Morgan Stanley’s CEO Succession Highlights Wall Street’s Diversity Problem

The question regarding the leadership of the American financial services company Morgan Stanley had been a hot topic in different circles ever since the current Chief Executive Officer of the company James Gorman expressed his plans to step down from the position.

Ever since, different names have come up, who could possibly fit in and take up the role of the Chief Executive Officer of the company.

Still, according to corporate governance experts, the lack of women from the possible successors of Gorman stresses the fact of lack of diverse talents in the field and also underscores the importance of building and giving space for diverse talents in the field. 

Since the announcement of Jams Gorman about his plans to step down from his current position as Chief Executive Officer of the company, many different names had been raised as the successor of Gorman.

Among the chosen names, the frontrunners who are most in with a chance at the job include the co-presidents of the company Ted Pick and Andy Saperstein, and also the head of investment management Dan Simkowitz.

According to the details given by James Gorman, he wishes to step down from his role in the company within a year. 

Morgan Stanley CEO James Gorman

One of the most important factors that raised concerns regarding the lack of diversity at the firm was the U.S. workforce diversity data that was published recently.

According to the data which was based on the details and reports from the Wall Street Banks, Morgan Stanely, even though one of the most successful and biggest of its kind in the nation, is also the firm that has seen the least percentage when it comes to women represented in leadership positions.

The percentage is way less for Morgan Stanley than other top banks in the United States as of 2021. 

According to a statement from Morgan Stanley, around 25% of employees who hold the title of ‘executive/senior officials/managers in the United States were women. Looking at some of the other major financial institutions, the percentage of women representation differs in a much higher number than this.

As for JP Morgan & Chase, the number is almost 29% whereas the same number for Bank of America Corp is around 36%.

The CitiGroup also has a higher number with 38%. Among companies that work in the dame field, only the arch-rival of Morgan Stanely, Goldman Sachs Group Inc has a number that is less than 25%. For Goldman Sachs Group Inc, the number goes down by around 23%. 

In line with the smaller number of women represented in the company, it was also noted that around 80% of people who handled the top positions in the company in the United States were also occupied by white people. The percentage of white representation in the company is very high compared to its peers.

The average white representation in the top positions in similar companies that operate in the same field is almost 67% to 78%. When asked about the difference in these percentages regarding representation, a representative of Morgan Stanley declined to make a comment or statement on the subject. 

In light of the discussions regarding the percentage differences in representation, the director of engagement for Domini Impact Investments LLC, Mary Beth Gallagher stated that a firm should have a pipeline of diverse talents if they want to find diverse leaders.

According to her, fulfilling these tasks would involve recruiting and carer-building efforts from the side of the company. She elaborated by saying that the logic is to ensure that there are the right people employed in the company that possesses the right set of skills and also have the authority to make decisions. 

Looking further into the workforce at Morgan Stanley, there are several women who handle some of the top positions in the company. One such example is Sharon Yeshaya, who is the Chief Financial Officer of the company.

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Sharon is also one of the 14-member operating committee of the company and she holds this position along with other two women employees. The company also has four women on the 14-member board of directors.

It should also be noted that there are 4 directors on the committee who identify themselves as ethnically diverse. 

In the past few years, Wall Street has struggled with its general image of being an ‘old boys’ club’ and has made different efforts to change that reputation.

The banks also made different changes in many of their policies and other schemes in order to impress the new generation of workers who are often described as millennials on social media and other public platforms.

The pressure from different social campaigns and movements of modern times like #MeToo and Black Lives Matter has also forced these institutions to bring about different changes in their operations. 

The details brought out by a Deloitte study that was published last year have some interesting facts about the number of jobs held by women in the financial industry. According to the data published, only 21% of seats on service boards were occupied by women in the country.

While the number of C-suite roles is occupied by 19% of women, there is a female representation of 5% in the position of CEO. One of the groundbreaking moves in female representation came in 2021 when Jane Fraser, the former president of the company, was announced as the new CEO of Citigroup. 

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