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Sallie Krawcheck, former chief financial officer at Citigroup and former president of Bank of America Global Wealth Management, said she blames the 2008 financial collapse on “groupthink.”
While the media has blamed the financial crisis on greed, “what I actually saw was people who ate their own cooking, not evil geniuses who perfectly foresaw the crisis,” said Krawcheck, who shared her views March 24 at the Society for Human Resource Management’s 2015 Employment Law & Legislative Conference in Washington, D.C.
Top Wall Street executives had the same background. They went to the same schools. Their families vacationed together.
“What breaks groupthink? The answer, of course, is diversity of thought,” she said.
Research shows that organizations with gender-diverse leadership teams have higher returns on capital, lower risk, greater client focus, greater long-term focus, greater innovation and lower gender pay disparity, she said.
She recalled hearing a speaker once declare that diverse teams outperform smarter and more capable teams. At the time, Krawcheck said she couldn’t understand how that could be when on Wall Street “we worship the brain.”
But she compared it to a basketball team that picks the five best players: If they’re all point guards, the team won’t advance to the playoffs.
Diversity on Wall Street, which is the lifeblood of the U.S. economy, has regressed since the 2008 financial downturn, she contended.
“An industry that was white, male and middle-age has become whiter, maler and middle-ager,” she said.
Krawcheck said she considers diversity to be such a key driver of the financial crisis and its recovery—in addition to being the fair thing to do—that she bought Ellevate (formerly known as 85 Broads), a networking organization for professional women.
Women rate networking as the No. 1 unwritten rule of success in business. But women typically don’t recognize its importance until later in their careers, she said.
Since she left Wall Street, she has decided her previous approach to hiring was wrong.
“I was asking my HR professionals to help me put the best person in the job when I should have been asking them to put the best team in place,” she said. “The diversity of thought, of perspective, of gender, of complexion can drive the best team, and it isn’t always that highest performer.”
She worries that the popular press is telling women that to be successful, they must adjust their behavior to be more like a man. However, those trying to get everyone to behave the same way run the risk of weakening the power of diversity.
“Rather than trying to train the women to act differently, we need to try to do something that is much harder, which is to try to change the workplace,” she said.
When business leaders reject a female employee for a promotion because she’s “too aggressive” or favor a male employee despite his poor business performance because he exudes confidence and “looks the part,” HR needs to step in, she said.
“We need you to keep us honest,” she said. “We need you to make sure we are looking at the numbers next to the names so we’re making the smart decisions. We need you to give us training on this, and we need it again and again because we forget.”
Dori Meinert is senior writer for HR Magazine.
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