Why is diversity so important to banks?
Hi,
why do banks value diversity so much? Recent studies have shown that both share and general stakeholders, dont really care about diversity. They do care about negative infos like (we only hire white men) but they don't require 50% of an analyst class to be woman (e.g. GS).
So I was wondering what are possible other reasons?
Investor grifting. That’s it. As a public company you are at mercy to the public, and generally the loudest public cares about it and those with money see an opportunity to support it —> get support from the public —-> reap social capital etc.
I’m a proponent of the value proposition of diversity too - but I think it’s be disingenuous to think these big huge banks that will be successful anyway, think that increased diversity will make as much as a difference as they say. It’s to appease the public, which is fine.
I think the argument is that a "diverse and inclusive workplace promotes increased performance and innovation" and that its good for a company's reputation if they are inclusive of underrepresented groups. I always thought companies should just hire the best person for the job, but its a bit more complicated than that
Correct. I think the core of the issue is trying to solve what “the best person for the job” entails, accounting for clear groups of people having been excluded from the pipelines, resources, support systems that best prepares them for the role.
So diversity programs are a bandaid that artificially picks underrepresented groups, with the idea that if they have indicators of strong potential - they’ll be trainable to be “the best person” since banking is a very trainable job.
I think most against diversity thinks banks are picking random 2.0 gpa diversity kids who clearly have no interest / no desire to take a finance career seriously. In reality, these spots often go to privileged (already rich or elite educated) “underrepresented” minorities so really it’s not as benevolent rags to riches act as they claim. Once again, it’s very complex and ultimately a bandaid for a much larger issue: not everyone has the same starting basis of a good K-12 education and basic financial needs (food/housing/safe neighborhood) covered. The haves typically tend to be white (not always) and the have nots tend to be of color (not always). The government has failed in providing everyone a fair shot to pull themselves up by their bootstraps - banks want to be at the forefront of looking like they care about fixing this, which is largely paradoxical — but that’s an entirely different rabbit hole.
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