be rewarded,” added Sims. “We know this approach is controversial, and such a dramatic shift in processes and thinking will be challenging. We also believe it is a critical step for improving finance firms’ diversity retention.”

Survey Demographics

Approximately 500 professionals of color were contacted to participate in the Retention Returns survey, with more than 300 (60%) responding. The respondents included full-time professionals (260 total) and second year MBA candidates (40 total). The data and themes presented in the report focus on issues raised by the 260 respondents employed full-time. The survey was conducted online, with follow-up focus groups in New York, Chicago and San Francisco to gather additional information on key themes.

The demographic mix of survey respondents includes 62% African American, 24% Latino, 8% Asian/Pacific Islander, 2% Native American and 4% who identified their ethnicity as other. Respondents represented a mix of finance industry sectors, including asset and wealth management, investment banking, private equity, real estate, corporate finance and alternative investments. Nearly 70% of respondents have been with their current employer for less than four years — a critical timeframe in the employer/employee relationship.

About The Robert Toigo Foundation

As a partner to the finance industry, the Robert Toigo Foundation (www.toigofoundation.org) serves as a catalyst by inspiring and supporting people of color to pursue careers in finance. The Foundation provides a lifetime of leadership training, mentoring and coaching, careers services, as well as merit-based awards to incoming Fellows. Its network of minority professionals numbers 500 strong working in all areas of finance and at all levels of leadership. Through its partnership with finance firms and Fortune 500 corporations, Toigo seeks to promote positive, productive and supportive environments where these talented professionals will thrive.

About Heidrick & Struggles

Heidrick & Struggles International, Inc. (www.heidrick.com) is the world's premier provider of senior-level executive search and leadership consulting services, including talent management, board building, executive on-boarding and M&A effectiveness. For more than 50 years, we have focused on quality service and built strong leadership teams through our relationships with clients and individuals worldwide. Today, Heidrick & Struggles leadership experts operate from principal business centers in North America, Latin America, Europe and Asia Pacific.