Financial Services Industry: Overall Trends in Management-Level  
Diversity and Diversity Initiatives, 1993-2006 (07-FEB-08,	 
GAO-08-445T).							 
                                                                 
As the U.S. workforce has become increasingly diverse, many	 
private and public sector organizations have recognized the	 
importance of recruiting and retaining minority and women	 
candidates for key positions. However, previous congressional	 
hearings have raised concerns about a lack of diversity at the	 
management level in the financial services industry, which	 
provides services that are essential to the continued growth and 
economic prosperity of the country. This testimony discusses	 
findings from a June 2006 GAO report and more recent work on	 
diversity in the financial services industry. Specifically, GAO  
assesses (1) what the available data show about diversity at the 
management level from 1993 through 2006 and (2) steps that the	 
industry has taken to promote workforce diversity and the	 
challenges involved. To address the testimony's objectives, GAO  
analyzed data from the Equal Employment Opportunity Commission	 
(EEOC); reviewed select studies; and interviewed officials from  
financial services firms, trade organizations, and organizations 
that represent minority and women professionals.		 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-445T					        
    ACCNO:   A80549						        
  TITLE:     Financial Services Industry: Overall Trends in	      
Management-Level Diversity and Diversity Initiatives, 1993-2006  
     DATE:   02/07/2008 
  SUBJECT:   Data collection					 
	     Data integrity					 
	     Diversity management				 
	     Employee retention 				 
	     Employment of minorities				 
	     Fair employment programs				 
	     Financial institutions				 
	     Financial management				 
	     Minorities 					 
	     Personnel recruiting				 
	     Women						 
	     Program implementation				 

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GAO-08-445T

   

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United States Government Accountability Office: 
GAO: 

Testimony: 

Before the Subcommittee on Oversight and Investigations, Committee on 
Financial Services, House of Representatives: 

For Release on Delivery: 
Expected at 2:30 p.m. EST:
Thursday, February 7, 2008: 

Financial Services Industry: 

Overall Trends in Management-Level Diversity and Diversity Initiatives, 
1993-2006: 

Statement of Orice M. Williams: 
Director Financial Markets and Community Investment: 

GAO-08-445T: 

GAO Highlights: 

Highlights of GAO-08-445T, a testimony before the Subcommittee on 
Oversight and Investigations, Committee on Financial Services, House of 
Representatives. 

Why GAO Did This Study: 

As the U.S. workforce has become increasingly diverse, many private and 
public sector organizations have recognized the importance of 
recruiting and retaining minority and women candidates for key 
positions. However, previous congressional hearings have raised 
concerns about a lack of diversity at the management level in the 
financial services industry, which provides services that are essential 
to the continued growth and economic prosperity of the country. 

This testimony discusses findings from a June 2006 GAO report and more 
recent work on diversity in the financial services industry. 
Specifically, GAO assesses (1) what the available data show about 
diversity at the management level from 1993 through 2006 and (2) steps 
that the industry has taken to promote workforce diversity and the 
challenges involved. 

To address the testimonyï¿½s objectives, GAO analyzed data from the Equal 
Employment Opportunity Commission (EEOC); reviewed select studies; and 
interviewed officials from financial services firms, trade 
organizations, and organizations that represent minority and women 
professionals. 

What GAO Found: 

GAOï¿½s June 2006 report found that, from 1993 through 2004, overall 
diversity at the management level in the financial services industry 
did not change substantially, but some racial/ethnic minority groups 
experienced more change in representation than others. EEOC data show 
that management-level representation by minority women and men 
increased overall from 11.1 percent to 15.5 percent during the period 
(see fig. below). Specifically, African-Americans increased their 
representation from 5.6 percent to 6.6 percent, Asians from 2.5 percent 
to 4.5 percent, Hispanics from 2.8 percent to 4.0 percent, and American 
Indians from 0.2 percent to 0.3 percent. In preparation for this 
testimony, GAO collected EEOC data for 2006, which shows that diversity 
at the management level in the financial services industry remained 
about the same as it had in previous years. 

Financial services firms and trade groups have initiated programs to 
increase workforce diversity, but these initiatives face challenges. 
The programs include developing scholarships and internships, 
partnering with groups that represent minority professionals, and 
linking managersï¿½ compensation with their performance in promoting a 
diverse workforce. Some firms have developed indicators to measure 
progress in achieving workforce diversity. Industry officials said that 
among the challenges these initiatives face are recruiting and 
retaining minority candidates, as well as gaining the ï¿½buy-inï¿½ of key 
employees, such as the middle managers who are often responsible for 
implementing such programs. Without a sustained commitment to 
overcoming these challenges, diversity at the management level may 
continue to remain generally unchanged over time. 

Workforce Representation in the Financial Services Industry at the 
Management Level by Racial/Ethnic Group and Gender (1993, 1998, 2000, 
and 2004): 

[See PDF for image] 

This figure is a multiple line graph depicting the following data: 

Year: 1993; 
Total white: 88.9%; 
White men: 52.2%; 
White women: 36.7%; 
Total minority: 11.1%; 
African-American: 5.6%; 
Hispanic: 2.8%; 
Asian: 2.5%; 
American Indian: 0.2%. 

Year: 1998; 
Total white: 86.9%; 
White men: 49.0%; 
White women: 37.9%; 
Total minority: 13.1%; 
African-American: 6.4%; 
Hispanic: 3.3%; 
Asian: 3.2%; 
American Indian: 0.2%. 

Year: 2000; 
Total white: 85.7%; 
White men: 48.0%; 
White women: 37.8%; 
Total minority: 14.3%; 
African-American: 6.8%; 
Hispanic: 3.7%; 
Asian: 3.6%; 
American Indian: 0.3%. 

Year: 2004; 
Total white: 84.5%; 
White men: 47.2%; 
White women: 37.4%; 
Total minority: 15.5%; 
African-American: 6.6%; 
Hispanic: 4.0%; 
Asian: 4.5%; 
American Indian: 0.3%. 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add up to 100 due to rounding. 

[End of figure] 

To view the full product, including the scope and methodology, click on 
[hyperlink, http://www.GAO-08-445T]. For more information, contact 
Orice M. Williams at (202) 512-8678 or [email protected]. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

I am pleased to be here today to discuss the results of our June 2006 
study on diversity in the management level in the financial services 
industry, as well as more recent information that we have gathered on 
this important topic.[Footnote 1] As you know, the U.S. workforce has 
become increasingly diverse over the last several decades. As the 
composition of the workforce has changed, many private and public 
sector organizations have recognized the importance of recruiting and 
retaining minority and women candidates for key positions. In a 2005 
report on diversity management, we stated that workforce diversity can 
benefit organizations in a variety of ways, such as by allowing them to 
better meet the needs of a diverse customer base, reducing the costs 
associated with employee turnover, and increasing staff 
morale.[Footnote 2] However, this subcommittee and others have raised 
concerns about workforce diversity in the financial services industry, 
which provides key services necessary to help ensure the continued 
growth and economic prosperity of the country. In hearings held by this 
subcommittee in 2004 and 2006, some witnesses stated that financial 
services firms--banks and securities firms, for example--have not made 
sufficient progress in recruiting and retaining minorities and women at 
the management level.[Footnote 3] 

In my testimony, I will summarize the key findings from our work, which 
has sought to collect, analyze, and report data and information that 
provide insights into diversity in the financial services industry. 
Specifically, I will discuss (1) what the available data show about 
diversity at the management level in the financial services industry 
from 1993 through 2006 and (2) the types of initiatives that the 
financial services industry and related organizations have taken to 
promote workforce diversity and the challenges involved. 

To prepare our June 2006 report, we used the Equal Employment 
Opportunity Commission's (EEOC) Employer Information Report (EEO-1) 
data on financial services firms with 100 or more employees for the 
period from 1993 through 2004.[Footnote 4] The EEO-1 data provide 
information on racial/gender representation for various occupations, 
including "officials and managers," for a broad range of industries, 
including financial services. In updating our work in preparation for 
this testimony, we collected and analyzed EEO-1 data for financial 
services firms with 100 or more employees for 2006. We cannot conduct a 
direct and continuous trend analysis of changes in the representation 
of minorities and women at the management level in the financial 
services industry between 2004 and 2006 because the 2006 data is based 
on an updated system for classifying industries.[Footnote 5] However, 
the 2006 EEO-1 representation data for the financial services industry 
can generally be compared with the EEO-1 data for 2004 and prior years. 
Our work has also involved reviewing reports on the state of workforce 
diversity and initiatives to increase the representation of minority 
and women in financial services firms. We have also interviewed 
academics and officials from a variety of financial services firms and 
trade and professional groups. 

We performed this performance audit in Washington, D.C., in January 
2008, in accordance with generally accepted government auditing 
standards. Those standards require that we plan and perform the audit 
to obtain sufficient, appropriate evidence to provide a reasonable 
basis for our findings and conclusions based on our audit objectives. 
We believe that the evidence obtained provides a reasonable basis for 
our findings and conclusions based on our audit objectives. 

In brief: 

From 1993 through 2006, overall workforce diversity at the management 
level in the financial services industry did not change substantially, 
but some racial/ethnic minority groups experienced more change in 
representation than others. As described in our June 2006 report, EEO- 
1 data show that overall management-level representation by minority 
women and men increased from 11.1 percent to 15.5 percent from 1993 
through 2004. Specifically, African-Americans increased their 
representation from 5.6 percent to 6.6 percent, Asians from 2.5 percent 
to 4.5 percent, Hispanics from 2.8 percent to 4.0 percent, and American 
Indians from 0.2 percent to 0.3 percent. Representation by white women 
remained constant at slightly more than one-third during this period, 
while representation by white men declined from 52.2 percent to 47.2 
percent. EEO-1 data also show that representation by minorities and 
women at the management level was about the same in 2006 as it had been 
in previous years.[Footnote 6] For example, African-Americans and 
Asians represented about 6.4 percent and 5.0 percent, respectively, of 
all financial services managers in 2006. Moreover, the EEO-1 data show 
that depository institutions, such as commercial banks and insurance 
companies, have generally been more diverse at the management level 
over the years than securities firms. 

Although financial services firms and trade groups have initiated 
programs to increase workforce diversity, these initiatives face 
challenges that may help explain why overall diversity at the 
management level has not changed substantially. Officials at financial 
services firms said that diversity was an important goal and that top 
leadership was committed to recruiting and retaining minority and women 
candidates. Some financial services firms have established scholarship 
and internship programs or partnered with groups that represent 
minority professionals. Officials from a few firms told us that they 
had begun linking managers' compensation and performance in promoting 
workforce diversity, and some firms had developed indicators (e.g., 
representation by minorities and women in key positions) to measure 
progress in achieving workforce diversity. Industry officials said 
that, among the challenges these initiatives faced were recruiting and 
retaining minority candidates, as well as gaining the "buy-in" of key 
employees, such as the middle managers who were often responsible for 
implementing such programs. Without a sustained commitment to 
overcoming these challenges, diversity at the management level in the 
financial services industry may continue to remain generally unchanged 
over time. 

Background: 

We defined the financial services industry to include the following 
sectors: 

* depository credit institutions, which include commercial banks, 
thrifts (savings and loan associations and savings banks), and credit 
unions; 

* holdings and trusts, which include investment trusts, investment 
companies, and holding companies; 

* nondepository credit institutions, which extend credit in the form of 
loans, and which include federally sponsored credit agencies, personal 
credit institutions, and mortgage bankers and brokers; 

* the securities sector, which is made up of a variety of firms and 
organizations (e.g., broker-dealers) that bring together buyers and 
sellers of securities and commodities, manage investments, and offer 
financial advice; and; 

* the insurance sector, including carriers and insurance agents that 
provide protection against financial risks to policyholders in exchange 
for the payment of premiums. 

The financial services industry is a major source of employment in the 
United States. EEO-1 data showed that the financial services firms we 
reviewed for this work, which have 100 or more staff, employed nearly 3 
million people in 2004. Moreover, according to the U.S. Bureau of Labor 
Statistics, employment in the financial services industry was expected 
to grow at a rate of 1.4 percent annually from 2006 through 2016. 

Diversity in the Financial Services Industry at the Management Level 
Did Not Change Substantially: 

EEO-1 data for 1993 through 2006 generally do not show substantial 
changes in representation by minorities and women at the management 
level in the financial services industry, but some racial/ethnic 
minority groups experienced more change in representation than others. 
Figure 1, which is based on information that we obtained in preparation 
for our June 2006 report, shows that overall management-level 
representation by minorities increased from 11.1 percent to 15.5 
percent from 1993 through 2004.[Footnote 7] Specifically, African- 
Americans increased their representation from 5.6 percent to 6.6 
percent, Asians from 2.5 percent to 4.5 percent, Hispanics from 2.8 
percent to 4.0 percent, and American Indians from 0.2 to 0.3 percent. 
Management-level representation by white women was largely unchanged at 
slightly more than one-third during the period, while representation by 
white men declined from 52.2 percent to 47.2 percent. 

Figure 1: EEO-1 Data on Trends in Workforce Diversity in the Financial 
Services Industry at the Management Level, by Racial/Ethnic Group and 
Gender (1993, 1998, 2000, and 2004): 

[See PDF for image] 

This figure is a multiple line graph depicting the following data: 

Year: 1993; 
Total white: 88.9%; 
White men: 52.2%; 
White women: 36.7%; 
Total minority: 11.1%; 
African-American: 5.6%; 
Hispanic: 2.8%; 
Asian: 2.5%; 
American Indian: 0.2%. 

Year: 1998; 
Total white: 86.9%; 
White men: 49.0%; 
White women: 37.9%; 
Total minority: 13.1%; 
African-American: 6.4%; 
Hispanic: 3.3%; 
Asian: 3.2%; 
American Indian: 0.2%. 

Year: 2000; 
Total white: 85.7%; 
White men: 48.0%; 
White women: 37.8%; 
Total minority: 14.3%; 
African-American: 6.8%; 
Hispanic: 3.7%; 
Asian: 3.6%; 
American Indian: 0.3%. 

Year: 2004; 
Total white: 84.5%; 
White men: 47.2%; 
White women: 37.4%; 
Total minority: 15.5%; 
African-American: 6.6%; 
Hispanic: 4.0%; 
Asian: 4.5%; 
American Indian: 0.3%. 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add up to 100 due to rounding. 

[End of figure] 

As shown in figure 2, EEO-1 data also show that the depository and 
nondepository credit sectors, as well as the insurance sector, were 
somewhat more diverse at the management level than the securities and 
holdings and trust sectors. In 2004, minorities held 19.9 percent of 
management-level positions in nondepository credit institutions, such 
as mortgage banks and brokerages, but 12.4 percent in holdings and 
trusts, such as investment companies. 

Figure 2: EEO-1 Data on Workforce Diversity in the Financial Services 
Industry at the Management Level by Sector (2004): 

[See PDF for image] 

This figure is a multiple vertical bar graph, depicting the following 
data: 

Sector: Total officials and managers; 
White men: 47.2%; 
White women: 37.4%; 
Minority men: 7.0%; 
Minority women: 8.4%. 

Sector: Holding and trusts; 
White men: 52.3%; 
White women: 35.3%; 
Minority men: 6.2%; 
Minority women: 6.2%. 

Sector: Insurance; 
White men: 46.3%; 
White women: 35.3%; 
Minority men: 5.4%; 
Minority women: 7.5%. 

Sector: Security and commodity brokers; 
White men: 57.5%; 
White women: 27.4%; 
Minority men: 8.7%; 
Minority women: 6.4%. 

Sector: Nondepository credit institutions; 
White men: 44.0%; 
White women: 36.1%; 
Minority men: 9.4%; 
Minority women: 10.5%. 

Sector: Depository credit institutions; 
White men: 44.0%; 
White women: 38.2%; 
Minority men: 7.7%; 
Minority women: 10.1%. 

Source: GAO analysis of EEOC data. 

Note: Percentages may not always add to 100 due to rounding. 

[End of figure] 

In preparation for this testimony, we contacted EEOC to obtain and 
analyze EEO-1 for 2006 and found that diversity remained about the same 
at the management level in the financial services industry (see fig. 3) 
as it had in previous years.[Footnote 8] For example, the 2006 EEO-1 
data show that African-Americans and Asians represented about 6.4 
percent and 5.0 percent, respectively, of all financial services 
managers in 2006. In addition, the 2006 EEO-1 data show that commercial 
banks and insurance companies continued to have higher representation 
by minorities and women at the management level than securities firms. 

Figure 3: EEO-1 Data in Workforce Diversity in the Financial Services 
Industry at the Management Level by Racial/Ethnic Group and Gender 
(2006): 

[See PDF for image] 

Racial/Ethnic Group: All; 
Total: 100%; 
Men: approximately 56%; 
Women: approximately 44%. 

Racial/Ethnic Group: White; 
Total: 83.9%; 
Men: approximately 46%; 
Women: approximately 38%. 

Racial/Ethnic Group: Minority; 
Total: 16.1%; 
Men: approximately 7.5%; 
Women: approximately 8.6%. 

Racial/Ethnic Group: African-American; 
Total: 6.4%; 
Men: approximately 2.4%; 
Women: approximately 4%; 

Racial/Ethnic Group: Hispanic; 
Total: 4.4%; 
Men: approximately 2.2%; 
Women: approximately 2.2%. 

Racial/Ethnic Group: Asian; 
Total: 5.0%; 
Men: approximately 3%; 
Women: approximately 2%. 

Racial/Ethnic Group: American Indian; 
Total: 0.3%; 
Men: approximately less than 0.3%; 
Women: approximately less than 0.3%. 

[End of figure] 

Note: Percentages may not always add up to 100 due to rounding. 

However, it is important to keep in mind that EEO-1 data may actually 
overstate representation levels for minorities and white women in the 
most senior-level positions, such as Chief Executive Officers of large 
investment firms or commercial banks, because the category that 
captures these positions--"officials and managers"--covers all 
management positions. Thus, this category includes lower-level 
positions (e.g., Assistant Manager of a small bank branch) that may 
have a higher representation of minorities and women. Recognizing this 
limitation, starting in 2007, EEOC revised its data collection form for 
employers to divide the "officials and managers" category into two 
subcategories: "executive/senior-level officers and managers" and 
"first/midlevel officials." We hope that the increased level of detail 
will provide a more accurate picture of diversity among senior managers 
in the financial services industry over time. However, it is too soon 
to assess the impact of this change on diversity measures at the senior 
management level. 

Initiatives to Promote Workforce Diversity in the Financial Services 
Industry Face Challenges: 

Officials from the firms that we contacted said that their top 
leadership was committed to implementing workforce diversity 
initiatives, but they noted that making such initiatives work was 
challenging. In particular, the officials cited ongoing difficulties in 
recruiting and retaining minority candidates and in gaining employees' 
"buy-in" for diversity initiatives, especially at the middle management 
level. 

Financial Services Firms Have Implemented a Variety of Diversity 
Initiatives: 

Minorities' rapid growth as a percentage of the overall U.S. 
population, as well as increased global competition, have convinced 
some financial services firms that workforce diversity is a critical 
business strategy. Since the mid-1990s, some financial services firms 
have implemented a variety of initiatives designed to recruit and 
retain minority and women candidates to fill key positions. Officials 
from several banks said that they had developed scholarship and 
internship programs to encourage minority students to consider careers 
in banking. Some firms and trade organizations have also developed 
partnerships with groups that represent minority professionals and with 
local communities to recruit candidates through events such as 
conferences and career fairs. To help retain minorities and women, 
firms have established employee networks, mentoring programs, diversity 
training, and leadership and career development programs. 

Industry studies have noted, and officials from some financial services 
firms we contacted confirmed, that senior managers were involved in 
diversity initiatives. Some of these officials also said that this 
level of involvement was critical to success of a program. For example, 
according to an official from an investment bank, the head of the firm 
meets with all minority and female senior executives to discuss their 
career development. Officials from a few commercial banks said that the 
banks had established diversity "councils" of senior leaders to set the 
vision, strategy, and direction of diversity initiatives. A 2005 
industry trade group study and some officials also noted that some 
companies were linking managers' compensation with their progress in 
hiring, promoting, and retaining minority and women employees.[Footnote 
9] 

A few firms have also developed performance indicators to measure 
progress in achieving diversity goals. These indicators include 
workforce representation, turnover, promotion of minority and women 
employees, and employee satisfaction survey responses. Officials from 
several financial services firms stated that measuring the results of 
diversity efforts over time was critical to the credibility of the 
initiatives and to justifying the investment in the resources such 
initiatives demanded. 

Several Challenges May Have Affected the Success of Workforce Diversity 
Initiatives in the Financial Services Industry: 

While financial services firms and trade groups we contacted had 
launched diversity initiatives, officials from these organizations, as 
well as other information, suggest that several challenges may have 
limited the success of their efforts. These challenges include the 
following: 

* Recruiting minority and women candidates for management development 
programs. Available data on minority students enrolled in Master of 
Business Administration (MBA) programs suggest that the pool of 
minorities, a source that may feed the "pipeline" for management-level 
positions within the financial services industry and other industries, 
is relatively small.[Footnote 10] In 2000, minorities accounted for 19 
percent of all students enrolled in MBA programs in accredited U.S. 
schools; in 2006, that student population had risen to 25 percent. 
Financial services firms compete for this relatively small pool not 
only with one another but also with firms from other industries. 

* Fully leveraging the "internal" pipeline of minority and women 
employees for management-level positions. As shown in figure 4, there 
are job categories within the financial services industry that 
generally have more overall workforce diversity than the "official and 
managers" category, particularly among minorities. For example, 
minorities held 22 percent of "professional" positions in the industry 
in 2004 as compared with 15 percent of "officials and managers" 
positions. According to a 2006 EEOC report, the professional category 
represented a possible pipeline of available management-level 
candidates.[Footnote 11] The EEOC report states that the chances of 
minorities and women (white and minority combined) advancing from the 
professional category into management-level positions is lower when 
compared with white males. 

Figure 4: EEO-1 Data (Percentage) on Workforce Diversity in the 
Financial Services Industry by Position, Gender, and Racial/Ethnic 
Group (2004): 

[See PDF for image] 

This figure is a multiple vertical bar graph, depicting the following 
data: 

Position: Total; 
White men: 30%; 
White women: 43%; 
Minority men: 9%; 
Minority women: 18%. 

Position: Officials and managers; 
White men: 47%; 
White women: 37%; 
Minority men: 7%; 
Minority women: 8%. 

Position: Professionals; 
White men: 37%; 
White women: 42%; 
Minority men: 9%; 
Minority women: 13%. 

Position: Technicians; 
White men: 41%; 
White women: 35%; 
Minority men: 13%; 
Minority women: 11%. 

Position: Sales workers; 
White men: 47%; 
White women: 29%; 
Minority men: 12%; 
Minority women: 12%. 

Position: Office and clerical workers; 
White men: 13%; 
White women: 51%; 
Minority men: 8%; 
Minority women: 28%. 

Position: Other; 
White men: 41%; 
White women: 25%; 
Minority men: 21%; 
Minority women: 13%. 

Source: GAO analysis of EEOC data: 

Note: Percentages may not always add to 100 due to rounding. 

[End of figure] 

* Retaining minority and women candidates that are hired for key 
management positions. Many industry officials said that financial 
services firms lack a critical mass of minority men and women, 
particularly in senior-level positions, to serve as role models. 
Without a critical mass, the officials said that minority or women 
employees may lack the personal connections and access to informal 
networks that are often necessary to navigate an organization's culture 
and advance their careers. For example, an official from a commercial 
bank we contacted said he learned from staff interviews that African- 
Americans believed that they were not considered for promotion as often 
as others partly because they were excluded from informal employee 
networks needed for promotion or to promote advancement. 

* Achieving the "buy-in" of key employees, such as middle managers. 
Middle managers are particularly important to the success of diversity 
initiatives because they are often responsible for implementing key 
aspects of such initiatives and for explaining them to other employees. 
However, some financial services industry officials said that middle 
managers may be focused on other aspects of their responsibilities, 
such as meeting financial performance targets, rather than the 
importance of implementing the organization's diversity initiatives. 
Additionally, the officials said that implementing diversity 
initiatives represents a considerable cultural and organizational 
change for many middle managers and employees at all levels. An 
official from an investment bank told us that the bank has been 
reaching out to middle managers who oversaw minority and women 
employees by, for example, instituting an "inclusive manager program." 

In closing, despite the implementation of a variety of diversity 
initiatives over the past 15 years, diversity at the management level 
in the financial services industry has not changed substantially. 
Further, diversity at the most senior management positions within the 
financial services industry may be lower than the overall industry 
management diversity statistics I have discussed today. While EEOC has 
taken steps to revise the EEO-1 data to better assess diversity within 
senior positions, this data may not be available for some period of 
time. Initiatives to promote management diversity at all levels within 
financial services firms appear to face several key challenges, such as 
recruiting and retaining candidates and achieving the "buy-in" of 
middle managers. Without a sustained commitment to overcome these 
challenges, management diversity in the financial services industry may 
continue to remain generally unchanged over time. 

Mr. Chairman, this concludes my prepared statement. I would be pleased 
to respond to any questions you or other Members of the Subcommittee 
may have. 

GAO Contact and Staff Acknowledgments: 

For further information about this testimony, please contact Orice M. 
Williams on (202) 512-8678 or at [email protected]. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this statement. Individuals making key 
contributions to this testimony include Wesley M. Phillips, Assistant 
Director; Emily Chalmers; William Chatlos; Kimberly Cutright; Simin Ho; 
Marc Molino; and Robert Pollard. 

[End of section] 

Footnotes: 

[1] GAO, Financial Services Industry: Overall Trends in Management- 
Level Diversity and Diversity Initiatives, 1993-2004, GAO-06-617 
(Washington, D.C.: June 1, 2006). For purposes of this testimony, we 
focused the diversity discussion on changes in management-level 
representation over time by gender and racial/ethnic minority groups, 
including African-Americans, Asians, Hispanics, and American Indians. 

[2] GAO, Diversity Management: Expert-Identified Leading Practices and 
Agency Examples, GAO-05-90 (Washington, D.C.: Jan. 14, 2005). 

[3] House Committee on Financial Services, Subcommittee on Oversight 
and Investigations, Diversity: The GAO Perspective, 109th Cong., 2nd 
session, 2006, 109-107; and House Committee on Financial Services, 
Subcommittee On Oversight and Investigations, Diversity in the 
Financial Services Industry and Access to Capital for Minority Owned 
Businesses: Challenges and Opportunities, 108th Cong., 2nd Session, 
2004, 108-101. 

[4] We used the EEO-1 "officials and managers" job category as the 
basis for our discussion of management-level diversity within the 
financial services industry. EEOC defines the job category of 
"officials and managers" as occupations requiring administrative and 
managerial personnel who set broad policies, exercise overall 
responsibility for execution of these policies, and direct individual 
departments or special phases of a firm's operation. 

[5] Our June 2006 report describes our approach to reporting the 1993 
through 2004 EEO-1 data, which used the Standard Industry 
Classification System (SIC). In preparing for this testimony, EEOC said 
that the previous approach would not be reliable for the 2006 EEO-1 
data because the SIC has become increasingly unreliable over time and 
has been replaced by the North American Industrial Classification 
System. 

[6] As mentioned previously, it is not possible to directly conduct a 
trend analysis due to changes in collecting and reporting EEO-1 data 
from the 2004 to 2006 period. However, the 2006 EEO-1 data can 
generally be compared with the EEO-1 data from 2004 and earlier years. 

[7] GAO-06-617. 

[8] As mentioned previously, it is not possible to directly conduct a 
trend analysis due to changes in collecting and reporting EEO-1 data 
from the 2004 to 2006 period. However, the 2006 data can generally be 
compared with the financial services industry as a whole from 2004 and 
previous years. 

[9] See Securities Industry Association (currently renamed Securities 
Industry and Financial Markets Association), 2005 Report on Diversity 
Strategy, Development and Demographics: Executive Summary (November 
2005). 

[10] Association to Advance Collegiate Schools of Business, the world's 
largest accreditation association for business schools, conducts an 
annual survey called "Business School Questionnaire" of all its 
accredited schools. Participation in this survey is voluntary. For the 
year 2006, the most recent year, 94.3 percent of the accredited schools 
responded to the survey. 

[11] Equal Employment Opportunity Commission, Diversity in the Finance 
Industry (April 2006). 

[End of section] 

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