Diversity officers set metrics for success

With so many money managers hiring chief diversity, equity and inclusion officers, how are these new senior executives measuring progress?

Chief diversity, equity and inclusion officers in interviews with Pensions & Investments outlined tangible goals and quantifiable targets they have set for themselves and their organizations.

For example, BlackRock Inc. measures employee reaction to its DEI efforts and analyzes any gaps in the experience of underrepresented groups through its annual employee opinion survey.

"The survey gives us insights into where to look further to engage our employees directly in problem-solving dialogue and focus group discussions," said Michelle Gadsden-Williams, New York, who joined BlackRock Inc. in September as managing director and global head of diversity, equity and inclusion.

In terms of specific targets, BlackRock set a goal last June to increase its overall representation of Black and Latinx employees in the U.S. by 30% by 2024 and double its representation of Black and Latinx senior leaders by 2024. The firm currently has 14% more Black managing directors and directors in the U.S. than it did a year ago, and since last June, the number of Latinx managing directors and directors in the U.S. grew by 9%. The number of directors was not available.

After achieving its goal of having women make up 30% of its global managing directors and directors — a target the firm set in 2017 — BlackRock intends to further grow its female senior leadership globally by 3% each year.

Separately, a report from BlackRock showed that as of Jan. 1, Asian employees represented 18% of the firm's senior leadership in the U.S. and 26% of its total U.S. workforce, Black and Latinx employees each represented 3% of the firm's senior leadership in the U.S. and 6% each of total employees in the U.S. Over the course of 2020, 26% of new hires in the U.S. were Asian, 10% were Black and 11% were Latinx.

In addition, Ms. Gadsden-Williams and Manish Mehta, global head of human resources, sent a memo to BlackRock employees on April 1 announcing that the firm would undergo an external review of how its diversity, equity and inclusion policies affect stakeholders.

Meanwhile, TIAA is "doing rigorous pay equity analytics" to make sure it's providing opportunities equitably," said Corie Pauling, chief inclusion & diversity officer and head of corporate social responsibility at TIAA, Charlotte, N.C.

"We're being explicit about our focus on equity, which is a tangible space where you can measure impact in objective, quantifiable ways," Ms. Pauling said. "We're using data points, demographic trends, best practice information."

Ms. Pauling added: "Once people join the organization, we want to see mobility equity: Are they advancing at a relatively equitable clip? We also want to see equity in development and performance."

Ms. Pauling, who has been with TIAA since 2006, took on her current role at the firm in August 2018.

For Ares Management Corp., one area in which the investment firm is setting quantifiable targets is in recruiting talent. Indhira Arrington, Ares' recently appointed managing director and global chief diversity, equity and inclusion officer, said that the firm is mandating diverse slates for interviewing first-round candidates.

"That means having a minimum of four candidates, and half of them have to be diverse," New York-based Ms. Arrington said. "We're also asking our executive search partners to meet this diverse slate mandate."

Ms. Arrington, who joined the alternatives firm in January, added that Ares also conducted a qualitative analysis where all of its business units received inclusion scores from an outside consultant by various diversity dimensions, which included gender, race, ethnicity, gender identity, veteran status, disability and caregiver status.

"We want to ensure our strategy, processes and policies account for more than just gender and ethnicity," Ms. Arrington added.

Aegon Asset Management achieved its goal of 30% of women in senior management roles by the end of 2020. Lindsay Hudson, head of inclusion and diversity, London, says Aegon now plans to increase the number of women in senior management positions to 33% by the end of 2021. Ms. Hudson joined Aegon in January.

But when it comes to increasing the number of women in senior positions, Ms. Hudson said that having a long-term focus for employees can actually hold back diversity efforts.

Ms. Hudson noted that the industry and firm is struggling "across the board ... with having women in portfolio management roles" because of low turnover in these positions.

"You want that tenure among portfolio managers, but it makes it more difficult to move the needle on those numbers," Ms. Hudson said.

Aegon isn't publicly stating other targets such as minority employees in senior roles because the firm doesn't have the data, which makes such targets difficult to set, Ms. Hudson said.

To increase the number of diverse employees, not just women but also ethnic minorities and LGBT, Ms. Hudson said: "We need to have data to look at what is actually working and compare results over time not just through gender but also including race and social mobility, sexual orientation."

Over at Invesco Ltd., the Atlanta-based firm set a target to increase the representation of women among senior managers to 30% in 2020 from 26% in 2018. Having achieved that, the firm is now aiming to grow this figure to 35% by 2022.

However, Anna Penn, head of diversity and inclusion, North America, at Invesco said that data is a challenge when it comes to trying to get ethnicity metrics globally. "Right now, the only place that we hold a full set of ethnicity data is in the U.S., just due to government-mandated reporting there," Ms. Penn said. "We did launch a self-identification campaign in October of last year. So, we've asked all colleagues globally. It's completely voluntary." Ms. Penn added that the firm asked for primary identity.

Ms. Penn added that the firm will be able to create a better snapshot of employee base once the data is collected on for example, race and ethnicity, sexual orientation and gender identity.