Why Diversity Is More Important Than Meritocracy: Quotas, Talent, Wall Street | Sallie Krawcheck

Why Diversity Is More Important Than Meritocracy: Quotas, Talent, Wall Street New videos DAILY: Join Big Think Edge for exclusive video lessons from top thinkers and doers: ---------------------------------------------------------------------------------- We need to rethink our diversity strategy, says Sallie Krawcheck. What we’ve been trying for the last decade hasn’t been working, but what exactly is the problem? Research reveals that diversity is actually worse in meritocracies. Managers—and particularly middle managers, Krawcheck points out—fall into the cognitive trap of hiring people who “remind me of a young me“ (i.e. look like them and think like them) instead of more cognitively diverse people who would bring a missing skill set to a team. This is as important now, under the almost all-white male Trump administration, as it was in the 2008 Financial Crash. Wall Street is one of the most homogenous institutions in America, and Krawcheck has no doubt that having a more diverse set of minds in finance would have lessened the severity of the global crash. In addition, risk-taking and the poor decision making that results can be tracked to fluctuations in one hormone: testosterone. Whether it’s the housing bubble, America’s healthcare, or foreign policy, these are mistakes that affect millions of lives. As a CEO, Krawcheck’s approach and advice on diversity is changing. The current strategy has been a failure, but what if companies paid their managers, in part, based on the diversity of their hires? What if we thought of diversity as more important than meritocracy? Sallie Krawcheck is the author of Own It: The Power of Women at Work. ---------------------------------------------------------------------------------- SALLIE KRAWCHECK: Sallie Krawcheck is a financial feminist, CEO and Co-Founder of Ellevest, a recently launched innovative digital investment platform for women. She is the Chair of Ellevate Network, the global professional women’s network, and of the Pax Ellevate Global Women’s Index Fund, which invests in the top-rated companies in the world for advancing women. She is also the best-selling author of Own It: The Power of Women at Work. Before becoming an entrepreneur, she was CEO of Merrill Lynch Wealth Management, of Smith Barney and of Sanford Bernstein. Krawcheck has also been named among the top ten of Fast Company’s “100 Most Creative People“ in business list, as well as one of Entrepreneur Magazine’s Entrepreneurs to Watch. and she has also been referred to as one of the most successful and influential executives in financial services. ---------------------------------------------------------------------------------- TRANSCRIPT: Sallie Krawcheck: In my experience, most CEOs and boards “get” the power of diversity. There may be some who are giving it lip service still out there but in my travels these individuals understand that not only is it the fair thing to do, and it’s really the tenet upon which our country was built, but it’s really the smart thing to results, reaching different customer bases—I think they get it. Sadly, middle management is where diversity goes to die. And I’ve been thinking about this a lot recently because there’s research I’ve recently come across that says that diversity is actually worse in meritocracies. It’s really surprising, right? You’d think, you know a meritocracy, people will search out the best person, will search out the best strategy and we’ll judge them later, and the capitalism, the market forces, will decide. Huh. But it’s worse in meritocracies and I think it is exactly that sort of hands-off perspective, that if you’re a CEO you get it, you’re hiring all the time, et if you’re in middle management, you’re hiring, what? Once a year, twice a year, four times a year? Once every few years? It’s not a regular part of the job. And the research tells us that while there are these supposed benefits to diversity that we tend to retreat to the comfortable. We tend to overvalue products that we already have. We tend to overvalue environments in which we already exist. And by the way the longer we have it or exist in them, the more we overvalue so what you see in the middle management is, “I like working with people like me. Maybe I read some research report one time that said diversity was better but gosh, I like Jim,” right? “Gosh I like him.” Compound that with that we tend to allow ourselves in this country to ask the wrong question. And the question we usually ask when hiring people is, “Can you help me find the best person for the job?” The “best person for the job” — our cognitive shortcut is, typically, someone who reminds us so darn much of ourselves. Whereas what we should be asking is, “Can you help me fill out the... For the full transcript, check out