During the summer of 2020, companies across the economic spectrum came out in force to decry their desire to make their institutions more diverse and inclusive. Social media campaigns, press releases and marketing materials centered on the topic of ending racial discrimination in the United States could be found everywhere. However, as well-intentioned as many of those statements may have been, what is actually happening on the inside of each company separates the allies from the performers.

A popular theme among many of these initiatives was a call to hire and promote more diverse candidates, especially Black professionals. Despite these outward-facing positions, there is still clearly a long way to go, as the belief that there is a “lack of diverse talent” remains regardless of its inaccuracy.

“I think it’s a 100% incorrect and uncentered assessment and [I’ve] heard it my whole career,” Derek Melvin, managing director and co-head of origination and syndication for fixed income secured lending at Morgan Stanley, says.

Stagnant Processes

Melvin has worked at Morgan Stanley for more than 15 years, including the last five as part of the fixed income secured lending business. During that time, little has changed in terms of representation and inclusion for people of color across financial services.

“It’s no secret that the industry as a whole has struggled historically with issues of what I’ll call representational diversity,” Melvin says. “I have been doing this about 15 years and when I look across the street, it looks very, very similar to when I first started.”

Melvin’s experience mirrors the slow progress made over the last half century. Willie Carrington, principal and founder of Carrington & Carrington, an executive search firm focused on identifying candidates of color, has been in the business for more than 40 years. When he first started in 1979, Carrington found that diversity efforts were “not as orchestrated and directed” as they are now, but the institutionalization of these strategies has remained absent. Carrington points to a lack of intention and willingness to adapt as the primary culprit.

“I don’t believe that companies walk around saying, ‘Oh, boy. We don’t want to hire someone Black or Hispanic.” I think more than anything else they say they do,” Carrington says. “They gingerly put forth an effort to do it. What I mean by that is the companies want diversity to happen without changing much.”

This reliance on the traditional rather than the creative produces a chicken-or-the-egg situation when it comes to diverse representation, especially in leadership roles. Without hiring diverse candidates at more than just the entry level, companies indicate that there is no path forward for employees of color, causing those employees to move on rather than climb the ladder, according to Carrington. This shrinks the pool of available candidates but only because companies stick to their traditional recruiting and promoting practices, essentially creating a self-fulfilling prophecy.

“It’s easy to take from companies that only recruit diversity focus at a lower level because those people come in and see there’s no one in front of them. When they see there’s no one in front of [them], they don’t make plans to stay,” Carrington says, noting that “there are more who could be considered if companies focused directly on doing it,” but that companies are “focusing on the wrong thing.”

For the most part, many financial services firms follow one of two primary recruiting techniques, according to Melvin. The first is the apprenticeship model, in which candidates are brought in from college and trained. The second is more of a “poaching” model, with candidates being hired from other competing firms. These strategies limit the scope for companies.

“There are aspects about these approaches that make a lot of sense and that work, but I felt that we were still running into issues actually diversifying our workforce,” Melvin says.

The Necessity of Creativity

Melvin was fortunate enough to have more of a vision of how his career could progress when he started at Morgan Stanley, as he worked for two Black managing directors when he was hired. To ensure that such a situation can occur elsewhere in the company, Melvin, along with several other managing directors in the division, spearheaded a new initiative at Morgan Stanley in 2020: the Morgan Stanley Experienced Professionals Program.

Melvin first had the idea for the program in early 2020, but it didn’t really get off the ground until the summer when the murders of George Floyd and Breonna Taylor sparked a drive for more radical changes across society. The pilot program focuses on recruiting Black professionals from across industries for full-time roles within the fixed income and bank resource management divisions of Morgan Stanley.

To recruit for the program, Melvin and his colleagues did more digging than is usually completed in the traditional process, including spreading the word through external recruiters, partnering with experts in the diversity space and drilling down in their own networks. This more aggressive recruiting process was pared with a much wider scope. Rather than searching for candidates with specific industry experience, the program looked for successful professionals across industries, including consulting, legal, government work, nonprofits, education, science, technology and more.

“We were open-minded and wanted to make sure that any potential hires had a track record of excellence, a proven ability to adapt to different situations, and that they could thrive in a fast paced, sometimes stressful, but interesting work environment,” Melvin says.

Nearly 800 individuals applied for the program. Candidates were then evaluated by a cross-business unit of representatives at Morgan Stanley, after which 100 candidates were selected for interviews. Of those 100, 55 went on to the final interview stage and 20 were eventually hired for the program, starting Feb. 1. The program includes six weeks of intensive financial services training followed by eight-week rotations to find the right specialty for each new employee.

Due to the initial success of the program, Morgan Stanley is planning to make this an ongoing initiative and incorporate it into other business divisions outside of fixed income and bank resource management.

Creative solutions like the Morgan Stanley Experienced Professionals Program are the key to not only improving hiring practices but tearing down the lazy excuse that diverse talent is hard to find.

“This program has proven to us that there is so much talent out there, and technology is set up right now where you can sift through candidates much more quickly and more efficiently,” Melvin says. “And I think that’s helped us open our eyes as we continue to think about building a diversified workforce.”

While the program primarily recruits at the entry level, Melvin hopes that by creating more opportunities, there will be more successes and a greater chance at advancement, ultimately leading to a more diverse workforce up and down the organization.

March of 1,000 Years

Beyond creating programs, companies also need to be intentional and make diversity improvement efforts a core part of business. They need to see diversity as an investment, Carrington says. That means getting leadership not only behind these initiatives but actively involved, especially in siloed industries like financial services.

“The same people who are focused on generating revenue have to be focused on this issue too,” Melvin says. “That increased attention from business leaders helps create a culture where diversity and inclusion is considered part and parcel of the entire organization.”

“Companies don’t see diversity as an investment. They don’t have the long-term vision of what they need to do in order to make diversity real and a part of their everyday business,” Carrington says, suggesting that diversity efforts could be tied to the bonus pay of senior leaders to further incentivize progress.

In addition, the work toward creating a more representative and inclusive workforce doesn’t stop at recruiting. It must continue throughout the organization. This includes a consistent emphasis on sponsorship and mentoring as well as a dedication to providing real paths to advancement. Companies can’t just fall into the trap of assuming these things are happening, according to Melvin.

Unfortunately, patience also is a virtue that must be practiced. While initiatives like the Morgan Stanley Experienced Professionals Program show that action can be taken quickly and results can be expected in a matter of months, more long-term progress requires a sea change beyond just one company. Carrington, who has seen the ups and downs across four decades in executive recruiting, believes that there will continue to be an ebb and flow, but he also believes that 2020 will be an inflection point. During the last 12 months or so, his company received more than 90 unsolicited calls from companies looking for help with hiring diverse candidates, which was up from about 15 to 20 such calls the year before. But it will take more than phone calls to create real progress on what Carrington calls a “march of 1,000 years.”

“It’ll take the leadership to keep their foot on the pedal to make sure it grows and becomes an institutional part of companies,” Carrington says. “Those companies that really want to make that change will stay with it.”

Phil Neuffer is managing editor of ABF Journal.