When Fannie Mae decided to redesign its minority-employment efforts back in 1993, “the first thing we did was to benchmark best-in-class,” says finance chief Tim Howard.
The results were surprising. “We found out,” says Howard, “that even before we launched a diversity program, we were already best-in-class.” Indeed, the companies that Fannie Mae assumed were far out front — “particularly the ones that were getting all the terrific media publicity” — were leading with their lips. “When you looked at what they were actually doing, the numbers weren’t all that impressive,” he adds, without mentioning any names. The ranks of African-American, Hispanic, Asian, and Native-American executives were extremely thin — especially within finance management, where “white guys in ties” prevailed.
So the shareholder-owned, publicly chartered mortgage-funding concern chose a new target: “to look like America,” reflecting the country’s minority-majority and male-female demographic mix. “It was a very ambitious goal,” the CFO acknowledges. Today, Fannie Mae is nearly the demographic mirror it had sought to become, with minorities holding more than 24 percent of its 633 management-group jobs, up from just over 9 percent in 1994. Representation of female managers has jumped to 45 percent from 40 (According to the 2000 census, Caucasians now comprise 69 percent of the U.S. population.) The company’s diversity push — initiated by former CEO James Johnson and sustained by current CEO Franklin Raines, an African-American — has led to a series of initiatives, including “networking groups” and mentoring programs. CFO Howard, who has assisted in these initiatives, says they have increased communication not only among minorities, but also among other interest groups, such as veterans and single parents.
And in finance? Progress there has been significant, though slower. Today, nearly 13 percent of Howard’s 82 corporate-finance managers are minorities, triple the 1994 rate. “Our goal is clearly to get those numbers higher,” says Howard. The task is complicated by the need to search among New York portfolio strategists and analysts for job candidates. “And diversity,” he says wryly, “is not widely sought after on Wall Street.”
If you judge strictly by the numbers, diversity doesn’t seem to be much sought after in the rest of U.S. industry either. The Council on Economic Priorities, for example, reports that minorities hold only 15.7 percent of the management jobs at large companies. And while media outlets regularly examine the best workplaces for minorities, most coverage focuses on corporate missteps. Coca-Cola, Texaco, and Denny’s all have made highly publicized efforts to redress offenses against minority managers.
And if Corporate America as a whole has little to trumpet regarding diversity, finance shouldn’t make a sound. Eight years after Fannie Mae began its initiative, a CFO survey shows that only 14 of the finance chiefs in the Fortune 500 (year 2000), 10 of the treasurers, and five of the controllers are people of color. While comparative numbers for minorities are not available, the number of women in the top three finance posts at the same companies continues to grow, albeit incrementally, based on CFO’s surveys. The 24 female CFOs in the Fortune 500, 14 more than in 1995, represent a 71 percent growth over six years, though still only a paltry 4.8 percent of the total. “Ethnically diverse candidates in finance are probably where women were 20 years ago — just beginning to emerge, and getting the experience and exposure they need to rise to the top,” says E. Peter McLean, vice chairman of global search firm Spencer Stuart.