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| Krawcheck unveils a new index and fund |
Her rise through the ranks at Citi was swift and included a stint as CFO. She subsequently held senior roles in asset and wealth management at Bank of America. But in both places she crashed upward into a ceiling, shoved aside from senior, sector-leading roles after being just steps away from the CEO's front door. She was not yet 50.
Some who followed her career might not have wagered that she would become the next CEO at Citi or Bank of America, but many might have bet that a known regional bank would have asked her to leave New York's financial cauldron and lead a smaller institution in banking's regulation-challenged new era.
Her days at Citi and Bank of America are apparently done. And since then, she has not shied away from reflecting upon her experiences in why she might have been dismissed and wondering whether Wall Street is still reluctant to let women lead major financial institutions. Many major banks have had women in significant roles. JPMorgan Chase, Citi, BankOne, Morgan Stanley, and even Lehman Brothers had or have women in CFO spots. Bank of America has had women in roles as Chief Risk Officer and Chief Marking Officer. JPMorgan had women as Chief Investment Officer and has a female CFO and head of wealth management. Nasdaq recently rehired a senior woman executive, who some speculate could run the exchange one day.
Yet something seems to happen--a dismissal, an unexpected downturn, a financial crisis, a bankruptcy, a different CEO and his new team--to get in the way of women rising and settling into the top spot.
In the past year, Krawcheck has assumed a different leadership role, preferring now to lead efforts to find pathways for women to seize important roles in not only in financial services, but all of global business. Hers is a different approach from Facebook COO's Sheryl Sandberg's Lean In strategy that encourages women, more or less, to look into the mirror, change some of their ways, and forge ahead aggressively.
Krawcheck has adopted a take-action approach, ready to bang on corporate doors to force companies to do better about women in their corporate ranks. Last year, thanks in part to comfortable severance packages from her old employers, she bought out the women's finance network "85 Broads" and is using that as a platform to make the industry uncomfortable. She is preaching about industry's sluggish efforts to make the sheltered circle of financial services--at its highest levels--more welcoming for women.
Just days ago, she announced the formation of an industry scorecard, a new index along with a new fund, that will report publicly to investors and business leaders which companies are walking the walk. The financial index, the Pax Global Women's Leadership Index, will include companies that have significant numbers of women on their boards and significant percentages of women in senior roles. The index will highlight companies, she contends, that should be revered (and promoted) because women are in visible, impactful leadership positions.
The fund, the Pax Ellevate Global Women's Index Fund, will invest in companies that appear in the index. Krawcheck says companies that are successful in "gender diversity" have a track record for producing good returns for investors.
(Krawcheck, after acquiring 85 Broads, changed its name to "Ellevate," partly because of the old name's ties to Goldman Sachs. Goldman's old headquarters were located at 85 Broad Street in the Wall Street area. She wants to expand the network beyond its investment-banking roots and its Goldman Sachs birth, and some might have advised that "Broads" in reference to improving the business prospects of women might not work well in Dubuque.)
As the index and fund are launched, what's the current scorecard with some major financial institutions--for women and for those in other under-represented groups?
For the past couple of decades, the industry had taken token steps. You could always count on major banks, broker/dealers, insurance companies, and asset managers to have one or two women and one or two minorities on boards of directors. You could probably count on the same institutions to have a woman leading a small fraction of a bank's major business units or acting in a one or two major corporate-staff roles. But you couldn't count on financial institutions to promote regularly a woman into the president's or CEO's office, and you don't see boards of directors where more than half comprise women or minorities. As the index and fund are launched, few financial institutions have met the initial qualifications to be included. (US Bancorp is one bank that will be included.)
Let's take a peek at the leadership landscape at selected financial institutions today. What do the board numbers look like in 2014?
1. Goldman Sachs. Ruth Simmons, president of Brown University at the time and an African-American woman, served on its board until 2010. But as she was departing, certain factions attacked Goldman for haven chosen a university president not experienced in the complexities of capital markets, derivatives and corporate finance, especially in midst of the financial crisis.
Nonetheless, she brought many other important experiences, skills and judgment to board discussions. Remember, Brown has an endowment in billions, and Simmons managed a large organization with several silos of departments led by smart, stubborn professors, populated by thousands of smart students. Sounds somewhat like Goldman. So why wouldn't she have been qualified at Goldman?
The criticism might have influenced Goldman in selecting other board members, but the firm later appointed another woman college president to the board (Debora Spar of Barnard College) and--to its credit--didn't seem to be moved by voices assessing who was and wasn't qualified to serve on its board.
Goldman's numbers are adequate, at best. Two women and one black (Adebayo Ogunlesi, who once held senior positions at Credit Suisse) serve on the board.
2. JPMorgan Chase has two women on its board and has had a history of having one or two African-Americans (including long-time board member, the late Congressman Bill Gray). In recent years, it has had women in CFO roles or women managing large business units. But when people dare to speak of CEO Jamie Dimon's successor or those on the short list to lead JPMorgan in the 2020's, no woman appears to be a front-runner.
3. Bank of America has better representation. Four women serve on the board. Although Krawcheck left under unhappy circumstances, women have had major, visible roles the past decade (e.g, in risk management, wealth management, and marketing).
3. Applaud Wells Fargo, because its board ranks include at least five women, one African-American and two Hispanics, unusual representation for a financial institution that large. The bank chose the eight or more because of their experiences and leadership, but don't discount how much Wells Fargo, a major commercial bank with footprints in diverse communities, values the business it does with these groups.
4. Richard Parsons, an African-American, once served as Chairman of Citigroup. Hence, it has had its significant first. Three women serve on its board today.
5. Some companies, powerful and profitable in the industry, conduct much of their business transactions out of the public (or individual consumer's) eye. They might not be attuned as others are about diverse representation at the top levels.
Blackstone, the private-equity firm, roams the top in its sector. Big, powerful, successful, it conducts much of its business in private, out of the headlines, or often in the back of the business pages in the media. It doesn't advertise its services in TV commercials or online ads; it doesn't need to or want to. It has only two women and no African-Americans on its board.
Lazard, the boutique investment bank with major corporate clients, has no women and one African-American (Richard Parsons, formerly of Citigroup and recently announced as the top executive of the Los Angeles Clippers). To its credit, Lazard has had African-Americans in senior banking roles.
6. Count on Kenneth Chenault, CEO of American Express, who happens to be African-American, to ensure his company sets examples for all major financial institutions. And it does.
Many bank leaders will say privately they welcome women and those from under-represented groups, but can't find them. Chenault and American Express seem not to have had that issue. Its board includes three African-Americans and three women. Other institutions usually (a) don't see this as a priority, (b) don't make concerted, painstaking efforts, and/or (c) are so mired in other issues (regulation, business downturns, slow growth, or challenges from shareholder activists) they overlook the importance of broad representation.
7. Capital One, AIG, and eTrade have two women board members each. Notice a pattern? JPMorgan and Goldman also had two. These financial-services companies seem to have stopped at two. Since it's 2014, many will likely ask themselves, "What's good enough? What's appropriate?" Two seems to be that number and, unfortunately, has been that number for about two decades. (Some of the same institutions have had two women and one or two African-Americans or Hispanics on their boards since the late 1980's.)
Krawcheck's campaign (managed by her organization, the new fund, and the new index) hopes to push companies to do better. Companies, she would contend, need to get beyond settling for a number and patting themselves on the back. Companies must recognize there are women and members of under-represented groups who are qualified to serve and lead (from vice president to managing director to CFO and CEO and board membership). Financial institutions should open their doors, Krawcheck suggests, or else....
Tracy Williams
See also:
CFN: Fighting the Gender Fight at Harvard Business School, 2013
CFN: Muriel Siebert, Wall Street Pioneer, 2013
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