VideoAnd always lurking in the corner is the specter of bigotry. According to a 1998 survey conducted by Korn/Ferry International and Columbia Business School, 59 percent of the 280 minority executives at large firms who responded said they had experienced racially motivated double standards in the delegation of assignments, while 45 percent had been a "personal target of racial or cultural jokes." Columbia adjunct research scholar Anna Duran, the principal researcher on the study, says that some rising finance stars in the study have since left the corporate world rather than face discrimination on the job, or "have to haggle politically" for fair treatment and promotions. Often the bias is subtle, says Duran. For instance, pressing your view in a group "is considered immature in some Asian cultures, but is seen as a barometer of leadership in American culture."
In Robert Ryan's case, when the Detroit native was about to become the first in his family to enter college, he was warned by his father to choose a career based on "what paid you the most, had job security, and had the least amount of racism." When Ryan later decided on finance and became one of 20 minority Harvard MBAs in 1970's 800-member class, his father opposed the decision. "I just thought you didn't have enough opportunity," he later explained. Even now, as Medtronic's finance chief, Ryan suggests that minority business students start as he did, in a more-supportive consulting environment, because big companies' many management layers can present "more roadblocks to advancement."
Even among corporations sophisticated about diversity, notes Harvard's Thomas, minority executives still may detect differences. He compares PepsiCo with General Electric, for example — both "very aware of the war for talent," and dedicated to bringing in top minority candidates. But GE hasn't done enough to support minorities in the rise toward high corporate positions, Thomas asserts. "For a person of color, there's a sense of a ceiling, and that you've got to get out while your stock is still high." By contrast, he cites PepsiCo's appointment of India-born CFO Indra Nooyi, who will also become president later this year.
If you buy the pipeline argument, the job of identifying diverse finance candidates should get easier very soon. Of about 5,000 African-Americans enrolled in MBA programs, roughly 40 percent have a finance specialty, says Antoinette Malveaux, president and CEO of the National Black MBA Association — a figure that is expected to grow. "Since the downturn of the dot-coms, individuals are shifting back to finance and consulting for security," she says. The National Society of Hispanic MBAs (NSHMBA) also says finance is its largest specialty, with 26 percent of its members in that field. And the Big Five accounting firms, an especially attractive pool for future finance executives, say their percentages of minority hires have surged.
On the demand side today, companies have developed compelling new rationales for increasing their diversity efforts — often, as at Fannie Mae, echoing strategic business initiatives. In a small, informal survey by CFO magazine, the top reason large-company CFOs gave for boosting diversity was to allow the company to benefit from the diverse viewpoints of a multicultural workforce. "At one time, diversity [initiatives were] driven by guilt; now they're a business imperative," says John Honaman, executive director of the 2,700-member NSHMBA. "This is about your ability to compete effectively in a global marketplace."
At Fannie Mae, Cummins, and Medtronic, CEOs and CFOs team up to make sure that diversity initiatives thrive — despite economic conditions that could severely test their commitment. The teamwork also leverages the finance department to improve minority participation. "Finance is responsible for the measuring systems at the company, whether for diversity or profitability," says Cummins chairman and CEO Tim Solso. "You are what you measure."
Fannie Mae: A Systematic Approach
Having an employee diversity program that tracks Fannie Mae's corporate strategy — building new business by encouraging minority lending — is logical, says CFO Tim Howard. Howard plays a major role with the company's diversity council, which oversees support groups and training and mentoring programs. He schedules monthly CFO breakfast meetings with 10 to 18 managers, where diversity issues are hashed out. And within finance, he sponsors focus groups that probe such sticky issues as allegations of unposted job openings and lower pay for minorities. Maria Johnson, the company's vice president for diversity and health and work-life initiatives, says that Howard monitors Fannie Mae's diversity results "with the same laser focus he uses to make sure our stock looks good."
Howard's most important contribution, however — one that is aided by a compensation plan that rewards diversity — is to continually encourage his troops to seek out minority candidates when they have openings. That encouragement over the past eight years has helped build a pipeline of high-potential staffers with diverse backgrounds. The company has strong ties with historically African-American universities, minority-MBA associations, and minority specialist recruitment firms to find candidates, and many minority finance directors are promoted from within.
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