I'm curious to get y'all's take on this because some of the quasi quota systems that I've seen seem like they will just make things worse for everyone.
Let's assume that the talent for investment banking is normally distributed across all ethnic/gender groups (e.g., let's say 10% of people, across all groups, are qualified for investment banking jobs). However, the applicant pool is clearly extremely skewed, with maybe 80% of applicants coming from overrepresented groups and the remainder from minorities. The problem with a 50% quota (which seems to be an informal target at most places I've worked) is that it ends up massively skewing the talent distribution.
Let's say there are 1,000 applicants for a 100 analyst seats. Using the distributions above, to have a class that is 50% URM, you would need to have an acceptance rate of 6.25% for the ORM applicant pool and 25% for the URM pool. If the distribution of talent is normal across both pools (i.e., the 10% above), 15 of the 25 URMs you hired don't make the cut absent the quota. Again -- both groups are equally qualified, this is just how math works.
Now, you've got 60% of your URM class that is likely to underperform expectations. There are two ways to deal with this -- either the URMs disproportionately get poor performance reviews (it's not really disproportionate but the headline numbers will look bad) or you're going to have to weaken performance reviews across the board. Both are obviously bad. The former, unfortunately, will likely lead to cries of systemic racism (60% of URMs are getting poor reviews, the firm must be racist), so the incentive is for firms to dramatically reduce negative feedback and rankings or reviews to dodge that bullet. What that means is that the quality of the analyst class as a whole will decline to avoid highlighting these disparities. Ironically, this feels like a case of systemic racism in itself as a disproportionate percentage of URMs are getting the poor reviews here.
Anyway, all of this is to say that affirmative action / diversity programs at the university recruiting level are misguided and ultimately hurt everyone, including the people they were meant to help. Banks should continue to have special recruiting events for women, Latino, black, etc. students to encourage them to apply and widen the candidate pool, but the actual interview standards cannot shift. This is beyond the scope of this post, but if you really want racial equity, it needs to start before birth -- people need access to reproductive education and contraception to prevent unwanted kids to be born, then schools need to be fixed so that kids are able to read and do math at a competent level, the social safety net needs to be strengthened so factors outside their control don't hurt kids development, etc. etc.
Thoughts?
When I speak with bankers, I hear all the time that if anyone has more skills/knowledge coming into the job, the head start will be gone a month or two in. This means that as far as some of the skill sets required it matters less exactly who you hired as long as the are smart enough to pick up on what they need to learn.
The studies show that diverse teams produce better results, so maybe the benefits of diversity are greater than getting some slightly more skilled analysts? Just a thought, am definitely not an expert here.
My team has no females or minority (non-white/Asian/Indian) or LGBTQ analysts. Half the analysts still suck. Must’ve been the diversity recruiting.
Said this before on another thread. Note I assist in diversity hiring at my firm.
Diversity hiring, in particular the focus on women is extremely detrimental to quality standards.
Even at BBs, juniors hiring is not longer a meritocracy. Its a sad fact.
I've seen analysts who should never have been promoted to associate be promoted simply because they are diversity quota members. These people then instruct analysts.
It then causes a generation problem as you have unqualified people teaching our newest colleagues.
Meanwhile when it's highlighted the sensible conversations are then shut down.
Sad situation but that's the honest truth from two places ive worked.
Had a female friend receive a call from a VP at a BB and present her with all the technical questions that would be covered in the upcoming interview. After listing them all, the VP said, "Do you understand all of the questions, or do you need help answering any of them?"
Recruiting has become a joke. During an SA interview, I walked an Analyst through different Debt / EBITDA turns on an LBO (Senior, Sub, Revolver) and explained why each tranche had x number of turns and he responded, "Wow, I definitely didnt know that at your age", only to get passed up by someone from my school with less technical knowledge (doesnt need to be said but they met the diversity quota). Sure it could have been fit, but "may the best and most knowledgeable candidate win" straight up doesnt exist anymore.
My advice? Pursue a different industry. The only areas in finance that actually pay well either A. Require you to sacrifice 100% of your life for a stupid job (IB / PE) or B. Will be like FP&A or something where you make $150+ per hour worked but only actually work like 15 hours a week, so therefore you arent making very much money.
People get so upset when you say pursue tech on this site so I wont say that, but pursue something else.