Is Wall Street Finally Starting To Get It?Leah Nathans Spiro
It was hearing women employees complain about the scantily clad dancers at Merrill Lynch & Co.'s 1992 Christmas party that finally convinced Chief Executive Daniel P. Tully that it was time to act. In the six months before the party, Tully had heard about six other incidents af alleged sexual harassment at his firm. Merrill had already formed a committee to study bias and implement measures to recruit and retain more blacks and women. But Tully's concerns got things moving. Says Roger M. Vasey, the Merrill executive vice-president who is leading the firm's effort: "This program has teeth."
Wall Street could use one. The industry has a record of not hiring many women and minorities--and failing to protect them from bias once on the job. Now, with the Clinton Administration cracking down on civil-rights violations across the economy and the U.S. Civil Rights Commission holding hearings on Sept. 21 to examine the financial industry's record, Wall Street has good reason to clean up its act.
Just how bad is the Street's record? Pretty dismal. There are virtually no women and blacks in top management at the major firms. Of 546 managing directors and directors at Merrill, just 57 are women; only 38 are black, Asian, or Hispanic. At Goldman, Sachs & Co., there are just seven women and one black out of 150 partners. Salomon Brothers Inc., which also has a diversity committee, has just one black trader.
Merrill is one of the few firms taking action. Vasey, a heavy hitter who used to run its fixed-income department, has an annual budget of $1 million for his diversity committee. Merrill now awards up to 10% of the bonuses to its 10 executive vice-presidents on the basis of eight criteria, including recruitment, retention, and career development of minorities and women--with progress monitored quarterly.
Some significant steps have already been taken. Merrill also has doubled paid maternity leave to three months, for instance, and it now has a screening process to make sure it doesn't hold corporate outings at golf clubs that discriminate. It's also trying to boost the number of women branch managers--now only six out of 325--by not forcing them to move all over the country as a prerequisite for a promotion. And it just added former Securities & Exchange Commissioner Aulana Peters, a black woman, to its board.
Other firms also are getting started. To help retain female employees, Goldman Sachs has installed a day-care center in the lobby of its building that provides backup child care. Morgan Stanley & Co. has hired a full-time consultant to work exclusively on diversity issues and has assigned William M. Lewis Jr., an African American managing director in investment banking, to head its diversity task force. Among measures taken so far: Morgan has started a $2.5 million scholarship program in which it sponsors promising college students in their junior and senior years as interns. And last year, for the first time, it began recruiting at five historically black colleges.
There are skeptics, of course. New York lawyer Jeffrey L. Liddle, who will be testifying at the Sept. 21 hearings, calls Wall Street's efforts at diversity "a cruel joke. Those committees do nothing." The companies, critics contend, are acting mainly to avoid lawsuits. For example, in December, 1993, 10 former and current African American Merrill employees from San Francisco branches filed a complaint with the National Association of Securities Dealers alleging that Merrill discriminated against them on the basis of race. Merrill says in a statement that it "is outraged by these meritless claims."
Now, Wall Street is under intensified pressure. Many state and federal agencies require detailed information on the number of women and blacks in senior positions at financial companies bidding for their business. And with the feds on the case, Wall Street may have to get more serious about promoting equality.