DOING MY BEST TO ADDRESS HARD QUESTIONS ABOUT DIVERSITY & INCLUSION

July 6, 2021

I was asked to answer some random questions from followers of @overhead_recruiting on the topic of diversity and inclusion.  This is a topic that generates questions that are incredibly important, near and dear to my heart, extremely capable of misinterpretation and likely to offend someone regardless of the answer.  Additionally, I am not an expert on this topic.  Jefferies track record is mixed and while we have greatly improved (especially in recent years), we are not a role model of success and there is no declaration of victory in any aspect of this important issue.  As is my way, I tried to select from the very long list the questions that I wanted to answer the least, namely the hardest ones.  I answered to the best of my ability and I am only speaking for myself based upon my experience and beliefs.  My goal is to help acknowledge and encourage an important discussion that your generation has thankfully brought to the forefront of public interest.  I acknowledge that none of my answers solve the problem and some may not help at all.  Others may have better solutions and I am open to learning.  I will be sending out a note to the people whose questions I selected with an invitation to an hour Zoom discussion on Thursday at noon.   

Thank you for your participation,

Rich Handler

RICH HANDLER
CEO, Jefferies Financial Group
1.212.284.2555
[email protected]
@handlerrich Twitter | Instagram
Pronouns: he, him, his

1. In what way is promoting diversity important? Is it not better to have the same process for everyone?

If you want to have the very best company, you need the very best people.   If you only actively recruit and attract from a limited portion of society, by definition your company cannot have the best talent available.  Yes, diversity and inclusion is the right thing for goodness and fairness in society.   But it is also the best thing for revenues, earnings, clients, and shareholders.  Goodness and profits are not mutually exclusive.

2. Considering that Jefferies has a plethora of programs designed for traditionally underrepresented groups, would you consider replacing/adding to the programs based on socioeconomic background instead of ethnicity/gender/sexuality?

This is a difficult question and a very fair one.  At Jefferies, our recruitment programs are focused on broadening our pipeline to include candidates across all diversity groups, including those from low socioeconomic backgrounds. In London for example, we partner with an organization called Sutton Trust, which seeks to address social mobility so that every person has a chance to succeed in life.

Unfortunately, the reality is all groups don’t get the same support and resources from companies. This is not fair, and I get it completely.  Time and resources are finite, and choices must be made.  Traditionally underrepresented groups experience a disproportionate amount of professional obstacles and disadvantages, and I believe that is why they receive particular focus.  Additionally, it usually takes members of a group to unite together to create the momentum to establish, support and bring attention to those in their area that need help.  Without individuals who “own” the effort, it rarely gets to the level of success where it becomes effective and self-perpetuating.  I believe this explains why certain support groups get formed versus others, but that doesn’t mean we should just accept this as the only way forward.

For the past 15 years I have been heavily involved with a scholarship program at my alma mater, The University of Rochester. The program identifies potential college students who have incredible grades, recommendations and extracurriculars.  However, the second criteria for the scholarship is that they must have also faced incredible challenges and overcome enormous obstacles while they were miraculously prioritizing their education.  Not surprisingly, a large percentage of these scholars are from traditionally underrepresented groups, but many are not. I would be supportive of establishing a similar effort within Jefferies to help us identify and promote this spectacular category of future leaders (not members of one of the familiar diversity groups).

3. What have been the biggest challenges for promoting diversity and inclusion initiatives at Jefferies? Do you see culture issues that need to be addressed and changes?

Maybe I am naive, or people aren’t being honest with me because of my position, but I do not see pushback within Jefferies to promote diversity and inclusion.  I think the biggest challenge is time management.  We are a very flat, lean and client focused company.  It often feels like we have more business than we can possibly handle.  Every person at Jefferies wears multiple hats and the daily pressure on our people is intense.  Improving diversity and inclusion takes time and a lot of effort and often there are two steps forward and one step back.  Getting everyone to realize this is critical to our long-term success; the challenge and the opportunity is making the right short-term trade-offs.

4. Why sacrifice profits for this soft Twitter shit? Do you think the best will look elsewhere rather than be typecast?

Diversity and inclusion are consistent with maximizing long-term profits because the very best people always eventually win.  A culture of fairness, equality, mutual respect and meritocracy is not “soft Twitter shit,” but rather the best competitive advantage a company can ever have.  I purposely left your name off this question in the hopes that you might self-reflect in privacy and consider what is motivating you to think this way.

5. At what point does giving certain candidate’s preferential treatment in hiring practice, based off of immutable characteristics such as race or gender, erode confidence in a meritocracy?

At Jefferies, we are not looking to give anyone preferential treatment. Rather, we are working to create a culture that promotes diversity and inclusion and actively addresses conscious and unconscious biases in the hiring processes. It harms everyone in the underrepresented groups and everyone outside those groups if merit isn’t the ultimate determinator of who gets the job or promotion.  The goal must be to make sure we are seeing all the great candidates available, and then decide who is truly best.  However, if we are only seeing people from one or two subgroups, by definition we are not seeing the best.   People applying to Jefferies should feel they have an equal chance of building their career with us and enjoying it.   If the job goes to someone based on race or gender and they do not deserve it, it demotivates the entire existing team and makes it harder for future stars with diverse backgrounds to be given a fair chance when it is their turn.

6. One of the biggest drivers of pay gaps is continuing to ask what a candidate’s previously salary was. Do you think a step in eliminating pay gaps is to eliminate this question from the interviewing process?

In many cities in the U.S., it is illegal to ask a candidate their previous salary.  That is probably a good step toward eliminating pay gaps, but at the end of the day, it is up to everyone to understand and appreciate their value to a company and negotiate to the best of their ability.    Personally, I never negotiated any beginning compensation for any job I took.  I never accepted a job because of money, but rather I wanted to work for the company and was passionate about the opportunity.  Once I felt I proved myself and truly deserved more, I actively negotiated on my own behalf.

7. Diversity programs promote reverse racism by excluding white individuals or those who are not considered minorities. What are your thoughts on that?

Interestingly, this question was asked anonymously but I think it is worth answering.  If you have lived your life enjoying the benefit of having the playing field stacked in your favor and you are now upset because others have a fair chance to compete, I am not sympathetic.

8. Do you think attempts by firms like Jefferies to implement diversity programs actually makes a difference in the organization? Or does it just conveniently give some PR boosts as diverse candidates churn in the junior ranks?

There is nothing about our effort that is done to “tick a box” or “for show.”  I passionately believe that diversity and inclusion will make Jefferies the best firm we can be and without it we are destined to be mediocre.  I know our Board, my senior partners, and our employees are as passionate about this as I am.  If everyone in a company has similar history, perspectives, relationships, and thoughts, how can you possibly compete against a company that brings together people from all walks of life and promotes an open exchange of ideas and solutions?  The world is diverse, with challenges and opportunities, and any company that wants to be relevant and important must mirror that diversity.

9. How do you balance promoting diversity without prejudicing “non-diverse” applicants? For example, if there are two candidates with identical skill sets and value-adds, chances are the “diversity-hire” will get the job. Just wondering how you strike a balance between promoting diversity and ensuring fair hiring practices? Further, how do you balance meritocracy with promoting diversity? Obviously, this is a tough topic with no correct answer but interested to hear your perspective.

People can be similar, but no two people are identical with skills and value-add.  As long as we have a process that casts the net as wide as possible to capture as many qualified candidates, both diverse and not, we must let merit win in the end.  Merit includes many characteristics that might not be obvious like empathy, tenacity, hunger, breadth, humor, kindness, inquisitiveness, and passion for the job.  In the end, it is up to all of us to find the truly best all-around candidate who wins on merit.

10. What has been Rich’s most formative professional or personal experience related to diversity, equity and inclusion?

Right after the George Floyd murder I held a Zoom session with a large cross-section of my scholarship students from the University of Rochester.  It was extremely emotional, and they were incredibly angry.  I felt a great deal of that anger directed towards me as someone they viewed as having some power to make the world better, but not doing enough from their perspective.  It was very harsh and directed right at me, and I am still hurt by the entire event.  That said, it showed me how much raw pain exists and how much important work truly needs to be done.  We are far from a fair and equitable world, but I am committed to doing my part.

11. Promoting D&I is critical in all industries, especially finance. Unfortunately, often times there are toxic employees who view diverse hires as only getting the job because of their race, gender, etc. and not because of their skill, background, etc. How can a company address this beyond boilerplate D&I training sessions that often times are not taken as seriously as they should be?

We have allyship training, unconscious bias training sessions, and many wonderful outside speakers sponsored by our diversity and inclusion groups.  We will always give our people the benefit of the doubt; education and awareness is definitely the most important way to overcome small-minded thinking.  That said, when we see toxic people who have no desire to learn or grow, we figure out a way to part ways as quickly as possible.  Life is too short.

12. How can we remove unconscious bias deeper in the hiring funnel? It’s hard to improve inclusion and diversity unless we can actively coach hiring managers to remove unconscious bias.

We made unconscious bias training mandatory this year and will continue offering training annually.   Out of 4,000 people at Jefferies, we are down to about 37 who haven’t taken it yet.  We just sent out a final notice and after that, I will be calling each one individually to make sure they participate.  That said, the training alone will not quickly solve this problem.  We need to promote and reward those who “get it” and do the opposite for those who do not.  It is a process, and we are committed to it.

13. Many banks have implemented policies and procedures to address D&I in the workplace / in their hiring practices. It seems like the focus is primarily on junior / mid-level employees, while the senior ranks remain an “old boys club” in most Wall Street banks. What is Jefferies doing to address this and how does it plan to ensure systemic issues around gender pay disparity are addressed moving forward?

Ten years ago, we were 90/10, men to women in our most junior ranks.  Our black and brown junior employees were extremely limited.  We had no idea what percent of our junior workforce were members of the LGBTQ+ community.  Today our incoming classes are closer to 50/50, with much thanks going to jWIN, our women’s initiative.  We have made significant progress (though not enough) attracting people of color through our J-NOBLE (Jefferies Network of Black and Latino employees) and JEMS (Jefferies Ethnic Minority Society) employee resource groups.  We are proud to have a vibrant and active group called JMosaic+ that is helping us make sure we attract great talent from the LGBTQ+ community and to insure they feel welcomed and empowered.  We also have J-Asia, jVets, and NextGen (our Analyst & Associate community) which also add to our efforts.  The responsibility to improve diversity and inclusion is not delegated to these groups.  These groups are helping the rest of the firm to understand the issues, challenges and sensitivities to get this right for all of the groups, and then it is up to all 4,000 of us to execute.  It has worked well in the junior area because it is more about educating diverse people about the opportunity to work at Jefferies and in finance.  If we target younger people (we have done some work with people in high school and college), we can get them educated and informed enough to apply to Jefferies.  We can then increase diversity while also increasing quality.  It is much harder to do this at the senior levels because our industry has never gotten this right and the talent pool of experienced people is smaller, plus there is a lot of competition seeking these stars.  One longer term strategy is to make sure that we consistently recruit quality diverse candidates to build up our own pool and then make sure we retain the people.  This is done by commitment, focus, training, mentoring, and creating true career paths for everyone.  The second strategy is more immediate and is to recruit diverse senior talent from other related industries – not only from our own industry – who we can teach how to use their considerable skills toward a career in financial services.  Compensation often follows production and responsibility in our industry, so the best way to really deal with the gender pay disparity is to create the roles and opportunities for women and diverse senior members to succeed in the areas that are most rewarded in finance.  When we do this and we have a critical mass of successful diverse people, it becomes easier to attract other top talent since we will be viewed as a firm that embraces people from all walks of life.  Success begets success, but it doesn’t happen overnight.  We are on the right path, but we are not close to where we need to be.  Having a strategy and a consistent commitment is the only way we know to eventually succeed.

14. Why do companies only focus on the back end of diversity pipeline (recruiting people to hit a diversity quota) vs putting effort on the front end (creating academies, scholarships, etc. for the youth in minority/disadvantaged areas)?

Companies are under constant short-term pressure to generate revenues, earnings, and profits for their stakeholders.  Companies that are able to do this consistently are able to pay their employees well and grow by hiring new ones.  Companies that do not generate the returns aren’t able to hang onto their existing employees and clients, let alone generate new ones.  It is quite a treadmill with a lot of short-term pressure.  I don’t know many companies that have actual quotas because it implies hiring people who do not deserve it based on merit.  Investing in academies, scholarships and other targeted approaches for diversity is great, but requires a very long-time horizon and isn’t always consistent with the short-term profit pressures.  Also, the odds of getting these people to eventually join your company after a long investment period isn’t always high.  Fortunately, Jefferies is now at the point in our evolution where we can afford to invest in the future by starting earlier and targeting diverse employees to join us.  Additionally, many of us have been doing the long-term investment in this area personally (since it is individual money and not shareholder money) and we are reaping the long-term benefits of having some of these amazing candidates join Jefferies.  The multi-pronged approach of early investing and immediate recruiting is best.  We’ve been doing quite a bit of it for about ten years at Jefferies, but I wish we had started sooner.

15. I would love to hear about veterans recruitment, while most finance recruiting tends to focus on top MBA programs, would there be any interest in recruiting people right from the force?

I’m very proud that one of our groups is jVETS, Jefferies’ Veterans network.  The goal is to recruit, develop, promote, and retain veterans at Jefferies. The team strives to create a community of peers that understand the military-to-private sector transition. We have leaders in many of areas across Jefferies who have served our country and they have been incredibly productive and strong culture carriers.

16. Do you believe in quotas? And if not, then how do you increase specifically females in senior level roles / board level?

I can understand why this can be perceived as a simple solution to a complex problem.  It isn’t.  It harms morale of people who are not being targeted and detracts from the accomplishments of those that are being assisted.  The pool of talent needs to be expanded as greatly as possible which requires a lot of effort to populate the candidate pool with people who through no fault of their own find it hard, if not impossible to be considered.  Then merit must prevail.  The Board level is somewhat easier as the absolute numbers are smaller and a targeted approach to get the best candidates from a diverse pool is possible.  We have made solid strides in this at Jefferies.  Again, merit must prevail.

17. In the recent era of remote working, how do (did?) you promote individuals’ identity (racial, religious, sexual orientation, you name it) in a positive way when so many folks could feel no connection to their colleagues (who they may have never met)?

In a remarkable twist, remote working has helped our firm better embrace the importance of diversity and inclusion and actually inspired more of our people to get actively involved.  Working from 4,000 individual home offices with no travelling or in-person socializing became an incredible equalizer.  Suddenly we were all merely the same size boxes on a Zoom and we longed for human connection, even if it was virtual.  We were all open to content that during more normal times many of us might have dismissed.  Our diversity and inclusion groups really distinguished themselves by offering thoughtful speakers, training sessions, unique entertainment, and emotionally charged conversations.  People who had never met in person got to know each other in a more human and empathetic way because we were all captive audiences yearning for interaction.  As we all begin to return to the office while still maintaining the flexibility of the hybrid work model, my bet is that the virtual and real worlds will both be used to better the cultural connection and fabric of Jefferies.

18. Why was diversity & inclusion at Jefferies not prioritized as heavily as it is now? You’ve been CEO for about two decades now. Why the sudden shift?

We have been working on this in earnest for about ten years.  The previous five we have made more progress and the last two, even more so.  I’ve been working on this for over 15 years through my personal philanthropy.  My gut reaction is that for too long we were trying to get to critical mass at Jefferies as we were a smaller player in a very large and competitive pond.  That excuse is very lame and I’m pretty embarrassed by it.  The fact of the matter is we have finally begun to have a cohesive, comprehensive, and global plan to address this.  Jefferies has a very long way to go and we are not yet a role model for success.  We intend to become one.

19. Why are some ethnic minorities prioritized over others? In most cases many minorities don’t have connections that white people may possess, however there tend to be special programs for black minorities and none for Asians.

I don’t have a good answer for this.

At Jefferies, we aim to achieve a broad, diverse pipeline and hire the best candidate. We are not perfect. And we don’t always get it right. But we do have a very significant participation rate at Jefferies with the Asian community. However, we never had internal sponsorship with any of our people to spearhead an initiative focused on Asians.  That changed dramatically with the horrible events in Atlanta.  We had a very emotional group Zoom and people spoke openly about the need to make this a priority at Jefferies.  Within days we had a group organized and leaders from around the firm emerged to help.   It shouldn’t take internal champions to decide to make something like this happen, but in the real world with all of the day to day pressures we are under, that is unfortunately what it takes sometimes.  What we are learning is that there is pain, hardship, persecution, and disadvantages across the population.  In many ways the obstacles are very different, in other ways they are the same.  I take great pride that our various groups are coming together to unite to tackle the problems and inspire the rest of our company to join them with the result being to make Jefferies culture ever better.

20. How do you ensure minority hires come from diverse backgrounds? It has been argued those hires are selected from a very limited pool with similar backgrounds i.e. IVY league schools, thus limiting diversity overall.

No doubt there are amazing and diverse candidates from the very top ranked schools.  That said, we are very proud to recruit from almost 100 different colleges and universities and have found it a great way to gain access to top talent with different perspectives and diverse backgrounds.

21. How can large companies set the tone for their industry in promoting a truly diverse workplace that is representative of the demographics of where they operate?

The only way I know how to do this is to do our best to lead by example.  Talk is cheap, and actions matter.  Things that are truly important, like sustainable change, never happen quickly or without major effort.  Change requires people to get out of their comfort zone, and that often creates uncomfortable tension.  I believe Jefferies, and every company that wants to successfully tackle this worthy challenge, will need to be consistent, committed, strategic, communicative, and honest.  Whichever companies get this right will not only become role models in their industry for diversity, but they will also become the most successful ones because they will have an abundance of the most important asset for any company: human capital.

22. Similar to how they are having green bonds to encourage companies be more environmental friendly, do you think having a social bond would be possible and achieve the effects green bonds currently have?

There is no doubt that every company responds to incentives and penalties if they are properly structured to promote desired outcomes.  In the past several years, Environmental, Social and Governance (ESG) factors have become a major part of identifying risks and growth opportunities.  When you begin to measure intangible assets with the correct belief that they will have a strong predictive correlation to future success, leaders of companies will adapt accordingly.  The world has moved in this direction, and I believe this is a very good thing.  This is not transitory, and I believe this is a critical component to get right to compete today and into the future.

23. What should our generations legacy be for diversity and inclusion?

Your generation is remarkable, and I am personally in awe of you.  I have four of you in my family and I cannot get enough of them and their friends.  I do my best to spend as much time as possible with all of you at Jefferies, the University of Rochester and my four adult children and their friends.  I always learn more than I teach, and it is always fun.  Your legacy will be that you will teach my generation how to truly treat all people as equals, regardless of sex, race, religion, or sexual orientation.  You will make sure our planet is protected and you will work to make sure every aspect of our society is better.  None of this will be easy or straightforward but this will be your legacy, and we are all counting on you to make it better for your children and grandchildren.

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