[House Hearing, 116 Congress]
[From the U.S. Government Publishing Office]


                       GOOD FOR THE BOTTOM LINE:
                     A REVIEW OF THE BUSINESS CASE.
                      FOR DIVERSITY AND INCLUSION

=======================================================================

                                HEARING

                               BEFORE THE

                       SUBCOMMITTEE ON DIVERSITY

                             AND INCLUSION

                                 OF THE

                    COMMITTEE ON FINANCIAL SERVICES

                     U.S. HOUSE OF REPRESENTATIVES

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                              MAY 1, 2019

                               __________

       Printed for the use of the Committee on Financial Services

                           Serial No. 116-22
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]


                              __________
                                

                    U.S. GOVERNMENT PUBLISHING OFFICE                    
37-521 PDF                  WASHINGTON : 2019                     
          
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                 HOUSE COMMITTEE ON FINANCIAL SERVICES

                 MAXINE WATERS, California, Chairwoman

CAROLYN B. MALONEY, New York         PATRICK McHENRY, North Carolina, 
NYDIA M. VELAZQUEZ, New York             Ranking Member
BRAD SHERMAN, California             PETER T. KING, New York
GREGORY W. MEEKS, New York           FRANK D. LUCAS, Oklahoma
WM. LACY CLAY, Missouri              BILL POSEY, Florida
DAVID SCOTT, Georgia                 BLAINE LUETKEMEYER, Missouri
AL GREEN, Texas                      BILL HUIZENGA, Michigan
EMANUEL CLEAVER, Missouri            SEAN P. DUFFY, Wisconsin
ED PERLMUTTER, Colorado              STEVE STIVERS, Ohio
JIM A. HIMES, Connecticut            ANN WAGNER, Missouri
BILL FOSTER, Illinois                ANDY BARR, Kentucky
JOYCE BEATTY, Ohio                   SCOTT TIPTON, Colorado
DENNY HECK, Washington               ROGER WILLIAMS, Texas
JUAN VARGAS, California              FRENCH HILL, Arkansas
JOSH GOTTHEIMER, New Jersey          TOM EMMER, Minnesota
VICENTE GONZALEZ, Texas              LEE M. ZELDIN, New York
AL LAWSON, Florida                   BARRY LOUDERMILK, Georgia
MICHAEL SAN NICOLAS, Guam            ALEXANDER X. MOONEY, West Virginia
RASHIDA TLAIB, Michigan              WARREN DAVIDSON, Ohio
KATIE PORTER, California             TED BUDD, North Carolina
CINDY AXNE, Iowa                     DAVID KUSTOFF, Tennessee
SEAN CASTEN, Illinois                TREY HOLLINGSWORTH, Indiana
AYANNA PRESSLEY, Massachusetts       ANTHONY GONZALEZ, Ohio
BEN McADAMS, Utah                    JOHN ROSE, Tennessee
ALEXANDRIA OCASIO-CORTEZ, New York   BRYAN STEIL, Wisconsin
JENNIFER WEXTON, Virginia            LANCE GOODEN, Texas
STEPHEN F. LYNCH, Massachusetts      DENVER RIGGLEMAN, Virginia
TULSI GABBARD, Hawaii
ALMA ADAMS, North Carolina
MADELEINE DEAN, Pennsylvania
JESUS ``CHUY'' GARCIA, Illinois
SYLVIA GARCIA, Texas
DEAN PHILLIPS, Minnesota

                   Charla Ouertatani, Staff Director
                Subcommittee on Diversity and Inclusion

                     JOYCE BEATTY, Ohio, Chairwoman

WM. LACY CLAY, Missouri              ANN WAGNER, Missouri, Ranking 
AL GREEN, Texas                          Member
JOSH GOTTHEIMER, New Jersey          FRANK D. LUCAS, Oklahoma
VICENTE GONZALEZ, Texas              ALEXANDER X. MOONEY, West Virginia
AL LAWSON, Florida                   TED BUDD, North Carolina
AYANNA PRESSLEY, Massachusetts       DAVID KUSTOFF, Tennessee
TULSI GABBARD, Hawaii                TREY HOLLINGSWORTH, Indiana
ALMA ADAMS, North Carolina           ANTHONY GONZALEZ, Ohio, Vice 
MADELEINE DEAN, Pennsylvania             Ranking Member
SYLVIA GARCIA, Texas                 BRYAN STEIL, Wisconsin
DEAN PHILLIPS, Minnesota             LANCE GOODEN, Texas
                            
                            
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on:
    May 1, 2019..................................................     1
Appendix:
    May 1, 2019..................................................    31

                               WITNESSES
                         Wednesday, May 1, 2019

Budson, Victoria, Co-Founder and Executive Director, Women and 
  Public Policy Program, Kennedy School, Harvard Univeristy......     4
Guzzo, Richard, Partner, Mercer..................................    11
Trimble, Adrienne, President, National Minority Supplier 
  Development Council............................................     6
Verrett, Rory E., Founder and Managing Partner, Protege Search...     9
Von Hoene, William A., Jr., Senior Executive Vice President and 
  Chief Strategy Officer, Exelon Corporation.....................     8

                                APPENDIX

Prepared statements:
    Budson, Victoria.............................................    32
    Guzzo, Richard...............................................    35
    Trimble, Adrienne,...........................................    70
    Verrett, Rory E.,............................................    72
    Von Hoene, William A., Jr....................................    75

              Additional Material Submitted for the Record

Beatty, Hon. Joyce:
    Written statement of Chris Armstrong, Co-Owner, Veritas 
      Culture....................................................    85

 
                       GOOD FOR THE BOTTOM LINE:
                     A REVIEW OF THE BUSINESS CASE
                      FOR DIVERSITY AND INCLUSION

                              ----------                              


                         Wednesday, May 1, 2019

             U.S. House of Representatives,
                          Subcommittee on Diversity
                                     and Inclusion,
                           Committee on Financial Services,
                                                   Washington, D.C.
    The subcommittee met, pursuant to notice, at 2:07 p.m., in 
room 2128, Rayburn House Office Building, Hon. Joyce Beatty 
[chairwoman of the subcommittee] presiding.
    Members present: Representatives Beatty, Green, Gottheimer, 
Gonzalez of Texas, Lawson, Pressley, Dean, Garcia of Texas, 
Phillips; Wagner, Lucas, Mooney, Kustoff, Hollingsworth, 
Gonzalez of Ohio, Steil, and Gooden.
    Ex officio present: Representatives Waters and McHenry.
    Chairwoman Beatty. The Subcommittee on Diversity and 
Inclusion will come to order. I note a quorum is present.
    Without objection, the Chair is authorized to declare a 
recess of the subcommittee at any time.
    Also, without objection, members of the full Financial 
Services Committee who are not members of this subcommittee are 
authorized to participate in today's hearing.
    Today's hearing is entitled, ``Good for the Bottom Line: A 
Review of the Business Case for Diversity and Inclusion.'' I 
now recognize myself for 4 minutes to give an opening 
statement.
    Thank you, everyone, for joining me today for this 
trailblazing hearing of the Subcommittee on Diversity and 
Inclusion.
    This hearing speaks to the foundation of why this 
subcommittee exists because diversity and inclusion is a 
business imperative. Those who embrace it will be more likely 
to prosper, and those who ignore it will be more likely to 
fail.
    According to a study conducted by McKinsey & Company 
entitled, ``Delivering Through Diversity,'' researchers have 
found that companies in the top 25 percent for gender and 
ethnic diversity on executive teams were 21 percent and 33 
percent more likely to outperform on profitability, while 
companies in the bottom 25 percent for both gender and ethnic 
diversity are 29 percent less likely to achieve above average 
profitability.
    Today's hearing seeks to set the stage and highlight the 
positive, tangible ways diversity leads to greater financial 
performance. This topic does not stop at the jurisdiction of 
this committee either.
    This narrative applies equally across corporate America. 
According to a Harvard Business Review article entitled, ``How 
Diversity Can Drive Innovation,'' employees at diverse 
companies are 45 percent more likely to report that their 
firm's market share grew over the previous year, and 70 percent 
more likely to report that the firm captured the new market.
    It is also important to remember that diversity and 
inclusion goes far beyond race and gender. There are many 
studies that I could quote, but studies by Intel show that 
improving ethnic and gender diversity in the United States 
technology workforce represents a massive economic opportunity 
that could create between $470 billion to $570 billion in new 
value for the tech industry.
    There are also studies, I am pleased to say, through the 
National Minority Supplier Development Council that reinforce 
this. This is not new to us. For many decades we have been 
working on diversity, so I am proud to have today's hearing 
establish new policy setting for diversity and inclusion 
established by the Democratic Majority under the leadership of 
Full Committee Chairwoman Maxine Waters.
    I look forward to hearing from the expert witnesses today 
on how to tackle the business case and to further take action 
in transforming the culture of the financial services industry 
and beyond.
    I reserve the balance of my time for the Chair of the full 
Financial Services Committee, Chairwoman Maxine Waters.
    The Chair now recognizes the ranking member of the 
subcommittee, Mrs. Wagner, for 4 minutes for an opening 
statement.
    Mrs. Wagner. Thank you, Madam Chairwoman, for hosting our 
hearing today entitled, ``Good for the Bottom Line: A Review of 
the Business Case for Diversity and Inclusion.'' As the 
chairwoman has made reference to, and many in this audience 
know, McKinsey & Company published a study in 2015 identifying 
a direct correlation between corporate diversity and 
profitability of a company.
    Diversity can also help drive productivity, innovation, and 
good decision-making. When we talk about how diversity is good 
for business, I appreciate that it can encompass several 
different facets.
    It can mean, as Mr. Guzzo writes in his testimony, that a 
company's profits are growing or that a company is attracting a 
talented diverse workforce or that it is attracting more 
investment. Mr. Von Hoene describes diversity as indispensable 
to Exelon's success and growth. And Mercer has taken tremendous 
strides in this field as well.
    Identifying how financial services companies can continue 
to invest in diversity and inclusion is a primary purpose of 
this hearing, and I am thankful to everyone who is lending 
their best practices and expertise.
    I look forward to discussing the business case for 
diversity, but let me be clear: Promoting diversity and 
inclusion is not just good for business; it is also simply the 
right thing to do.
    It is right for businesses to reflect the diverse make-up 
of our country, and we need to focus on working to change 
business culture and environments from within. It is nearly 
impossible to legislate away cultural barriers or attitudes. A 
change in how a company treats and embraces women and 
minorities must come from active engagement and leadership.
    That is why I am so pleased to welcome our witnesses today, 
leaders from business and academia who are leading the way and 
helping us do better in this space.
    Mr. Guzzo, thanks for being here. I had the pleasure of 
meeting your Mercer colleague, Pam Jeffords, in March, when she 
participated in a very thoughtful, productive roundtable 
discussion on diversity and inclusion. I understand that she 
was not able to testify here today, but I want to thank you for 
being here. I look forward to your testimony.
    I have read through a copy of the report you included with 
your testimony entitled, ``When Women Thrive, Businesses 
Thrives,'' and I am excited about the conversation that Mercer 
is leading to offer thoughtful solutions to addressing female 
participation in the workforce and senior management. I hope we 
will hear more today about how to bring about cultural and 
programmatic changes that help women thrive.
    I look forward to diving into practical strategies that 
help financial services companies take the next steps in 
ensuring that women can rise through the professional ranks, 
even as many are simultaneously raising the next generation.
    Thank you all for sharing your time with us, and thank you 
to my dear friend and colleague, Chairwoman Beatty, for your 
leadership.
    I yield back, and reserve one minute for the ranking member 
of the Full Committee, Mr. McHenry.
    Mr. McHenry. I thank the ranking member for yielding. Thank 
you, Ms. Wagner, for your leadership.
    And thank you, Chairwoman Beatty, for your leadership.
    At our last hearing, I highlighted a Harvard Business 
School study on the distinction between diversity and 
inclusion, with inclusion being the driving force behind 
success in diverse companies.
    I will take it one step further to say that the market 
actually rewards diversity in recruiting, hiring, and retaining 
that diverse talent.
    So how we reward diversity, how we drive inclusion, should 
be the conversation we have today. I appreciate this great 
panel for assembling today. It was our intention for this to be 
a statement that we are bipartisan by having a bipartisan 
panel.
    Nonetheless, we have the same members of the panel that we 
had negotiated for a bipartisan hearing. We just have four 
Democrat witnesses and one Republican witness, even though we 
had offered to make this a fully bipartisan panel, because I 
think all of you have a great story to tell and we have a lot 
to learn from you. So, thank you for being here.
    And with that, I yield back.
    Chairwoman Beatty. Thank you.
    Today, we welcome the testimony of a very diverse panel of 
five witnesses, and as has just been said by the ranking 
member, we are very honored that the Majority has four 
witnesses and the Minority also has a witness.
    First, we welcome the testimony of Victoria Budson, co-
founder and executive director of the Women and Public Policy 
Program at the Harvard Kennedy School of Government. She also 
served as chairperson of the Massachusetts Committee on the 
Status of Women from 2011 to 2016.
    Second, we welcome the testimony of Adrienne Trimble, 
president of the National Minority Supplier Development Council 
(NMSDC). She is a known leader in advancing corporate 
diversity, equity, and inclusion initiatives. Prior to her role 
with NMSDC, she was general manager of diversity and inclusion 
at Toyota Motor North America.
    Third, we are proud to welcome the testimony of William Von 
Hoene. He is the chief strategy officer and senior executive 
vice president of Exelon. A former partner at the law firm of 
Jenner & Block, in 2016 Mr. Von Hoene was appointed as co-Chair 
of the Obama Foundation Inclusion Council, which assists the 
foundation in establishing a framework for diversity and 
inclusion in all aspects of its operation.
    Fourth, we welcome the testimony of Rory Verrett, founder 
and managing partner of Protege Search. Mr. Verrett is a former 
leader in the diversity and public affairs practices of two 
global executive search firms, and the first ever head of 
Talent Management at the National Football League.
    He is the host of Protege podcasts, an award-winning series 
of podcasts on career success, and has 20 years of experience 
in recruiting, developing, and mentoring high-performing 
executives from diverse backgrounds.
    Finally, we welcome the testimony of Rick Guzzo, partner 
and co-founder of the Workforce Sciences Institute at Mercer. 
He has written dozens of professional papers and was one of the 
primary authors of ``Bridging the Diversity Gap,'' the report 
on the Chicago financial services sector initiatives to bring 
more African-American and Latino talent into the industry.
    He has earned a Bachelor's degree from the Ohio State 
University, I put emphasis on that, and a Ph.D. from Yale 
University in administrative sciences.
    The witnesses are reminded that their oral testimony will 
be limited to 5 minutes. And without objection, your written 
statements will be made a part of the record. The witnesses are 
reminded to turn on their microphones and abide by the three 
lights in front of you: green means go; yellow means wrap it 
up; and red means stop.
    Ms. Budson, you are now recognized for 5 minutes to give an 
oral presentation of your testimony.

    STATEMENT OF VICTORIA BUDSON, CO-FOUNDER AND EXECUTIVE 
  DIRECTOR, WOMEN AND PUBLIC POLICY PROGRAM, KENNEDY SCHOOL, 
                       HARVARD UNIVERISTY

    Ms. Budson. Thank you very much. Chairwoman Beatty, Ranking 
Member McHenry, and members of the subcommittee, thank you for 
the opportunity to testify today about the importance of 
diversity inclusion within this industry.
    For America to be most competitive in the global 
marketplace, we need to draw on our full talent pool, not 50 
percent of it. Every major city in the United States is 
predicted to be majority-minority by 2040.
    American women today are more highly educated than their 
male counterparts. They receive more high school, Associate's, 
Bachelor's and post-graduate degrees.
    When we look across the financial services industry, we see 
that the industry has yet to fully leverage this talent. In the 
industry, we also find that although there may be many women in 
entry-level positions, the ability to then retain and promote 
these women has not been maximized.
    Although 40 percent of the top 10 business schools will be 
graduating female MBAs at the rate of the top 10 schools, only 
34 percent of financial advisors and 40 percent of financial 
analysts are women. And as it moves up the ranks to the top of 
the hierarchy, only about 20 percent of leadership positions 
are held by women.
    When we look particularly at intersectionality and women of 
color, the numbers are much lower, and women of color are 
nearly completely absent from the C-suite.
    There are, however, very specific ways that gender 
diversity and other forms of diversity can benefit the 
financial services industry. Numerous research studies show us 
that diversity in teams leads to better performance.
    Heterogenous teams solve complex problems and catch errors 
better than homogenous ones. Even top-thinking homogenous teams 
are out-performed by heterogenous ones.
    This is because cognitive diversity enables us to do some 
very specific things. When we bring divergent views and 
different life experiences and cognitive viewpoints into teams, 
people are more likely to view information carefully, to remain 
objective, to consider more viewpoints, and also to reexamine 
the facts.
    As a result, gender and racial diversity on teams is 
correlated with the creation of novel solutions, greater 
innovation, and higher collective intelligence. And in the 
financial services context specifically, diverse teams have 
been shown to price stocks more accurately. They are less 
likely to make a false bubble.
    Benefits to the overall economy show us that when women 
have a greater labor force attachment, the economy grows. Now, 
it would be better if we saw women's numbers rising. As of 
2000, we had 77 percent of prime age women, meaning 24 to 55, 
in the workforce.
    But by 2017 Bureau of Labor Statistics, what we find is a 
drop. This is compared compared to the 89 percent of men who 
are currently in the labor force.
    When we have more women in the labor force and their 
participation is rising, what we find is overall market 
productivity rises. And this stimulus does several important 
things. Perhaps the most important of which, for many of our 
listeners today, is that wage growth continues for women and 
men.
    In summary, the research illuminates that more women in the 
financial services industry is important for the efficiency and 
competitiveness of the U.S. economy, as well as for financial 
services companies themselves.
    Gender inclusion needs to become business as usual, not 
only in this particular industry but across society as a whole. 
Newer research highlights that companies that have more 
diversity do better when the societal context values diversity 
overall. They get greater leverage out of this work of having 
ensured that they have a diverse and inclusive workforce.
    We need women in the financial services industry in 
general, and we need them as well at the top of the hierarchy. 
We need to create a broader environment that supports women and 
men's maximal success, not to mention that utilizing the full 
talent pool is simply the right thing to do for all of us and 
for America.
    Thank you again for inviting me today. I look forward to 
responding to your questions and to providing information about 
specific strategies and tools that can be used within the 
workforce to create greater diversity and inclusion. Thank you.
    [The prepared statement of Ms. Budson can be found on page 
32 of the appendix.]
    Chairwoman Beatty. Thank you.
    Ms. Trimble, you are now recognized for 5 minutes to give 
an oral presentation of your written testimony.

  STATEMENT OF ADRIENNE TRIMBLE, PRESIDENT, NATIONAL MINORITY 
                  SUPPLIER DEVELOPMENT COUNCIL

    Ms. Trimble. Thank you very much. Diversity and inclusion 
are my life's work, but I don't say that because diversity and 
inclusion is a nice sentiment. It is not a social program. It 
is not a handout. I can tell you that diversity and inclusion 
make good business the best business. It is nothing less than 
the American future.
    In American business, diversity and inclusion already have 
concrete, specific, and strategic meaning. It is a mistake to 
assume, as some will, that diversity and inclusion are today's 
form of affirmative action with supporting quotas. Not at all.
    Diversity and inclusion strategies make good business more 
profitable, more efficient, and more of a factor in every 
aspect of American life. They have a clear, measurable impact 
to a corporation's bottom line.
    I am here today because I believe that the National 
Minority Supplier Development Council, or what we refer to as 
NMSDC, is the go-to for diversity and inclusion in American 
business.
    We are a non-profit organization sustained by our 
membership with a national network of 23 regional affiliate 
councils, over 1,400 corporate members, and over 12,000 
certified minority businesses. Some of those businesses, over 
2,300, are women-owned.
    We are uniquely positioned to partner with this committee 
as we drive economic growth in communities. We do this through 
business ownership, through employment, and through setting a 
foundation for sustainable wealth creation.
    I would like to take this opportunity to thank all of you, 
Congresswoman Waters and Congresswoman Beatty in particular, 
for bringing emphasis to this initiative and making it a top 
priority for American corporations.
    It is a fact that racial and ethnic demographics are on the 
move in our country. It has been that stated by 2045, our 
population will be majority-minority. As we approach that 
fundamental shift, it becomes more important than ever that all 
Americans have a stake in the economy that will support them, 
every race and ethnicity, as well as full gender parity.
    Diversity and inclusion strategies also transform the 
approach to the consumer. They offer the best ways to develop 
products to meet the market demand, as well as the best way to 
create disposable and discretionary income in communities, 
particularly those that have been underserved and 
underrepresented.
    Last year, Forbes magazine cited a recent study by the 
Boston Consulting Group that found that increased diversity of 
leadership teams in business resulted in 19 percent higher 
revenue due to innovation, a huge factor in tech start-up 
companies and industries of the future.
    I built my career in diversity and inclusion by working for 
a global leader in the automotive industry. The strategy we 
developed and implemented lined up with the company's business 
objectives.
    That was how we won senior leadership buy-in and support. 
It covered everything from talent acquisition to marketing to 
the changing consumer demographics, to building a diverse 
supplier base.
    Senior leaders embraced the idea that in order to achieve 
maximum business results their consumers had to be reflected 
throughout the company. The best D&I strategies take a holistic 
view of the business.
    The bottom line is that CEOs have to drive this initiative 
within their corporations. Sometimes it is just asking the 
simple question, how diverse is your team, and how are all of 
our consumers reflected in product and/or service strategies?
    Diverse supply chains are better equipped to address 
consumer preferences in a direct way. Diverse companies tend to 
hire diverse workers at a much higher rate. That decreases 
unemployment in underserved communities, typically with those 
communities being populations of people of color.
    In fact, in 2018, our certified minority businesses 
sustained over 525,000 jobs and generated over $31 billion in 
wages earned; 70 percent of those workers were classified as 
minority. NSMDC serves to ensure that those who claim to be 
minority firms are indeed minority-owned, operated, and 
controlled. Our certification is the gold standard for 
corporate America.
    After we certify our minority firms, we develop their 
skills for building growth and capacity. Diversity and 
inclusion drives everything that we do at NMSDC. For that 
reason, I would like to close by reminding everyone how 
urgently important it is to address some of the challenges that 
impact our MBEs, such as access to capital.
    The challenge in seeking access to capital for our minority 
firms is obvious. Our certified minority businesses generated 
over $214 billion in tax revenues yet still struggle to get the 
needed capital to sustain and grow their businesses.
    That is why NMSDC has established its own initiatives, and 
that is the call to action and an advocacy issue and one that I 
look forward to working with and partnering with this Diversity 
and Inclusion Subcommittee.
    Thank you for allowing me to be here today.
    [The prepared statement of Ms. Trimble can be found on page 
70 of the appendix.]
    Chairwoman Beatty. Thank you very much.
     Mr. Von Hoene, you are now recognized for 5 minutes to 
give an oral presentation of your testimony.

 STATEMENT OF WILLIAM A. VON HOENE, JR., SENIOR EXECUTIVE VICE 
    PRESIDENT AND CHIEF STRATEGY OFFICER, EXELON CORPORATION

    Mr. Von Hoene. Good afternoon, Chairwoman Beatty, Ranking 
Member Wagner, and members of the subcommittee. Thank you for 
the opportunity to speak today about the critical role of 
diversity and inclusion in achieving financial success in 
business. Thank you for your commitment to this issue.
    I am pleased to share Exelon's experience, which is this: 
Our success would be impossible but for our comprehensive 
commitment to diversity and inclusion within our company, with 
many other companies that provide essential services to us, and 
with the communities we serve.
    Exelon operates six electric and gas utilities centered 
around major metropolitan areas, including Pepco, which 
provides electricity here in the District. We also are the 
largest operator of nuclear plants and the biggest producer of 
clean energy in the country.
    All in, we have over 12 million customers, including two-
thirds of the Fortune 100 corporations, and we operate in 48 
States. Our business is extraordinarily complex, rapidly 
changing, and frequently volatile. Nonetheless, as my written 
testimony reflects, in the last 6 years Exelon has enjoyed 
significant success.
    Illustratively, our total shareholder value during that 
period has increased 120 percent. Among other things, this has 
enabled us to contribute over $50 million annually to 
organizations providing critical services to the communities in 
which we work.
    Our commitment to diversity and inclusion has been 
invaluable in achieving these results. To meet the challenges 
we face, we need superb engineering, operational dexterity, 
regulatory and financial sophistication, political acumen, 
close connections to our customers, and myriad other skills.
    We have that array of skills only when our people possess a 
wide variety of perspectives, backgrounds, ideas, and 
connections to the diverse world in which we operate.
    Our commitment to diversity and inclusion has included, in 
addition to many other initiatives, the following: one, 
tracking our diversity internally against specific metrics, 
just as we do for safety, operational financial performance, 
and holding our officers accountable.
    The result? Where the utility industry is heavily white 
male, our workforce is 41 percent diverse.
    Two, recognizing the importance of diversity in senior 
leadership. Our 6 regulated utilities now produce well over 50 
percent of our net income and that percentage is increasing. 
The CEO for five of those six utilities is either Hispanic or 
African American and all the utility CEOs report to the CEO for 
Exelon Utilities, the holding company, who is a woman.
    The result? Our utilities are in the top quartile or decile 
of virtually every metric by which utility performance is 
measured.
    Three, pursuing diversity and inclusion with our suppliers 
of goods and services. Our overall spend with diverse suppliers 
totaled $2.2 billion last year, a 100 percent increase over 5 
years ago. This is more than 25 percent of our overall supply-
managed spend.
    The result? A supply chain unsurpassed in our industry for 
efficiency, cost savings, and delivering value to our 
customers.
    Four, and perhaps of most relevance to this subcommittee, 
zealous pursuit of diversity and inclusion with professional 
service providers including banks and money managers.
    Many banks do business with us. We track the percentage of 
Exelon work done by professionals at each bank, rank the banks 
against each other, disclose to them their rankings, and weigh 
those results in deciding where to place our business.
    The result? Sixty-four percent of the outside bankers 
providing coverage services to Exelon companies are diverse.
    With respect to money managers, in 2010 we revamped a 
modest minority money manager program that relied almost 
exclusively on fund of funds arrangements by converting to a 
direct mandate approach. We then aggressively sought out 
relationships with minority- and female-owned money management 
firms.
    Today, 24 of those firms manage over $3 billion in Exelon 
pension, decommissioning, and employee savings funds. The 
result? In 3 of the last 5 years, a minority-owned firm has had 
the highest returns of any Exelon U.S. public money manager.
    It is, of course, impossible to measure with precision the 
financial impact of our diversity and inclusion efforts, but 
our financial success over the last 6 years unmistakably 
coincides with those efforts.
    A friend of mine captured the business case for diversity 
in a single question: Is a person smarter if she or he reads 
the same newspaper 4 times rather than reading 4 different 
newspapers? The obvious answer to that question is, of course 
not.
    And the compelling business case for diversity is just as 
obvious. Exelon is a vivid example of precisely that principle. 
Thank you. I look forward to your questions.
    [The prepared statement of Mr. Von Hoene can be found on 
page 75 of the appendix.]
    Chairwoman Beatty. Thank you, Mr. Von Hoene.
    Mr. Verrett, you are now recognized for 5 minutes to give 
your oral presentation on your written testimony.

  STATEMENT OF RORY E. VERRETT, FOUNDER AND MANAGING PARTNER, 
                         PROTEGE SEARCH

    Mr. Verrett. Thank you. I want to thank Chairwoman Beatty 
and Ranking Member Wagner for the invitation to provide remarks 
at this important hearing. My name is Rory Verrett and I am the 
founder and managing partner of Protege Search. We are the 
leading retained executive search and leadership advisory firm 
focused on diverse talent.
    At Protege Search we don't make excuses about not having a 
diverse talent pipeline. We don't invent the people we recruit. 
We simply find them. We lead searches for senior leaders at 
corporations, start-ups, trade associations, and nonprofit 
organizations.
    I am also the host of Protege Podcast, the leading career 
success show for diverse professionals. At Protege, we are in 
the trenches every single day working with corporations and 
organizations trying to meet their diversity and inclusion 
goals.
    Madam Chairwoman, diversity and inclusion are vital to the 
competitiveness of American companies. There are three 
principal reasons why companies are simply more successful the 
more diverse and inclusive they are.
    First, you will hear talk about diversity and inclusion 
being the right thing to do or the business case is right for 
diversity and inclusion. But simply put, diversity and 
inclusion helps companies become the fullest, most successful 
version of themselves as enterprises.
    From my experience in professional sports, I can tell you 
every single professional sports league, from the NBA to the 
PGA Tour, owes its current level of success and profitability 
to diversity and inclusion. The NBA, for instance, has several 
innovative D&I initiatives which have helped grow the game in 
Asia and Africa, and years ago launched a women's league.
    The strategic decisions by the NBA to enter these new 
markets were guided by a diverse team of executives, including 
Deputy Commissioner Mark Tatum and Amadou Gallo Fall who leads 
the efforts in Africa, both of whom brought a global 
perspective to the business of basketball.
    Second, diversity and inclusion helps companies outperform 
their competitors. As was mentioned previously about the 
McKinsey study, companies in the top quartile for ethnic and 
cultural diversity on executive teams are 33 percent more 
likely to have industry-leading profitability.
    As one venture capitalist in Silicon Valley told me, social 
media is driven by culture. Culture is driven by music. Music 
is primarily driven by influencers of color.
    So if we want to know what trends our social media 
portfolio companies need to predict, need to harness and focus 
on, all we need to do is follow what is happening in 
communities of color.
    Third, diversity and inclusion allow companies to better 
solve the problems they face. One of our clients at Protege 
Search is Freddie Mac. Freddie Mac has an innovative initiative 
in which the company actively hires as interns students who are 
on the autism spectrum.
    From the program's launch in 2012, Freddie Mac has found 
these professionals to be exceptionally capable, for instance, 
in data analytics, an area of critical importance for the 
company.
    So what can companies do to foster greater diversity and 
inclusion? From my work with companies in healthcare, financial 
services, tech, sports, and consumer products, there are five 
core principles which should guide any D&I strategy.
    First, the D&I strategy must have the support of the CEO 
and the board with the requisite budget and personnel necessary 
to execute an enterprise-wide strategy.
    Second, the diversity and inclusion strategy must be linked 
to individual and group performance standards and be tied to 
executive compensation.
    Third, companies have to move beyond diversity on candidate 
slates and mandate diversity on interview teams. Moreover, 
executive search firms must be held accountable for the 
diversity of candidate slates they submit to their corporate 
clients and not simply state that there is a pipeline problem. 
There is no pipeline problem.
    Fourth, companies must be transparent about hiring rates, 
promotion rates, and compensation and advancement to senior 
management by employees of color and women.
    It should not require public pressure by advocacy groups 
for companies to be transparent about equality. If companies 
want to continue to earn consumer trust, they must make public-
facing disclosures about where they stand on diversity and 
inclusion.
    And fifth, companies must be smart enough to harness the 
latent entrepreneurial talent of their diverse staff by 
unleashing these high-potential professionals to help solve the 
enterprise's toughest challenges and help seize the company's 
greatest opportunities.
    In a country which will be majority people of color by the 
middle of this century, in an era where consumers and 
prospective employees are motivated by the social values in the 
companies they support, and against the overwhelming research 
which supports the positive business outcomes of diversity and 
inclusion, companies ignore this strategic imperative at their 
peril.
    [The prepared statement of Mr. Verrett can be found on page 
72 of the appendix.]
    Chairwoman Beatty. Thank you very much.
    I now recognize Mr. Guzzo for 5 minutes.

          STATEMENT OF RICHARD GUZZO, PARTNER, MERCER

    Mr. Guzzo. Thank you, Chairwoman Beatty, Ranking Member 
Wagner, and members of the subcommittee. I appreciate the 
opportunity to share my views with you today on this important 
topic.
    I am Rick Guzzo, a partner at Mercer. Mercer is a 
consulting firm and a unit of a 75,000-person strong Marsh & 
McLennan Companies family of companies, and I do lead Mercer's 
Workforce Sciences Institute, of which I am quite proud.
    Mercer has worked with hundreds of companies on diversity, 
both in the U.S. and globally. We are well-known for our When 
Woman Thrive Initiative which provides research and solutions 
on gender diversity for many industry sectors, including 
financial services.
    During my 20-plus years with Mercer, I have witnessed the 
importance of diversity rise on the business agenda, and some 
of my most rewarding professional experiences have come with 
clients working on this topic. It is a topic that matters to 
me.
    One element of our diversity-related work is fairness. I am 
proud to be part of a company that has affected millions of 
work lives by helping employers ensure that pay is fair, and 
that opportunities for advancement exist for all. While 
compliance has always been part of the agenda, today that 
agenda also is very much about values, and the business value 
of diversity has many aspects.
    For one, reputations matter. Employers are constantly under 
scrutiny in social media and on websites devoted to employer 
reviews by employees and job applicants. Companies that acquire 
reputations of being inclusive, of enabling all types of people 
to contribute to the best of their abilities will be favored 
when competing for top talent and in the eyes of consumers.
    Investors matter. For publicly traded companies, ESG 
investing, environmental, social and governance, is on the 
rise, and how a company manages gender, racial, and other types 
of diversity is an important element of the social and 
governance qualities that ESG investors look for. Those 
qualities influence where investors put their money.
    And, of course, business results matter. There is real, 
tangible evidence that well-managed diversity contributes to 
business success. I would suggest the story is not a simple 
one, however. It is not the case that all diversity is good for 
all aspects of business performance. Whose diversity, what 
types of diversity, and what measures of performance we are 
talking about all matter.
    Commensurate with the intensifying interest in diversity is 
the rapid rise of data and analytic methods in business. And so 
why is this worth noting today? I think there are two reasons.
    First, financial services firms respect good analytics of 
customer behavior, of market dynamics and applying analytics to 
issues of workforce diversity can produce powerful and readily 
accepted insights. Applying this to ourselves, for example, we 
at Mercer recently learned some new things about the value of 
gender diversity in our sales teams.
    Second, workforce analytics change the game for employers 
with regard to how best to attract, retain, and unleash the 
capabilities of a diverse workforce. What is a best practice in 
one employer may not be a best practice in another because 
circumstances differ. Analytics can reveal what diversity 
practices work best in what circumstances, thus making 
employers smarter.
    Another development to note is the growth of collaborations 
among employers, and I am fortunate enough to have firsthand 
experience with one such example, the Financial Services 
Pipeline Initiative.
    If you are not familiar with it, this is a Chicago-based 
collaborative among banks, asset managers, the Federal Reserve 
Bank of Chicago, and other employers in the industry, small and 
large, working with the Chicago Community Trust with a mission 
to achieve 2 things: increased representation of African 
Americans and Latinos at all levels in the industry; and 
increased cultural competence in the industry.
    The Initiative is remarkable for its many services and 
resources such as online toolkits for individuals and for 
employers, the internships it offers, career advancement 
workshops for people in the industry and more. It is also 
remarkable for its transparency. I encourage you to visit its 
websites, see who is doing what, the information that is 
shared, talk to its people.
    And it is also remarkable for its reliance on data and 
research to guide actions. Participating employers share 
workforce data and make their employees available for research 
inquiries for the good of all.
    In conclusion, it is clear that the financial services 
industry faces many challenges on the road to greater 
diversity. Progress on that road, I believe, is being made.
    And I think it can be accelerated through a genuine 
appreciation of the business case for diversity, through good 
research and data to steer by and by the energy produced by 
collaborating to achieve common goals.
    Thank you again for this opportunity. I look forward to 
answering your questions.
    [The prepared statement of Mr. Guzzo can be found on page 
35 of the appendix.]
    Chairwoman Beatty. Thank you very much, Mr. Guzzo.
    I now recognize myself for 5 minutes for questions. We have 
heard a lot of data and statistics. We have even heard about 
asset management, so I am going to start my questioning and 
hopefully we can give brief and concise answers and I can get a 
question to most of you.
    Mr. Von Hoene, you are up first. We have heard a lot about 
statistics and data, and you mentioned that your company 
started a diverse asset management initiative. Can you tell us 
briefly how you made that decision and what was one challenge 
with that?
    Mr. Von Hoene. Thank you for your question, Chairwoman 
Beatty. We made the decision because of two reasons. First, the 
program that we had in place was not advancing our interests 
nor was it advancing the social interests that we think were 
important for a diverse management program.
    The second reason we made the decision is because we 
weren't performing as well as we needed to perform in terms of 
returns on money management for our company.
    So what we did was say we will be responsible for direct 
relationships. We sought out those relationships. We used them 
and deployed them, and we were able to bring into our 
management of money in pension funds and other funds tremendous 
assets that had not previously been available to us. The 
success story, as I mentioned in my testimony, is obvious.
    Chairwoman Beatty. Thank you very much.
    Ms. Trimble, can you tell us how we can ensure that 
minority business enterprises are getting fair access to 
Federal contracting opportunities in order to generate more of 
this kind of economic growth?
    Ms. Trimble. Absolutely, and thank you, Chairwoman Beatty, 
for the question and for allowing me to participate. I think 
that it is really important for the Federal Government to 
understand where their sourcing opportunities lie and to do 
more forecasting of what those needs are going to be and reach 
out to the partners who can help provide those minority 
suppliers that have the capability and the capacity to meet 
those contracting opportunities.
    That is something that the NMSDC is positioned to do, and 
there are other advocacy groups that also have membership of 
minority firms that can deliver on those goods and services. 
Our minority firms can only get access to opportunities if 
those opportunities are made available to them and they are 
transparent in the procurement process.
    So I think that those are things that we need to work more 
closely hand-in-hand and understanding who the capable minority 
suppliers are, how do we position them for those opportunities 
and making sure there are accountability measure throughout the 
Federal Government for inclusion.
    Chairwoman Beatty. Thank you very much.
    Mr. Verrett, we have heard a lot about pipeline and all 
this great statistics about if we do this, it builds a case for 
diversity. But can you tell us, if you look inside a company, 
what do we need to know to ensure minority retention in firms 
so they are getting into the pipeline?
    Mr. Verrett. Thank you, Madam Chairwoman, for that 
question. I think a couple of things have to happen. First, I 
think most companies underappreciate the difficult journey that 
women and executives and professionals of color have in 
corporate America.
    They are the least likely to be mentored. They are the 
least likely to be sponsored. They are the least likely to be 
promoted. And so I think having the right data on the 
engagement of your minority and women employees is hugely 
important.
    I think companies have to also have a brand recognition 
about how they are recognized in the market by women and by 
executives and professionals of color. Not every employee, 
future employee, thinks about that company the same.
    And what we encourage our clients to do is to have a 
narrative that is specific to employees of color, specific to 
women candidates of color, who may want to work at the company. 
So I think there is a lot of work that needs to be done and, 
frankly, there are companies like Exelon and others in sports 
and in utilities that are doing admirable work in this area.
    Chairwoman Beatty. Thank you.
    Ms. Budson, we know that you have done extensive work at 
Harvard University and you mentioned in your testimony the 
inequities and disparities with gender equality in talking 
about women. Can you give us one thing or one practice that you 
think organizations should take heed to to help overcome gender 
and racial biases in the workplace?
    Ms. Budson. Yes, and thank you for the question, Chairwoman 
Beatty. So one of the things that we see is often when someone 
is recruited into an organization who is a woman, who is a 
woman of color or who is a person of color, anywhere across the 
gender spectrum, they often, even if they are on the team, 
aren't given the same opportunities for stretch assignments 
which are the pathway to promotion.
    So if there can be a system that is metric-based, that is 
organized and that is tracked, we can then provide 
opportunities more equally across the organization so people 
aren't going to people who read physically like them, might 
happen to live in their same community, might go to their same 
community of worship, but instead there is an evidence-based, 
tracked system so that each new employee has opportunities for 
advancement.
    Now, within the financial services industry, this is 
particularly important around profit and loss. So we have a--
    Chairwoman Beatty. Sorry, my time is up, but hold some of 
those thoughts. I know we will be able to let you get to them.
    I now recognize the distinguished ranking member of the 
subcommittee, Mrs. Wagner, for 5 minutes for questions.
    Mrs. Wagner. I thank the chairwoman.
    Mr. Guzzo, I think we are all here because we recognize 
that diversity and inclusion are essential for future growth 
and innovation in the financial services industry. Both from 
your experience and from your report on ``When Women Thrive, 
Businesses Thrive,'' how specifically can leaders in this 
industry actively implement practical strategies to build 
diverse workforces?
    And then also, how does the financial services sector 
compare to other industries, please?
    Mr. Guzzo. The financial services sector has, if you will, 
a more favorable representation of women and minorities than 
some industries. It could be, if I recall, manufacturing and 
energy. But less favorable than others, right? So I think each 
industry has its own unique challenges. Certainly, financial 
services does as well, but it is in the distribution.
    In terms of tactics, I think the first tactic that everyone 
looks to, business leaders look to, is hiring. And you have to, 
if you want to increase representation. But the big lesson that 
we have had in our work with clients is that hiring surely is 
not enough, right?
    That the notion of bringing people in can sometimes be a 
revolving door because they go out. Why? Because of the factors 
that create a work environment that are not accommodating, 
friendly, which frankly don't let them flourish, don't let them 
thrive, hence how we got to that word with regard to women.
    I would say that the fundamentals of fair practices in the 
workplace, right, fair opportunities are the starting point 
after hiring, and close tracking of the dynamics of who is 
staying, who is going, who is advancing and how to change it 
are the--
    Mrs. Wagner. In your testimony, you mentioned how the 
evidence-based business case for diversity in terms of its 
impact on business is sometimes nuanced.
    Mr. Guzzo. Yes.
    Mrs. Wagner. Can you elaborate on these nuances?
    Mr. Guzzo. Well, the standards of evidence, if you will, 
that sometimes go into the public discourse aren't maybe the 
standards of evidence that you would find in research 
publications, right?
    Mrs. Wagner. Yes.
    Mr. Guzzo. And I make that statement based on the standards 
of evidence in research publications to say it is not simple. 
It is very nuanced, such that we might find, for example, in 
our organization that gender diversity matters to sales teams, 
but ethnicity may not in one situation, but it may in another.
    There are lots of place and people differences that need to 
be understood and need to be accounted for. And my observation 
is simply that we need to be nuanced in our thinking about the 
topic with regard to the business case.
    Mrs. Wagner. Ah, I see. Well, you also write that the 
business case for diversity is multifaceted. We shouldn't 
assume that one of the best practices discussed today will work 
effectively, as you said, in all business sectors. So could you 
elaborate on the one-size-fits-all approach when it comes to 
diversity within a company?
    Mr. Guzzo. Yes. No, absolutely true. For example, many 
companies will have what might be called resource groups in 
their organization which are affiliations of people with 
something in common. It could be ethnicity. It could be a 
women's group, et cetera.
    Sometimes those groups are really effective at creating 
climates and cultures in the place that enable others like them 
to succeed. Sometimes it is not. Why?
    I think it is sometimes leadership. I think it is sometimes 
resources. I think it is sometimes other aspects of the 
environment which make their work believable or not to the 
newcomer to the organization.
    So there is just lots of variation. The fact that you 
implement a resource group isn't sufficient.
    Mrs. Wagner. Mr. Von Hoene, you spoke about your efforts to 
recruit, retain, and promote underrepresented groups. Can you 
tell us what programs you have established to make Exelon a 
more attractive place to work for your diverse employees?
    Mr. Von Hoene. Thank you for the question, Ranking Member 
Wagner. We do a series of things once people arrive, including 
an extensive mentorship and sponsorship program for new people 
entering the company, programs that are particular for 
lifestyle challenges that people may have in terms of flexible 
work schedules, in terms of equal pay, in terms of paid family 
leave.
    We have systems in which we have training programs for 
people at all levels in the company designed to enable them to 
be successful and to learn how they can rotate through the 
company and find opportunities in other areas in the company. 
And we take a personal stake in development and hold our 
officers and our leaders accountable for doing all of these 
things.
    Mrs. Wagner. In my brief time here, tell me more about the 
Honor Roll Program.
    Mr. Von Hoene. The Honor Roll Program is a program that we 
instituted with respect to professional services. We started it 
with law firms. What we do is we measure--
    Mrs. Wagner. Banks and then other institutions, too, right?
    Mr. Von Hoene. Insurance companies, consultants, banks. 
What we do is we measure for each engagement team at Exelon the 
percentage of work that is performed by women, by people of 
color. We then rank those. We tabulate that.
    We rank the firms from first to last. We tell them where 
they are ranked. We give them report cards. Those who perform 
best get an opportunity to have a personal dinner with our CEO. 
Those who perform worse don't get as much business as they 
would have if they had been in the latter categories.
    Mrs. Wagner. Thank you. My time has expired.
    I yield back.
    Mr. Von Hoene. Thank you.
    Chairwoman Beatty. Thank you.
    The Chair now recognizes the distinguished Chair of the 
full Financial Services Committee, the gentlewoman from 
California, Chairwoman Maxine Waters.
    Chairwoman Waters. Thank you so very much, Madam 
Chairwoman. I appreciate the opportunity to be here with you 
this afternoon. I appreciate all the work that you have done on 
OMWI where we created this opportunity for diversity in the 
Dodd-Frank reform.
    And you have been carrying that for the whole time that you 
have been here and what you are doing now is a part of all of 
that, and I appreciate the work that you have done.
    I want to just raise a question about upper mobility in 
firms, in corporations. One of the consistent complaints that 
we get all the time, particularly from African Americans, and 
African-American women in particular, is that, ``I have been on 
this job for 10 years and they pass over me and give the job to 
newcomers coming in.'' And this is a constant, consistent 
complaint of African Americans in general, and African-American 
women in particular.
    So what do we do to help companies stop passing over good 
employees who put the time in, who do the work, but when the 
time comes to select a new supervisor or manager, they are 
overlooked? It is constant. Who wants to take this question?
    Mr. Verrett?
    Mr. Verrett. Madam Chairwoman, thank you so much for that 
question. It is common. It is frequent. And the research behind 
this beyond the anecdotal information that stretches across 
nearly every company.
    David Thomas, who is the president at Morehouse, and was an 
organizational design professor at Harvard, wrote a book 
called, ``Breaking Through.'' And he said that if you want to 
understand diversity and inclusion in corporate America, and 
why people don't get promoted who are not white men, it is 
because of risk. It is the risk of the blowback if they don't 
work out.
    So what you have to do is simply tie promotion of minority 
and women executives to executive compensation. What gets 
measured will get done. If people's performance standards are 
tied to diversity and inclusion it will get done. If it is a 
nice-to-do it will be the last thing that gets done, and it 
most often will not get done.
    Chairwoman Waters. I think Ms. Budson had her hand up? Yes.
    Ms. Budson. Thank you, Chairwoman Waters. One of the things 
which can take place is that when these decisions are being 
made rather than having an evidence-based framework where there 
is a clearly defined set of what needed to be achieved for 
someone to move forward, there is, in essence, a conversation 
which takes place where people talk about who is ready.
    And when companies can use best practice and evidence-based 
performance models where instead of saying who is ready you 
define out clear characteristics for that upward mobility 
within the organization that are transparent to the employees.
    And these decisions are made within the management team 
where it is literally written out. And instead of talking about 
general fit or readiness, one can mark who has ticked off all 
the different things to rise.
    Sometimes what we find is that this implicit bias makes it 
so one does not, as my colleague shared, take the risk instead 
of looking at who has demonstrated. And as I mentioned earlier, 
if people are not given the opportunity for their stretch 
assignments they then can't collect those key factors for 
upward mobility.
    A second piece which can take place as well is during the 
evaluation process ensuring that there are metrics which can 
live outside of either the self-evaluations, because people 
with less social capital in the organization tend to rate 
themselves lower and people with more tend to rate themselves 
higher. But to again move to an evidence-based approach rather 
than a readiness or a fit conversation.
    Chairwoman Waters. Well, thank you. And of course what we 
have had to do is we have had to file discrimination complaints 
and we can't keep doing that for the rest of our lives. But 
what about when you first get hired and you are told what the 
job is all about and how you get promotions and what is 
possible so that when the time comes and it doesn't happen, you 
know what to do in order to speak up for yourself, et cetera, 
et cetera?
    I want to thank you for your comments. This is a very 
important subcommittee and this is very important work that is 
being done.
    And again, I want to thank our chairwoman here, Ms. Beatty, 
for the work that is being done. And I am very pleased that 
this issue is finally getting attention in this country all 
over every section of the country. Thank you very much, and I 
yield back.
    Chairwoman Beatty. Thank you, Madam Chairwoman.
    The gentleman from Indiana, Mr. Hollingsworth, is 
recognized for 5 minutes.
    Mr. Hollingsworth. Good afternoon. I appreciate everyone 
being here and I genuinely appreciate you holding this hearing. 
This is an important topic of discussion. I know every Member 
sitting up here cares a lot about these outcomes and cares a 
lot about the work that has been invested by so many private 
firms and frankly us as a government in making sure we get to 
better outcomes with regard to this.
    And Mr. Von Hoene, I wanted to talk to you for a brief 
second. You have talked about how you guys really walk the 
walk. How you don't just talk the talk but you are genuinely 
making these efforts, having these scorecards, ensuring this is 
a part of your company's very DNA.
    Now, we have seen so many of the research studies that 
indicate there are tremendous rewards out there for firms that 
do pursue with meaningful intent diversity and inclusion as a 
part of who they are.
    But I wondered if you might talk about the genesis of this 
at your firm? How did this all get started? If everyone in 
every private firm has the opportunity to see the rewards that 
might come out of this not only for themselves, not only for 
their employees but for their communities and for the country 
as a whole, how is it that others haven't followed in your 
footsteps? And how did you and your firm get started in this?
    Mr. Von Hoene. Sure. Well, we are in an industry where we 
touch large urban populations.
    Mr. Hollingsworth. Right.
    Mr. Von Hoene. So as a starting point one of the things 
that we have to be mindful of is who are our customers? Who are 
our stakeholders? And they reflect a very broad, diverse group 
of individuals and institutions.
    In order to address concerns that they have it is important 
that we be able to mirror that effectively so we start with a 
little bit of an advantage in that regard.
    But the other part of it that is really important is the 
work that this committee is doing today which is when you stop 
and recognize that this is not simply the right thing to do, it 
is the right business thing to do.
    And you see how that evolves in your business as you see 
people making contributions who had not historically been 
invited to the table to do so and you see the value that comes 
with that. It begins, I think, a trend or a momentum to 
understand more fully the business case that all of you fully 
embrace here.
    So what we have found is as we have done these things 
starting with baby steps and being more energetic as time went 
on to see the progress that our business made and to be able to 
tell people this is not only the right thing to do, this is a 
thing that is going to make you and to make the company more 
profitable and more successful. The key is delivering that 
message over and over again.
    Mr. Hollingsworth. Right. Well, I love that you see it as 
an advantage that you are with a utility company that touches 
so many different customers. One could see it as a disadvantage 
though, right?
    When I go to the supermarket I have a wide variety of 
options perhaps on every shelf and I can choose the products 
that match my values, companies that match my values, match my 
ethics, but I don't always have that same choice in utilities.
    So for you to be able to say, even as a utility, that it 
matters to you that you have the same culture of the people 
that you serve, I think that is a really unique position to 
take, and I think you guys should be applauded for the efforts 
that have already been undertaken with regard to that.
    Mr. Von Hoene. Thank you very much, Congressman.
    Mr. Hollingsworth. Absolutely.
    Ms. Budson, I know that you earlier spoke a little bit 
about some of the challenges that are associated with ensuring 
that we get everybody's talent into the workforce. This is 
something that I am passionate about as well, making sure that 
everyone has the ability to contribute to this economy, the 
ability to contribute to this country's future.
    I wonder if you might just pick out a few little areas 
where we are holding specifically women back from being able to 
engage in the workplace. Where are we losing them along the 
way, so to speak? In 90 seconds, hopefully you can solve that 
problem.
    Ms. Budson. Thank you. So sometimes we hear about women 
opting out and I would like to state that women don't opt out. 
Women get fed up, and there is a very significant difference. 
We need to create environments where all employees are able to 
fundamentally contribute. The most likely reason for a woman to 
leave her place of employment is because she doesn't feel 
valued.
    Mr. Hollingsworth. Right.
    Ms. Budson. More so even than what her income is in that 
organization.
    Mr. Hollingsworth. Right.
    Ms. Budson. And how do we communicate value? Within 
organizations we communicate value by pay. We communicate value 
by status. We communicate value by flexibility. We communicate 
value by what work we assign.
    And we communicate value by what are the narratives that 
our organizations share so that employees feel a specific sense 
of investment. And who within the company do we highlight and 
promote?
    Mr. Hollingsworth. Can I ask you a specific question about 
that?
    Ms. Budson. Yes.
    Mr. Hollingsworth. And I--
    Ms. Budson. Please.
    Mr. Hollingsworth. This is a sensitive topic but I want to 
just parse something up. Are we not communicating to our female 
employees that we value them enough? Or are we not 
communicating it in the right way where they receive the 
message? What is going on there? Kind of bifurcate that a 
little bit for me in 20 seconds.
    Ms. Budson. I think the answer is yes.
    Mr. Hollingsworth. Okay.
    Ms. Budson. And particularly when we talk about women of 
color, and really this applies not just to women but for anyone 
who doesn't have high social capital in their organization. My 
colleagues' comments about sponsorship, mentorship, people 
being reached out to to have those unique assignments to join 
the team that is going to be defining whether someone can 
advance and looking more thoughtfully about--
    Are we done?
    Mr. Hollingsworth. We are. Hopefully, someone else will let 
you continue it again.
    Madam Chairwoman, I appreciate you holding this hearing.
    Chairwoman Beatty. Thank you.
    The gentleman from Florida, Mr. Lawson, is recognized for 5 
minutes.
    Mr. Lawson. Thank you, Madam Chairwoman, and welcome to the 
subcommittee, witnesses.
    When I go into financial institutions, especially banks and 
so forth, when you walk into the institution mostly the only 
thing you see is women. Some women of color and some women of 
non-color, but they are there.
    So my question would be who determines whether women will 
get promoted in those institutions? Is it the human relations 
person, human affairs person who interviews people before they 
come into the institution? And you just assume when you go into 
the financial institution when you see the women who are clerks 
and everything else there, you know that this must be a pretty 
good atmosphere.
    We don't know until later on that you find and see people 
who say, well, I don't get promotions, but if you go upstairs, 
then you will see up there then it is probably all men and so 
forth, but you don't see that when you come into the 
institution.
    Now, I am in the financial services industry and the 
insurance field and I know we have had a difficult time in 
getting women into management positions for many, many years, 
over the last 30 years in working with Northwestern Mutual and 
other companies who are beginning to look at it differently and 
see what can they do.
    But I want to know from the position of financial 
institutions and larger banks and so forth, how are they 
recruited and the perception that you have? And any of you can 
comment on it.
    We can just go down the line and see what happens in human 
resources, because you don't see anyone in human resources. You 
just see the people out there working. So maybe you can comment 
on that.
    Yes, Ms. Trimble?
    Ms. Trimble. Thank you for that question and I would like 
to draw back on my human resources experience having been a 
human resources professional before working in the diversity 
and inclusion space.
    I do think it is a joint effort between the line business 
managers as well as the human resources department. You have 
your H.R. professionals who are outsourcing talent and finding 
talent to bring to hiring managers, however, many times that is 
where the challenges usually occur is when the hiring managers 
are making their final decisions.
    So in my experience has shown me that we really have to 
have a more intentional strategy for our hiring managers and 
those in those line positions to have more accountability 
measures for the types of decisions that they are making, 
particularly around talent as you look at promotions and job 
assignments and things of that nature. And understanding that 
there are some biases that are bleeding into this process and 
how do we address that.
    Everyone brings a bias to work with them. We know that. It 
is how you manage those biases that is going to make the 
difference. So I think that companies, particularly financial 
institutions, have to be much more intentional around 
addressing what those challenges are, addressing those barriers 
and making sure that they are being held accountable for the 
decisions that they are making.
    Mr. Lawson. Okay. Anyone else?
    Yes, sir, go ahead?
    Mr. Von Hoene. One point to amplify on that is this. It is 
not just the responsibility of the financial institutions to 
address the problem that you have articulated. It is the 
responsibility of their clients to do so as well. Are the 
clients looking at financial institutions and saying, we want a 
diverse body of leaders servicing our business?
    Because until that demand is made, the incentive internally 
in the financial institutions is much less than it is if the 
clients are saying, this is important to us. So this is a 
problem not just in financial services but for all businesses 
to address. And it is important that corporations step up to 
the plate and do so.
    Mr. Lawson. Would anyone else like to comment?
    Mr. Guzzo. Well, if I could add to it? I agree with 
everything that has been said, and I think there is an under-
observed or under-accounted for phenomena often which is that 
in any one cycle of promotions in a year we might look at as an 
employer, what is the ratio of minorities to whites hired or 
promoted to the next level?
    There might be a small difference. Over time those small 
differences, if they are in the wrong directions, can really 
accumulate and turn into big differences.
    And I think the point here I am trying to make is that we 
need to understand the running record of an organization's 
actions, not point-in-time actions, to really manage the issue 
of upward mobility in organizations.
    Mr. Lawson. Yes, go ahead, Mr. Verrett.
    Mr. Verrett. Congressman Lawson, just to finish up, I also 
think we have to acknowledge that promotion processes are 
subjective. There are some objective elements to them, but at 
the end of the day every company has a group of people deciding 
the behavior, the performance, the results of a group of 
employees and deciding who gets advanced and who doesn't. It is 
a subjective process.
    To say the common retort that we simply want the best 
people. We are fine with diversity and inclusion as long as we 
find the best people. That is often only said when we are 
talking about women and people of color.
    It is assumed that the best people are hired when they are 
non-diverse and we simply have to just get rid of that old 
trope and decide that we are going to understand this as a 
subjective process and lean into all the data that is 
available.
    Mr. Lawson. Okay, thank you.
    And with that, I yield back, Madam Chairwoman.
    Chairwoman Beatty. The gentleman from Ohio, Mr. Gonzalez, 
is recognized for 5 minutes.
    Mr. Gonzalez of Ohio. Thank you, Madam Chairwoman.
    And thank you to all the witnesses for your testimony and 
participation today.
    One of the neatest things about my--I am new to Congress--
time in Congress so far is that when I go home and I talk about 
what we are doing in committee and I mentioned this 
subcommittee specifically, the Diversity and Inclusion 
Subcommittee, to the business community I get more interest and 
positive feedback than maybe anything that we are working on, 
quite frankly.
    And so I find that encouraging because to me what that 
shows is there is a real hunger for this in our society. I 
think we get it now. And then there is all kinds of progress we 
still need to make obviously but I have just been so encouraged 
by that and I just want to thank you all for being here.
    I am going to start with my fellow Buckeye grad, Mr. Guzzo. 
I see from your testimony that you are a fellow Buckeye grad 
and you laid out Mercer's four-pronged approach to helping 
companies implement a diversity and inclusion plan: one, 
strategic development; two, creating a roadmap; three, 
executing that roadmap; and four, measuring the success of the 
plan.
    Two questions. One, how is diversity defined in the 
company? And then also, how do you measure success? What does 
it look like?
    Mr. Guzzo. Right. So diversity has different meanings to 
some extent at different employers. It always refers to issues 
of representation of people of color and women absolutely.
    Other aspects of diversity, age for example, might pop up 
as being really important in some employers' situations and not 
others. I think a lot of companies here will face age-youth 
diversity issues in the coming wave of retirement. So there are 
some differences but the basic identities are always there.
    And the measures of success have to do with two types of 
outcomes I would offer. One is what I will call workforce 
outcomes which is to say who is advancing? Who is getting their 
lion's share of pay when they do well to earn it? What are the 
outcomes experienced by the individual employee?
    And the other would be the business outcomes. There are 
indeed ways of deciphering and understanding the impact of 
diversity on business results, customer satisfaction, customer 
retention, dollars spent. Those are the measures.
    Mr. Gonzalez of Ohio. Thank you.
    And then Mr. Von Hoene, it is great to see all the effort 
that Exelon is doing. Obviously, it has been a huge benefit to 
the business but is also just the right thing to do.
    I ran a small business prior to coming to Congress. It was 
a start-up and I was so proud of what we were able to do on a 
diversity and inclusion front. We were a tech company, a small 
start-up competing against the Googles and Facebooks of the 
world who can devote a lot of resources and energy to these 
sorts of programs. As a startup sometimes it is a lot harder so 
we were very intentional about what we were doing, and I think 
we did a great job on that.
    But I would be curious for your thoughts or anybody's 
thoughts on the panel about how we can tailor what you all were 
doing or what you are doing to small businesses so that we can 
provide maybe guidance or a toolkit or whatever it is so that, 
you know, it is not just the big companies who can focus on 
this?
    Mr. Von Hoene. Well, you have correctly surmised, 
Congressman, that one size does not fit all and that programs 
that can be implemented in a large company are not viable 
programs for a smaller institution. But I think the same 
general principles apply and it is a recognition of the fact 
that there is a business advantage to doing so, as you 
obviously did in your business.
    In some ways, it would seem to me that a smaller company 
that is really devoted to this issue would have some advantages 
because the personal attention and the customization of the 
work to enable someone to come in and feel comfortable who has 
not historically been there at the company allows a sense of 
warmth and a sense of receptivity that would be valuable.
    But that depends on location, company, opportunities, and 
the like. Note there is no blueprint for this.
    Mr. Gonzalez of Ohio. Yes. What we found is it ended up 
being kind of a virtuous cycle where once we started and we got 
it going so that it kind of fed on itself in what was a really 
positive way.
    My last question, Ms. Budson, in the short time that I 
have, I just want to kind of have you parse through what you 
were talking about with my colleague, Mr. Hollingsworth. Can 
you speak a little bit more about when women drop out of the 
labor force, why is that? Just go a little bit deeper on that 
if you could?
    Ms. Budson. Yes, and I was talking a bit about particularly 
when women leave the company.
    Mr. Gonzalez of Ohio. Yes.
    Ms. Budson. What we find is regardless of what reason is 
either self-reported or presumed by the entity, that woman is 
working for a competitor within 18 months.
    Mr. Gonzalez of Ohio. Yes.
    Ms. Budson. So the key is how can businesses effectively 
both harness the current talent that they had where they have 
already made an investment.
    And note as a nation we have made an investment in 
educating women; 57 percent of college students today are 
female and we have this large number of women achieving MBAs. 
If we can't keep that talent in the workforce we are 
underleveraging an asset that in essence we have already paid 
into.
    And the same thing goes--
    Mr. Gonzalez of Ohio. I think our time is up, but I 
absolutely thank you for your feedback.
    And I yield back.
    Ms. Budson. Thank you.
    Chairwoman Beatty. The gentlewoman from Massachusetts, Ms. 
Pressley, is recognized for 5 minutes.
    Ms. Pressley. Thank you, Madam Chairwoman.
    And I would like to thank Chairwoman Waters for creating 
this subcommittee.
    And I want to thank you, Chairwoman Beatty, for your 
leadership and your entire time. This is a historic happening 
that this subcommittee even exists and we thank you all for 
your participation today and your good work every day.
    Certainly, I am biased, but Ms. Budson made great 
contributions in the Massachusetts 7th and so it was wonderful 
to have you here today.
    The scope of my questioning, much of my line was asked 
because I wanted to sort of lean in on the gender parity front 
and the inclusion front, especially in light of a recent tour 
at the IMF where we learned that if we were to have a more 
inclusive economy and realize gender parity we could increase 
the GDP by some 35 percent.
    And that makes the business case, so this is both about 
benevolence and justice and also the bottom line. And it is 
unfortunate we have to keep making that case.
    I wanted to ask, how much of that is about policies and 
practices and metrics of accountability and how much of it is 
simply about leadership and will?
    And the other thing I wanted to ask you, Ms. Budson, is 
specific to women. Are there variables outside of, since women 
are not independent contractors, that we should be addressing 
within the financial services industry, on-site childcare, 
things like that?
    Ms. Budson. Thank you, and it has been a pleasure working 
on these issues together for many, many years of diversity and 
inclusion. So when we look at the issue of leadership, a 
tremendous amount of this is about leadership. My colleagues on 
the panel have talked about how executive sponsorship can be 
instrumental and that tying it to metrics, tying it to 
compensation, tying it to numbers is invaluable.
    And in addition, this is one of the places where justice 
and good business intertwine sort of with a yield for everyone. 
We will see men's and women's wages rise together when we grow 
our economy.
    Having this greater attachment to the labor force is 
something where everyone can actually gain. And if we do it 
mindfully it gives us an opportunity to provide additional jobs 
in communities that haven't had them, to provide additional 
promotion and opportunity for those who have been passed over 
and overlooked who have earned them.
    And for us to look at how we can truly compete as a nation 
in what is a very global industry so that we are harnessing one 
of our key advantages, which is that we have this diversity.
    And to note as well that when we look at particularly 
women, women are making the majority of purchasing decisions 
when we are looking at banking, when we are looking at home 
buying, even when we are looking at cars. And I believe the 
statistic is that the largest purchasing power will be Latina 
women by the time we get to about 2040.
    Ms. Pressley. Okay. I am sorry. I am reclaiming my time 
because I am running out here.
    So you said that women leave not because they opt out but 
because they get fed up. So that speaks to the retention 
challenge around culture--
    Ms. Budson. Yes.
    Ms. Pressley. Right? Inclusion can't just be a seat at the 
table. It is about the overall experience.
    Ms. Budson. Yes.
    Ms. Pressley. And so to that end, disproportionately the 
data supports, Mr. Guzzo, bridging the diversity gap that 
minorities are usually in the low level jobs. And so, one, how 
do we keep them there and prevent them from being most 
vulnerable to layoffs and general attrition?
    And also A.I. is very heavy on my mind right now because 
these will also be the folks most vulnerable to advances in 
technology. So if you could speak to that? So culture, 
retention and how do we protect the most vulnerable to layoffs? 
So--
    Mr. Guzzo. So I think--
    Ms. Pressley. In some ways it is conflated.
    Mr. Guzzo. You directed that to me, Congresswoman?
    Ms. Pressley. Yes.
    Mr. Guzzo. Great. So I think the vulnerability to layoffs 
is a really terrific issue for you to raise because I do think 
that there are segments of the population more vulnerable to 
the challenges of new technologies, A.I., et cetera.
    I don't think it is just at the entry level of work. I 
think it is at the professional level as well, particularly in 
financial services. So the skilled individual contributor, 
right? The person with his or her MBA, person of color, et 
cetera.
    If there are dispersed risks of technology disruption, some 
of us may be more prone or subject to those risks than others. 
And I think it needs, like, we don't have data on it. I think 
it is a real issue that we don't know yet the result.
    In terms of I think the retention for us, one of our big 
learnings is that what keeps people in the enterprise is very 
local. You need to discover it in your enterprise about what is 
working or not to keep the right people there.
    Ms. Pressley. I am sorry, just reclaiming my time. And so 
just for the record, do you believe we have insufficient data 
on the Federal level in this space?
    Mr. Guzzo. On the impact on the impending technology 
impact?
    Ms. Pressley. Yes.
    Mr. Guzzo. Yes, insufficient data.
    Ms. Pressley. Okay. All right.
    And Ms. Budson, I will have to follow up with you offline. 
It looks like I am running out, but I thank you for being here 
and I have read your statement for today and I will follow up.
    Thank you.
    Chairwoman Beatty. Thank you.
    And Ms. Budson, I hope we can note that you started first 
that time so I did not have to cut you off.
    The gentleman from Wisconsin, Mr. Steil, is recognized for 
5 minutes.
    Mr. Steil. Thank you very much, and thank you, Madam 
Chairwoman, for holding today's hearing on what is a very 
important topic.
    I want to build on the comments that my colleague, Mr. 
Gonzalez, had, in particular as it relates to small businesses. 
Sometimes we hear about plans that work well for large 
businesses. And larger companies with big human resource 
departments and ample resources may find it sometimes easier to 
incorporate some of the strategies that we have been discussing 
today.
    However, I want to focus in a little bit on small 
businesses and how small businesses can take the strategies 
that we are discussing today, how they can implement them and 
also be successful.
    Can you give and kind of talk about how you advise small 
businesses that want to invest in diversity, and maybe start 
with you, Mr. Von Hoene?
    Mr. Von Hoene. Well, one of the things, we obviously run 
very large businesses, but we have a number of very small 
businesses who provide services, goods and services for us. And 
we are very interested in diversity in that field as well as 
our internal work.
    So what we do in that regard is we make sure that they 
understand how important this is to us, and we reward them 
accordingly for being successful in that area.
    So if you have done a good job in recruiting a diverse 
workforce in a small business you are more likely to have favor 
with Exelon in terms of rewarding work than you are if you 
haven't done so.
    Mr. Steil. Do you see challenges as you track that as it 
relates to kind of standard deviation with a smaller sample set 
in some of these smaller businesses as you are looking at how 
you are identifying success?
    Mr. Von Hoene. We do, but have a broad enough array of 
businesses.
    Mr. Steil. Okay.
    Mr. Von Hoene. We have hundreds and hundreds of businesses 
so we are able to be statistically, I think, accurate and 
statistically meaningful in connection with looking at that.
    Mr. Steil. I appreciate that. Does anybody else want to 
comment on the small business side?
    Mr. Verrett? And then I will come back across.
    Mr. Verrett. Thank you, Congressman. We have small business 
clients, start-up clients, backed by private equity and venture 
capital. And it is much easier to attract a broad array of 
talented individuals if, as the Congressman mentioned with his 
company, you start at the beginning with a diverse workforce. 
It is just much easier.
    Millennials, in particular, research shows are much more 
likely to work for diverse companies. They are choosing to work 
for diverse companies over companies that are non-diverse, as 
the most diverse generation in American history.
    And in my conversations with Silicon Valley startups they 
say, look, it is not our competitor down Sand Hill Road or in 
San Jose. It is in China. And we have to simply get the best 
talent with the best ideas to offset the next Googles and 
Facebook that are likely going to come from China.
    So this is about American competitiveness and building this 
from the ground up as an institutional value at the board level 
and at the executive level to maximize the ability to attract 
that genius executive, that genius professional that might be 
at an HBCU or a Latino-serving institution that might not be on 
the radar of another tech company.
    Mr. Steil. Thank you very much.
    Ms. Trimble?
    Ms. Trimble. Yes, thank you, Congressman. I think that my 
colleagues are absolutely right. I think that there are 
opportunities that small businesses have to be more flexible in 
applying their strategies.
    What I found in working and talking with Millennial workers 
and Gen X is that they are looking for more flexible 
environments. They are sometimes not as open to working in the 
complex, larger corporate structures. So I think that there is 
an opportunity to be able to bring these individuals in.
    And one of the advantages that entrepreneurs have is that 
they have the freedom and the flexibility to select their 
leadership team and so they can start with diverse pool. And we 
know that diverse people tend to hire more diverse people.
    So I think that those are ways that we can maybe encourage 
our small businesses to make sure that they are really living 
out their values and bringing in people that reflect their 
values.
    And I would also agree with Mr. Von Hoene that when 
corporations are doing business with these firms they need to 
ask those questions and hold them accountable for making sure 
that they are bringing diverse talent to represent their 
interests in their supply chain.
    Mr. Steil. Thank you.
    Ms. Budson?
    Ms. Budson. There are also many tools that small businesses 
can use that have virtually little or no cost: one, building 
partnerships with student organizations, talent management, and 
other firms that specialize or are known to do a good job in 
this area.
    Two, one can also do some things internally if you don't 
have a big human resource information system where once you 
have been recruiting from a very diverse talent pool to de-bias 
your processes, just covering the name removes a huge amount of 
bias.
    We like in our organization to also cover where somebody 
went to school, cover motherhood or fatherhood so that we are 
really just looking at those factors which are going to tell 
whether or not you are going to yield the talent that you need 
from the individual.
    And in addition, small organizations have the ability to go 
into the community in which they are located and to say this is 
a value. We mean it realistically and even sometimes just 
moving the interview site into the communities that you want to 
deeper engage sends the signal of seriousness and partnership.
    Mr. Steil. Thank you very much.
    And I yield back.
    Chairwoman Beatty. Thank you.
    The gentleman from Texas, Mr. Green, the Chair of our 
Subcommittee on Oversight and Investigations, is recognized for 
5 minutes.
    Mr. Green. Thank you, Madam Chairwoman, and I compliment 
you and the ranking member on the fine job you are doing.
    I have three areas of inquiry. The first has to do with the 
performance metric that you mentioned, Mr. Verrett. I was 
monitoring this in my office. You indicated that if we can tie 
the acquisition of diversity to performance where is this 
currently working? Can you give me some major corporations 
where they are doing this?
    Mr. Verrett. Congressman, I believe Exelon--
    Mr. Green. Well, we have this one.
    Mr. Verrett. --does this.
    Mr. Green. Yes. But can you give me another? We are proud 
to have them. I am just curious if you are aware of some 
others?
    Mr. Verrett. I believe the National Basketball Association 
also ties it to that as well. There are other sports leagues 
that do that. And how that is manifest is you don't have to tie 
it to a specific, measurable goal per se. Most companies are 
reticent to do that. The general counsel will come in and say 
that is illegal, that is a quota. You can't do that.
    If you tie it to the efforts made, what efforts have you 
made to make sure your division has people of color and women 
up for promotion? What efforts have you made to tie executive 
search firms like mine to make sure they are really submitting 
diverse slates of candidates?
    If you force executives to actually show their efforts you 
will find that most companies' executives will get in line if 
their compensation is tied to it.
    In some companies executive compensation can be 10 times 
the base compensation. You can get a base salary of $350,000 
and a bonus of $3 million. And so tying it to executive 
compensation makes it measurable and make sure it is monitored.
    Mr. Green. Thank you. And I think you have spoken well. I 
am just curious about actual companies that are employing this 
technique.
    Yes, Ms. Trimble?
    Ms. Trimble. Thank you, Congressman. I would like to say 
that actually my previous company where I was working, our 
automotive global leader, that was actually one of the ways we 
were actually able to make traction is by tying it to executive 
compensation and creating scorecards and dashboards for our 
executive leaders so that we could monitor their progress, 
measure their progress.
    And frankly what I found is that there was a spirit of 
competitiveness. So once we started visualizing this amongst 
the leadership team, no one wanted to be at the bottom of that 
list.
    So those are ways that we were actually able to see 
traction, to actually get progress is when we implemented a 
formal scorecard they were held accountable to and tied it to 
their performance metrics.
    Mr. Green. Next area, you mentioned the NBA and 
professional sports they do require that the talent pool, the 
final three, perhaps, will have at least one person who would 
represent diversity in it. How successful is this in business?
    Yes?
    Mr. Verrett. I would just say as somebody who was the 
keeper of the Rooney Rule at the NFL, the Rooney Rule is an 
extraordinarily effective tool to get diversity moving in your 
organization. But it is not a complete solution.
    It is part of a series of solutions. A better solution 
related to that is to make sure that you have diversity on the 
interview team to make sure that bias doesn't creep into the 
questions, bias doesn't creep into the order in which 
candidates are interviewed, into archetyping about what the 
ideal candidate is, which might have a bias of gender or race 
or age or orientation subtly built into it.
    So the Rooney Rule is effective and many of our clients are 
utilizing the Rooney Rule to make sure they have diversity. But 
I also think we should be mindful. Research shows that if you 
only have one person of color or one woman on the slate, the 
research shows that it is almost a guarantee that that person 
is not going to get selected for the role because they become 
the outlier.
    So organizations are now requiring two people of color or 
two women on the slate to make sure that there is sufficient--
    Mr. Green. I have little time and I do want to ask this 
last question.
    With reference to the culture in an office, a good many 
offices are concerned about bringing people in who just won't 
fit into the culture, don't play poker on Friday nights, not 
avid sports fanatics, if you will. How do you deal with that?
    Mr. Von Hoene. Well, I think all companies, Congressman, do 
have that challenge wherever they are on the diversity and 
inclusion spectrum.
    One of the things that I did with the people who work for 
me at one point in time who were officers of the company was, I 
said, let us keep track of who you go to breakfast with, who 
you go to dinner with, and who you go to lunch with, and let us 
look at the end of the year and see whether you have 
distributed your personal sponsorship and mentorship in an 
even-handed way.
    So we have to do those things that try to break that, but 
that is a journey that requires an enormous amount of ongoing 
effort. And to the degree that we can measure our success in 
that, it is very valuable.
    Mr. Green. Thank you, Madam Chairwoman.
    And I thank the witnesses as well.
    Chairwoman Beatty. Thank you, Mr. Chairman.
    I would like to thank our witnesses for their testimony 
today. And without objection, I would like to enter into the 
record letters from the African-American Credit Union National 
Association addressed to this entire subcommittee, thanking us 
for holding this important hearing. Without objection, it is so 
ordered.
    Additionally, I would like to enter into the record an 
article by Alex Gorsky, CEO of Johnson & Johnson, and Chair of 
the Business Roundtable Governance Committee. Without 
objection, it is so ordered.
    The Chair notes that some Members may have additional 
questions for this panel, which they may wish to submit in 
writing. Without objection, the hearing record will remain open 
for 5 legislative days for Members to submit written questions 
to these witnesses and to place their responses in the record. 
Also, without objection, Members will have 5 legislative days 
to submit extraneous materials to the Chair for inclusion in 
the record.
    This hearing is now adjourned.
    [Whereupon, at 3:35 p.m., the hearing was adjourned.]

                            A P P E N D I X


                              May 1, 2019