Et tu, State Street?
When the Boston financial services company disclosed in October that it had to pony up $5 million to settle claims of gender and racial bias in pay, it was a big come down for an institution behind the Fearless Girl statue in lower Manhattan.
This is the company whose guerrilla art — a young girl, arms akimbo, staring down the Wall Street bull statue — made its brand synonymous with fighting for equal treatment of women. It was all too easy to paint State Street as hypocrites because anyone following the company knows it has been walking the walk on diversity in recent years, whether it’s setting metrics on hiring and promoting women and people of color to being one of the first companies to join the city of Boston’s gender wage gap database.
“It was incredibly frustrating, ” said Lynn Blake, an executive vice president at the company’s investment arm, State Street Global Advisors, who helped get the Fearless Girl project off the ground. “I have never been more proud of what State Street has accomplished, not just through Fearless Girl, but also through the initiatives within State Street. That’s all relatively new in the last five years — this focus on diversity and inclusion and having really concrete goals.”
After bad headlines, some companies may opt to go quiet on gender diversity. Not State Street.
“It doesn’t change anything,” State Street chief executive Jay Hooley tells me. “If anything, it might embolden us even more.”
That’s exactly the response you want to hear.
State Street found itself in the government crosshairs as part of an audit of federal contractors.
More than three dozen firms, including Bank of America and KPMG, have also settled workplace discrimination charges as part of a record year of fines handed out by the Department of Labor to federal contractors, according to analysis done by Bloomberg Law.
The government asserted that State Street in 2010 and 2011 had discriminated against 305 women at the senior vice president, managing director, and vice president levels at its downtown headquarters by paying them less than men in similar positions.
The agency also claims the company paid 15 black vice presidents less than white employees with the same titles.
The affected female and black employees will receive a total of $4.5 million in back pay and nearly $508,000 in interest.
Kathy Horgan State Street’s chief human resources officer, said the company tried to replicate the government’s findings but couldn’t come up with the same disparities.
“We have a disconnect,” she said.
State Street decided to settle rather than keep fighting, which could have dragged on for years.
Ron O’Hanley — who ran State Street Global Advisors and is set to succeed Hooley at the end of 2018 — said paying the fine has made the company sharpen its own message on gender equity.
“We never intended Fearless Girl to state – ‘mission accomplished, we’re done,’ ” said O’Hanley, who became chief operating officer in November. “Maybe we will never be done. We certainly are not done yet.”
So let’s be clear on what State Street has done to advance women. Back in 2012, the company began setting diversity goals for senior management; the strategy was broadened in 2015 to include lower-level managers such as assistant vice presidents. Why then? Because research started to pour out on how more diverse teams lead to better financial results.
The numbers will bear out that the company has made progress but more needs to be done. More importantly, State Street hasn’t been afraid to divulge its gender diversity numbers: Forty-seven percent of its employees are women; 18 women are executive vice presidents, or 22 percent of the group; 156 women are senior vice presidents, or 28 percent; and 1,894 women are vice presidents, or 34 percent.
Four women are part of the 17-person management committee, and three women are on the 10-person board.
State Street is also focused on making sure its female pipeline is strong. Through the end of 2016, 45 percent of its hires were female, and women made up 43 percent of the last annual round of executive promotions.
A friendlier environment to women means promoting the idea that it’s OK to be on some kind of flexible schedule, which is the case for 78 percentof State Street employees. Mentoring is key, and in particular the creation of a Leading Women group in 2010 — made up of female executive vice presidents — who act as both a support and a business strategy network. Horgan, the chief human resources officer, credits the group with encouraging her to pursue a senior management role.
So what about the Fearless Girl campaign? State Street Global Advisors commissioned the statue to promote its new policy of getting public companies to add more female board directors. The investment unit, which has $2.67 trillion under management, holds stakes in thousands of companies.
In 2018, SSGA plans to turn up the heat on more public companies that don’t have a woman on its board. The company will extend its proxy voting guidelines beyond the United States, United Kingdom, and Australia to 1,200 public companies in Canada and Japan.
Some 55 percent of companies in Japan’s TOPIX 500 are all male. Similarly, close to 40 percent of the companies on the Toronto Stock Exchange do not have a female director.
When the Fearless Girl statue was installed in March, State Street identified 476 companies that did not have a woman on their board and informed them it would vote against the chair of their nominating committees if there were no female directors or candidates.
Of those, State Street voted against 400 that had not initiated efforts to increase diversity. State Street stopped short of voting against 42 companies that had shown progress in addressing the lack of gender diversity; seven of those companies have since added a woman to their boards.
State Street has a temporary permit to display Fearless Girl in Manhattan. It’s hoping she will become a permanent fixture somewhere near Wall Street.
Hannah Grove, State Street’s chief marketing officer, hinted at another catchy campaign in the works. “This isn’t one and done,” she said.