Why Getting Workplace Diversity Right Isn’t for the Faint-Hearted
I am living proof that diversity doesn’t just happen because you have diverse leadership. When my two male co-founders and I set out to build an independent investment business in our hometown of Minneapolis 25 years ago, we never thought that 33% would be our strongest showing in gender diversity for our investment staff. A few years ago, we looked back at the numbers and set out to change that.
When George Hicks, Greg McMillan and I formed Värde Partners in 1993, we did not dictate the culture, but our decisions set the tone early on. Before we even launched, we instinctively understood – and shared the belief – that we were stronger by leveraging our mix of capabilities, skills, and even personalities. In today’s diversity and inclusion parlance, we intentionally sought to maximize our Collective Intelligence and our Cognitive Diversity. We also chose to avoid the cult of personality that is so often associated with this business and, instead of putting our names on the door, we named the company Värde, which means “value” in Swedish.
As the business grew, those fundamentals evolved into a distinctive culture of which I am personally very proud. Being a woman in the male-dominated field of alternative investing never seemed to hinder my success. That success, however, may have led me to overlook the fact that we weren’t maintaining gender diversity among our own investing professionals.
When I transitioned into my current role as executive chair in 2016, we took a hard look at the data around diversity, both at Värde and within the industry. I was naturally drawn to the gender data, where it was evident that the rate of change in financial services has been nothing short of glacial.
Research suggests that, at the current rate of change, financial services globally will not reach that magical 30% critical mass of women in executive positions until 2048 – I hope to live that long! I was further disappointed that Värde’s numbers – in recruiting, hiring and retention of female investment professionals – were not much better than the industry averages, particularly in light of our enviable culture and my female leadership. I felt a deep sense of responsibility to improve that in an accelerated way.
My passion these days is the intersection of talent and organizations that are purpose-driven, performance-oriented and principles-led. One of my views is that there is a widening gap between the growing complexity and sophistication that is required in investing and the static approach the industry takes to its most strategic asset: the one that goes up and down the elevator every day. Another personal point of view is that good intentions are necessary, but not sufficient, to ensure a portfolio of talent that is diverse and inclusive. There is no substitute for purposeful actions to close the gap between aspiration and reality.
At Värde, we saw that we had to take deliberate actions in order to change things. Figuring out where to start felt daunting, but we benefitted from having a strong culture and a willingness to do an organizational reset. We realized that our core values of collegiality, excellence, humility, innovation and integrity could serve as guideposts in the process.
I often analogize creating an effective diversity and inclusion strategy with running a simultaneous “air war” and “ground war”. In other words, you need to start with the right tone from the top, while also ensuring policy changes are being practiced at the line manager level. You need leadership to walk the talk and make clear that diversity is a business imperative and not an HR initiative. You must also pay very close attention to every minority talent in your organization – and always know that your people will immediately see inconsistencies between messages and behaviors.
We scrutinized our recruiting, hiring, review, and promotion processes, and analyzed our retention of women in the investment side of our business. While some of this self-examination was admittedly painful, it helped shape our current views – and practices – toward developing a more diverse bench of investing talent.
While some changes were bigger than others, we saw that even seemingly small research-based changes we implemented could have an outsized impact. For example, we set a minimum of two female candidates per investing role. Of course, every candidate needs to be qualified, but making that demand often pushed our people to look beyond their immediate networks. We also review job descriptions to de-bias language, we review all resumes for a role at the same time, and we run a structured interview process.
In looking at reviews and promotions, it became clear we needed to better mitigate unconscious bias in these processes. In addition to individual managers being responsible for recommending promotions, we also conduct those assessments by committee. One change I advocate any organization to make is dropping self-evaluations from a review process. This behavior is not exclusive to Värde or investment professionals – but women consistently rate their performance lower than men do, which can certainly lead to unintended bias in reviews and talent performance rankings (and self-inflicted, no less).
Since Värde has focused on increasing female diversity among our investment professionals, I am pleased to report that we have doubled our women professionals to nearly 20%, and we are well on our way to an intermediate goal of one-quarter by 2020. It requires a long-term commitment.
I’m an optimist at heart and I love big opportunities. Increasing diversity in the alternative investing industry is one of them. Since we started to make progress at Värde, I wanted to extend my influence and assistance on this issue to other industry participants. I’ve met with numerous other firms – many of which have strong diversity and inclusion efforts – and there is no dearth of interest in this topic. The industry knows diversity matters to achieve the best business results. We need to do a better – and more deliberate – job of increasing the absolute numbers in the pipeline and ensuring that high-performing women have a fair shot at senior leadership roles.
Many organizations will need to reset their cultures to create workplaces that fully leverage their diverse talent. This starts by creating the conditions that influence behaviors and mindsets.
We saw the impact that moving from intuition to data-driven results could have, and I encourage others to hard-wire their organizations, including:
• Ensuring that your culture is truly inclusive and enables everyone to bring their “whole self” to work;
• Designing organizational processes to mitigate unconscious bias in hiring and promotion;
• Providing learning opportunities and leadership development to build a bench of leaders that are skilled and inspiring;
• Drawing out emerging talent and empowering them through sponsors and mentoring programs.
This is a demanding and competitive industry to work in, and the stakes are high. We are investing the assets of institutions that provide for the greater good: endowments, foundations, pension funds and more. Our ability to help fulfill their missions is dependent upon high-performing talent and inclusive leadership. We know that a team comprised of individuals with diverse backgrounds makes us better investors and better corporate citizens. I feel confident that driving this change will benefit our employees, clients and the millions of people they serve.
Written by Marcia Page, Co-Founder and Executive Chair of Värde Partners. Originally published in March 2019 by World Economic Forum.