You may before this never have heard the name Sallie Krawchek. To get a sense of how important a figure she has been on Wall Street, you need to read only one paragraph of her profile at Wikipedia:
Krawcheck started her business career as equity analyst covering the Wall Street firms, rising to become Director of Research and then chairman and CEO of sell-side research firm Sanford C. Bernstein & Co..[13] She had a reputation for impartial advice and her decision to take Bernstein out of the lucrative, but conflicted underwriting business, caused Fortune to dub her “The Last Honest Analyst.”[14] Citigroup sought her out to deal with criticisms over conflicts of interest within its wealth management and research business after charges were brought against the company by Eliot Spitzer
Were that her only achievements, she would be an important voice. But consider also the next paragraph:
Krawcheck was named CEO of Citigroup's (then new) Smith Barney unit, for which she was named to Time's 2002 list of "Global Influentials" and Fortune’s Most Influential Person Under the Age of 40.[12][16] The Smith Barney unit was set up in order to separate Citigroup's investment banking from its stock brokering and research operations, to avoid the appearance of a conflict of interest in those areas. Krawcheck was put in charge of 13,000 brokers and analysts of the new retail brokerage unit
She had other achievements before she set out on her own, including head of the Global Wealth and Investment Management Division of Citibank, and is now
the CEO and Co-Founder of Ellevest, a digital financial advisor for women launched in 2016. She is owner and Chair of Ellevate Network
Krawcheck has a long and thoughtful piece in today’s New York Times Sunday Review section titled The Cost of Devaluing Women. Obviously this was written because of the time in which we find ourselves, in which there has been an explosion of women coming forward to talk about sexual harassment and worse in Hollywood, journalism, politics, and now with James Levine in the arts as well (although his case is somewhat different in that he has a same-sex accuser, but similar to Roy Moore in that it started when his accuser was very much a minor). Krawcheck is able to talk about her own experiences first as she came up through the ranks in Wall Street, and then even if not sexual harassment the dismissive attitude she has experienced in seeking out venture capital from Silicon Valley for her current firm despite her own clear expertise. That makes what she has to say in her Times piece powerful and important.
Consider how she starts:
My first job out of college in the late 1980s was at Salomon Brothers, a trading house of cigar-smoking, expletive-spewing strivers. One day, I leaned over a colleague’s desk to work on a spreadsheet, and heard loud laughter from behind me; one of the guys was pretending to perform a sex act on me. Almost every day, I found a Xerox copy of male genitalia on my desk.
In the next paragraph she tells us of another firm on the Street paying out $150 million in a bias and harassment case — an amount that even without adjusting for inflation since then dwarfs the settlement made for Bill O’Reilly.
Krawcheck goes on to recount a number of other incidents in her own career as she rose through the ranks, before sharing this paragraph:
These are stories I have not often revisited. Maybe I’ve shared them over drinks with female friends or with younger women in the industry, to let them know what it used to be like. But in the dizzying past few weeks, as this crucial moment of reckoning on sexual harassment continues, it’s clear that the harassment I was subjected to is not in the past. Worse, I know that being a white woman afforded me a privilege in dealing with these issues that unfortunately not everyone has.
She is less concerned either about the size of settlements, or even the gross inequity in what some of the male harassers have received in compensation for their employment:
The bigger cost derives from how women’s ideas are discounted and their talent ignored. I have seen it up close in the two worlds I know best: Wall Street, where I was chief executive of Smith Barney and of Merrill Lynch Wealth Management, and in Silicon Valley, where I’ve raised money to run my start-up, Ellevest. These places are perhaps the purest microcosms of capitalism, and their lessons are instructive for all of us.
At this point I am going to urge you that by now you should know that you need to read this piece. It is worth one of the now only five articles per month the Times makes available for free to non-subscribers. And I have not even gotten to the key part of Krawcheck’s argument.
Her argument is that the real cost is not that of the millions in settlements, but the loss of what women can bring. For one thing, it is a different perspective:
Despite research showing that companies with more diversity, and particularly more women in leadership, offer higher returns on capital, lower risk and greater innovation than firms without such leadership, Wall Street has been, and is, predominantly male at the top. Its trading floors are 90 percent men. This ignores studies indicating that members of homogeneous groups tend to trust one another too much, leading to potential market mispricings.
She reminds us of how the herd mentality of Wall Street has led to so many jumping on the same trends at the same time.
Here I would like to offer some corroborating evidence from a somewhat different perspective. I first encountered the Meyers Brigg Type Indicator when the head of my department in Arlington County Government, which dealt with computers and technology, had all of us take it, and spent some time with an outside expert having us understand. Of the almost three dozen in the department, only 5 of us were extraverts. In fact, more than 80% were Introverted Sensate Thinking Judgers. Me? I was the only one who was an exact opposite, an Extraverted Intuitive Feeling Perceptor. That made in in some ways the most valuable member of the staff, and thereafter people wanted to hear my perspective, even if after the fact they might choose a different path. Similarly, I learned from how they viewed things.
Returning to Krawcheck’s piece, she notes not only the group think in finance, but what happens in venture capital in Silicon Valley, where
There are few senior women at the top venture capital firms. The industry funds few start-ups run by women. Last year, of the approximately $60 billion that venture capital firms invested, just $1.5 billion went to businesses with female founders.
While some might argue that is because firms run by men perform better, the evidence simply does not support that rationalization:
Investors in venture capital funds would have been as well off simply investing in the stock market over the past five to 15 years. That’s what I see in reviewing the data from the research firm Cambridge Associates: Investors in the high-risk, high-reward world of start-ups essentially did no better than they could have opening an account at their neighborhood brokerage. What might help those venture capitalists? First Round Capital reports that its investments in companies with a female founder have posted 63 percent better returns than men-only firms.
Stop and consider that for a moment. Then ask yourself while more venture firms don’t target women’s firms. Here perhaps Krawcheck can help us understand by sharing her own experience. She describes something that happened last summer, when she presented to a firm which was represented by 18 men — she was the only woman in the room. Many of the men ignored her, some half paid attention.
The lead investor was engaged, but not necessarily in a constructive way:
He challenged my knowledge on digital acquisition, on acquisition costs.
She decided that although he was being prickly, to continue, and mentioned that her firm was planning to hire a few financial advisers.
He proceeded to give me chapter and verse on how financial advisers are hard to manage and instructed me on the economics of the financial advisory business.
Now in case you have forgotten, go back to the top of this post where I shared about Krawcheck’s bio and you will understand her reaction. I am pushing fair use, but now consider her last two paragraphs:
I was astonished, because I have managed more financial advisers in my career than probably anyone in the country. And though it’s been years since I have been sexually harassed the way I was at Salomon, I realized in that moment how deep our gender views run, how men are still seen as leaders and women as more junior.
This man naturally assumed that he knew more about it than I did. It was his ingrained view of women — a view that’s costing all of us.
Consider:
how deep our gender views run, how men are still seen as leaders and women as more junior
his ingrained view of women
a view that’s costing all of us
Perhaps now you will see why I think this op ed piece is an essential part of our broader discussion on American attitudes on sexual/gender roles in society, and how poorly I think we have done in educating men about how they need to change.