June 28, 2022

Corporate America’s Employment Problem Isn’t Just Race But Also Class And Elitism

Walking with one foot in your mouth is hard. Plant the other in a pit of quicksand and you’re pretty well stuck.

That’s the position Wells Fargo
co-CEO Charles “call me Charlie so I seem like a regularly guy” Scharf is in. During a Zoom call this summer, Charlie (because I feel so close to him, or at least his press releases) made what is called in the business an unfortunate remark. According to a Reuters report on Tuesday, when some Black employees asked about unmet diversity goals, he replied that finding non-Whites was difficult. Later, in a memo, he wrote, “While it might sound like an excuse, the unfortunate reality is that there is a very limited pool of black talent to recruit from.”

Scharf, whose last name in German means sharp, managed to say something sharp in meaning and anything but sharp in presentation or timing. A slew of criticism broke forth. As did a corporate press release on Wednesday:

Some of you may have seen media stories referencing a comment on diverse talent from my June “Our commitment to change” memo. I apologize for making an insensitive comment reflecting my own unconscious bias. There are many talented diverse individuals working at Wells Fargo and throughout the financial services industry and I never meant to imply otherwise. I’ve worked in the financial services industry for many years, and it’s clear to me that, across the industry, we have not done enough to improve diversity, especially at senior leadership levels. And there is no question Wells Fargo has to make meaningful progress to increase diverse representation. As I said in June, I have committed that this time must be different.

So hard to find new talent, such a burden. Except, there is plenty of talent of any color in the country. You just have to look around. That seems a core problem. Actually looking around.

As the release mentioned, the company is trying (but how recently?) to “help build engagement with historically Black colleges and universities, or HBCUs, and Hispanic-serving institutions, or HSIs.” A good start.

But there is a more encompassing issue, in that financial institutions, on the investment banking side as an example, look for people in small collections of schools, according to Business Insider:

Elite private schools dominate the list—and show how difficult it is to break into the top tier of investment banking. Last year, only three public schools—the University of Michigan, the University of North Carolina, and the University of California, Berkeley—were among the top ten, despite public schools’ student populations vastly outnumbering Ivy League universities’ student bodies.

Even though elite schools like those in the Ivy League often have student bodies with less than half White undergraduate students—in theory, a great place to find diverse groups—taken together, they have a smaller number of students than a single big state school.

Nothing new here or restricted to banking. Top tech companies, management consulting firms, and, well, so many big corporations want to forage among the “best and brightest” to pick choice morsels to feed the HR machine.

In other words, in addition to race, corporations have an elitist class problem. They assume that only a small cadre of institutions can produce the quality of individuals needed for the very best management possible.

There is a small problem: the best and brightest often do the worst and dimmest things imaginable. They have been behind virtually every major corporate screw-up of the last fifty years. At least.

Would there have been the string of accounting frauds in one company after another that led to the Sarbanes-Oxley legislation had not elite-trained executives thought they were too clever for words? Perhaps some less sure of themselves would not have embroiled the world in derivative creation and trading that resulted in the implosion of the global financial system in 2008.

Tech corporate leaders less taken with their brilliance and insight might not have created social networks and algorithms that embroiled the world in mass manipulation of public sentiment and the disasters that has spawned.

Maybe Wells Fargo could have avoided having to settle those charges of massive consumer fraud between 2002 and 2014.

A little humility goes a long way. And, maybe, with a more diverse set of students, and eventually employees, by race, ethnicity, religion, and class, there might be an easing of income inequality. A glorious twofer.

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