Presented in Partnership With:
Greater talent diversity in finance is unambiguously good for business and for society.
In today’s competitive and dynamic financial landscape, the imperative for sustainable diversity goes far beyond recruitment. It requires a deliberate, coordinated leadership effort to unlock the full potential of the talented women and women of color who are already driving the industry forward. When done right, it’s a business strategy that will fuel innovation, strengthen organizational performance, and create a positive societal impact.
Diversity Drives Success – And That’s No Longer a Debate
Studies repeatedly show that organizations with greater diversity perform better financially. For the next generation of top talent, diversity, equity, and inclusion (DEI) are non-negotiable elements in the workplace culture. This is especially true in finance, where firms must move beyond traditional diversity metrics to focus on developing and promoting the talent they have already recruited—particularly women and women of color.
The Leadership Gap: A Missed Opportunity for Growth
While many financial institutions have made strides in recruiting women—almost half of entry-level finance roles are held by women—this early success does not translate into senior leadership. As of 2018, women held just 17 percent of senior vice president (SVP) positions, with women of color making up a mere 3 percent. To truly harness the power of diversity, firms must acknowledge that recruitment is just the beginning. The real work lies in cultivating, supporting, and promoting the talent already within their organizations.
The Attrition Challenge: Why the Pipeline Isn’t Enough
The path to career advancement for women in finance is fraught with challenges. A 2018 study revealed that women were 24 percent less likely than their male counterparts to earn their first promotion. Missing that critical first step can have a long-lasting, compounded impact on career trajectory. Unfortunately, many organizations operate under the illusion of a meritocracy, where the assumption is that talent will rise regardless of gender or background. But in reality, women—particularly women of color—often need tailored support to thrive.
The Critical Role of Social Capital in Career Success
While women excel through hard work and technical expertise, career advancement in finance is also driven by social capital—the relationships with mentors, sponsors, and decision-makers who can advocate for their success. Women, especially women of color, often struggle to build these essential connections, particularly in male-dominated environments. As Indra Nooyi, former CEO of PepsiCo, shared, early in her career, she was “just happy to be in the room,” unaware of how to navigate the social dynamics that would propel her forward.
Creating an Inclusive, Retentive Culture
The financial sector can no longer afford to simply put the onus on women to advocate for themselves. Firms that are serious about diversity must create an inclusive environment where talented individuals feel supported, seen, and empowered to succeed. This is not just about “retention readiness” but proactively fostering an ecosystem that values and nurtures diverse talent at all levels.
Actionable Steps for Finance Firms: A Blueprint for Success
To achieve true equity and inclusion, finance firms must take a holistic approach, beginning with leadership commitment and extending across every level of the organization. The following strategies can help foster an environment where women and women of color not only survive, but thrive:
For Board Members:
- Demand accountability at every level of the firm. Diversity should not only be a consideration in overall headcount, but also within departments, leadership teams, and key roles.
- Integrate DEI into succession planning. Just as excellence is expected in financial performance, DEI should be a key metric for leadership development.
For C-Suite Executives:
- Engage in meaningful conversations across diverse identity groups. Direct feedback through social listening can help uncover the experiences and challenges faced by underrepresented employees.
- Set firm-wide DEI expectations and make progress measurable, tying it directly to compensation and performance incentives.
- Lead with visibility. Demonstrating commitment to DEI through actions, such as courageous conversations and consistent messaging, reinforces the firm’s priorities.
For Firms:
- Build an inclusive talent pipeline. Provide underrepresented groups with access to essential finance skills early in their careers. Initiatives like Girls Who Invest and the Women in Private Equity Boot Camp can help bridge the knowledge gap.
- Invest in management training. Effective leadership is pivotal for retention. Training should focus on giving actionable feedback, addressing implicit bias, and fostering psychological safety in teams.
- Position women of color on high-profile accounts. In finance, career opportunities often stem from exposure to big-ticket clients. Firms committed to diversity should ensure women of color are front and center in these high-value situations.
For Managers:
- Deliver constructive, respectful feedback. Avoid generic advice like “develop your executive presence”; instead, provide specific, actionable insights that are free from bias.
- Amplify women’s voices in meetings. Advocate for your direct reports and ensure their contributions are recognized, particularly in situations where they may otherwise be overlooked or interrupted.
- Create inclusive social opportunities. Be mindful of how exclusionary activities, like golf outings or team sports, can unintentionally marginalize certain team members.
The Bottom Line: A Commitment to Lasting Change
The culture of a firm is the bedrock upon which diversity and retention are built. By fostering a culture of equity, financial services firms can create an environment where diverse talent feels not just welcome, but empowered to lead. In doing so, they will not only secure their future success but will also set a powerful example for the next generation of women in finance.
Shoma Chatterjee Hayden is a partner and chief innovation officer at leadership advisory firm ghSMART. She helps public and private equity boards and CEOs build the leadership capital needed for profitable and sustainable growth.
Cintia Nojima is a principal at ghSMART, where she serves leaders across Fortune 500 companies and private equity firms.
