Below is a brief synopsis of the Illinois State Treasurer’s Office’s 5th Annual Diversity in Investments Forum. Speakers included Mellody Hobson, Co-CEO & President at Ariel Investments, Don Thompson, Founder & CEO of Cleveland Avenue (Former CEO of McDonalds), and Jose Luis Prado, Executive Advisor Partner of Wind Point Partners (Former CEO of Evans Food Group). The discussion was led by Michael W. Frerichs, Illinois State Treasurer.
The main focus of the event was a discussion surrounding what the Illinois Treasury has been up to in the DEI space and talking with key leaders on how 2020 accelerated conversations on diversity.
Views on the State of DEI
The speakers started off by discussing their own point of view on diversity. Mellody brought up the importance of a diverse portfolio and the irony that many seem to miss the point when it comes to team composition. Jose foresees a major paradigm shift in people embracing DEI and pointed out that having diversity in an organization can be a selfish initiative to improve results. Don spoke to the issue of the necessity of intentionality in your diversity initiatives if you want the best solutions. He stated that people that have intentionality in their DEI initiative will not run into the “it is difficult to find them” cop out, stating “you just aren’t looking if that is your issue”.
Trade-offs in working with diverse owned firms: a cop out
Panelists claimed that the “trade-offs” are just a ruse and a new form of Jim Crow. Two barriers people tend to claim are that there are not any diverse candidates and that they are losing found talent to the big companies. In response to the first problem, panelists suggest that if you are intentional with your search, you will find great candidates that will bring additional success. To the latter claim, panelists say firms owe it to themselves to try to seek diverse talent because otherwise they are missing out on a major opportunity.
Emerging Managers: not a great term
Mellody, in a strong rebuff of the term “Emerging Manager”, provided the example that you wouldn’t hire an “emerging doctor” to take care of your very sick child. She said the term is usually used to label capable black and brown folks to give off a misconception that they are lacking in skill. The term should be a diverse manager rather than emerging.
What it takes for a minority to be successful in the investment space
Mellody pointed out that, as a minority one has to will one’s self, work hard, be extraordinary, and literally be able to outwork everyone else. She said that is no issue for us as we tend to be scrappy. She discussed the entertainment and sport industries, explaining how once we were able to make it in, “we dominated”. She went on to describe how the business world is last to realize “our” untapped potential.
A recurring theme of the forum was that Financial institutions need to understand that actions speak louder than words. Panelists suggested that they want diverse vendors but don’t work at understanding what their past actions have been. The panelists offered that the institutions “do the math”. In each area where you spend money, how many diverse candidates do they have? Why? Afterward, once looking at the numbers, evaluate whether your process is fair and work to make it more inclusive.
Don brought up the recurring theme that there are many who say they can’t find diverse vendors. He challenged the audience to think about how people tend to build relationships with ‘similar’ people, and at times one’s social circle is lacking in diversity. He moved to discuss that the level of scrutiny for POC is very high in banking and that institutions need to reevaluate their processes.
Jose closed in saying that diverse candidates know how to make decisions and take decisive action when needed. He stated that the way to break the inertia within the system is to give your toughest problems to small firms and minority players.
What actions do firms need to take who want to expand their diversity initiatives?
In short, Don said to do more in the way of incentives to get the entire firm involved in the process. Jose suggested that DEI needs to be a central initiative and not given to one “Diversity Officer” because it doesn’t work; everyone needs to be involved. He said making an intentional scorecard to gauge your success would be helpful along with disclosing the make-up of your company. Lastly, it is powerful to have diverse candidates that match a diverse client base as it makes better business sense.
Jose claims that you have to be a leader, a professional, very good at what you do and able to take risks in your career, as it tends to lead to better results. Expand your circle and help in your community.
Mellody advised that if you are going to be an entrepreneur, it is important to differentiate yourself by having original ideas, so you are not another ‘me too’ company. Have perseverance and also have people in your company that you can depend on.
She also quoted Colin L. Powell who said, “Never walk past a mistake”. From that quote she spoke on how everything you do matters and projects an image. You want that image to be excellence.
Don suggested to intensely study the industry you are a part of and consumer reactions, especially today. You need to study the game enough to be able to have a decent conversation about the industry. He also said don’t get down on the closed doors. Seek out support from people that believe in you and who tell you the truth. Lastly, he strongly encourages all not to attend pity parties because we are too good for that. Be intentional and don’t let anything stop you.