Understanding the Experiences of African Americans in the Finance Sector

With a thirty-year perspective honed through one-on-one interactions, industry discussions, and thought leadership, the Toigo team has a direct and differentiated view into the individual career aspirations and struggles of thousands of minority individuals with careers in finance, the greatest percentage of whom are African American. With this lens, Toigo presents a deep look into the complexities that surround the inclusion and leadership advancement of African Americans in both established, majority-led firms and emerging organizations today. What we have observed is that whether in an established corporate environment or in a business startup, the expressed desire and appreciation for inclusion may be high, but the mechanics of it are still uncharted territory for many.

Issues surrounding the inclusion and leadership advancement of African Americans in business, whether in structured corporate environments or startups, are rooted in a tangled mix of history, emotions, and human nature. To offer a timely, frontline, and forward-facing perspective, we conducted focused interviews to gather insights into the mindset of current African American business leaders. This includes a look into what today’s leaders are experiencing, and the career strategies they’ve employed to advance and navigate traditional expectations of leadership. We believe these perspectives and experiences are representative of a broader population of African American business professionals.

The African American leaders Toigo interviewed have significant work experience with established, large-scale financial institutions. Having hit a real or perceived ceiling of advancement, a selection of those interviewed decided to leave senior financial positions in global firms to establish their own finance-focused startups. With these entrepreneurs, we explored what prompted them to “opt out” of the global firms where they held increasingly more-senior leadership roles to launch their own business ventures. We investigated issues of credibility, confidence, sponsorship, and other leadership challenges and explored whether those issues persist even in an environment where African Americans have direct control over workplace culture and talent practices.

We know that leading organizations have taken critical steps to create a more comprehensive system for talent to thrive. We’ve witnessed initiatives that draw specific attention to African American leaders as a way to address the imbalance in the workforce, as well as organizations that partner with Toigo specifically to focus on tapping African American leaders for their own organizations or board positions. Insights shared by African American leaders signal that systemic and systematic change requires even greater and more meaningful dialogue (the tough conversations) and broader education and support for those who have achieved senior-level success. While past efforts and current practices are making a difference, a radical shift in approach is clearly needed if meaningful and sustainable changes are to take hold. A candid, direct lens into the experiences of those directly affected provides a valuable and often overlooked perspective. This lens reveals a widening gap between the way organizations market and promote diversity and the realities of day-to-day work life.

The Quest for Credibility

Many African American leaders possess the credentials and confidence to assume C-suite responsibilities based on requisite skills and experience; yet many we interviewed at this level commented that they still battle with credibility and “right to be there” feelings. We believe this constant feeling of not truly belonging, of doubt, of not having earned their rightful place in leadership amplifies this notion of the illusion of inclusion and may be at the root of why African American leaders must strategically “promote their own credibility markers in fostering meaningful points of connection with majority peers,” as one leader we interviewed shared.

Another leader noted that upon his arrival midcareer at his current firm, he was often referred to as “the guy we hired from [prominent firm],” underscoring that the gold-standard brand on his résumé was viewed as the most critical element he brought into his senior role—it was the lens through which others qualified and perceived his value. “I realized it was the credibility marker they needed to welcome me, the only senior African American leader on the line.” Sparked by that seemingly (to some) innocuous but nevertheless insulting “from” comment, this savvy executive began reframing how he introduced himself to firm colleagues with clients. Rather than leading with the prior firm’s moniker, he purposefully used very different references as a way to begin establishing meaningful connections to his leadership and accomplishments and the new role he was assuming. “Where I worked does not define me or my potential,” he decided. We heard consistently that African American leaders felt they needed to be more attuned than their white colleagues to navigating and managing against these “brand qualifiers,” which ultimately detract from and devalue the successes the individual has achieved and the value he or she has delivered.

The reality that the credibility marker may not rest in the hands of even the most experienced African American leader was discussed by an entrepreneur Toigo interviewed: “I had proposed a minority spin-out five years prior to my boss and he laughed and said ‘no.’ Not once, but year after year. Then one unsolicited remark made by a client (who was white) during a meeting gave my boss the confidence to change his thinking. While I had the required pedigree, education, and professional track record, that wasn’t enough without someone, a white male, making an endorsement.” Even with all the right elements in place, added intervention was needed to validate—and catapult—this African American entrepreneur’s rise.

Let’s Not Lower the Bar

Ingrained attitudes, many deeply rooted in individual psyches, present very real obstacles to driving greater diversity and ultimately more minority senior leaders. Attribution theory explains, in part, how these obstacles play out: We believe we’re inherently good and talented, yet others are merely lucky, beneficiaries of good fortune. We believe we do bad things because of the situations we are in, not because of who we are. In contrast, we assume others do bad things because they are predisposed to being bad (Gilbert & Malone, 1995). The “We really do want to be diverse, but we don’t want to sacrifice quality in any way” mantra falls squarely into this arena. David Thomas, the H. Naylor Fitzhugh Professor of Business Administration, Emeritus, at Harvard Business School and president of Morehouse College, explains in “Why Race and Culture Matter in the C-Suite” (McGirt, 2016), “If you’re not expecting positive performance from a particular group, such as black men, you may attribute their success to external factors, like affirmative action or luck,” rather than their own character. Research by Ashleigh Rosette and colleagues supports this pattern of attribution bias in performance evaluations, specifically with respect to African American leaders (Rosette, Leonardelli, & Phillips, 2008).

Not even the highest echelons of leadership are immune. Robert Smith, founder, chairman, and CEO of Vista Equity Partners and the only African American to sign the Giving Pledge, a commitment by the world’s wealthiest individuals and families to dedicate the majority of their wealth to giving back, is just one example. In a Forbes article, he shared that he “faces constant, if often unwitting, racism” (Vardi, 2018). After completing a deal and being complimented for his success, a white colleague then said, “But you still have your heritage to overcome.” “It meant I had to work harder. And that’s what I did,” Smith reflected. Smith and his team at Vista have produced returns exceeding those of the most prominent private equity funds, dispelling all notions of added risk or of lowering the bar for African Americans in business leadership.

Isolation Grows

While “It’s lonely at the top” may sound trite, one female black executive said, “It’s true—and it’s even more true when you’re ‘the first and the only.’ ” That sense of isolation, of solitude, can take a toll. One leader shared, “It’s like facing each day with a core of uncertainty. It’s wondering each day if the floor you’re standing on is concrete or dirt, whether it’s solid or not.”

African American leaders quickly acknowledge the absence of a deeply rooted internal support network, which is needed to navigate the headwinds they will inevitably encounter. For multiple reasons, key drivers for organizational success must be developed by diverse leaders through creative and self-initiated means—mostly informal or external. As one leader called it, “creating my own ‘safe place.’ ”

The absence of adequate representation of African Americans at the senior level and peer support often fuels an undercurrent of vulnerability and isolation within the workplace, as reported by some of our interviewees. For example, one shared, “When I left a major Wall Street firm, I had no idea what I was in for [by] joining a smaller, but still hugely successful, firm. It was like leaving a country club and going to a Klan rally.” The individual further explained that working in finance or the asset management business is like joining a country club, with clear, albeit exclusionary, rules of entry. However, when working within a smaller team, the interviewee found that the environment was unapologetically homogenous (white and male): “Private companies do not operate under the same rules as larger institutions. The ‘this is our culture’ mindset is much more overt and the message is loud and clear. If you want access, there is unapologetic harshness. That one needs to conform when you are working in an environment like that, you step back and say, ‘How can there be a meritocracy here when everybody here looks the same?’ ”

Even when the overall culture of an organization appears to be inviting, progress in confronting and addressing substantive issues can be difficult; of course, this sluggishness and lack of traction can be frustrating—for all. One interviewee observed, “People will tell you—come on in, the water is fine. The warning instead should be to have a very good wet suit. And floaties, because the water is a lot deeper and colder than you could ever imagine.”

The sense of isolation and constantly pushing was a common issue voiced by the African American leaders we interviewed. When we asked one entrepreneur to share the moment when he really felt he and his fund had made it, this leader of a high-performing, fifteen-year fund with allocations from the largest pension plans in the country paused and replied, “I don’t know if I feel that way today. I still question if we’ve made it.”

One executive we interviewed is trying to change the narrative by presenting himself as a culture resource within his organization, intentionally positioning himself as a “source of expertise” and leveraging his broad, diverse network to educate his corporate stakeholders on the value of inclusive practices. He proactively pursued opportunities and initiated discussions, both personal and professional, that could make a measurable impact in closing the cultural gap that often exists between leaders from underrepresented groups and their majority colleagues.

We probed to determine whether this “cultural ambassador” model led to greater understanding about the necessity for inclusion by the firm and whether the blind spots no longer exist. Sadly, he said no. While these efforts may have an impact at the individual level, the translation of this effort to the broader, institutional level is much less visible. The raw truth is that on a corporate level this highly regarded African American leader is viewed as an outlier or an exception instead of an example of many, which is disheartening. “They are a long way from seeing me as a multiplier,” he stated. “I am still an anomaly, which I do not own.” Classifying African American or other diverse leaders as “exceptional” only fuels the organization’s cultural complacency and can serve to further isolate the leader of color and slow any efforts for change.

“I have the opportunity and the obligation to change the narrative around complex conversations like race that help us work together toward common objectives,” Bernard J. Tyson, the CEO of the $60 billion Kaiser Permanente health-care organization, recently stated. “[T]o do that, we have to tell the truth,” he noted in “Why Race and Culture Matter in the C-Suite” (McGirt, 2016). To drive these needed conversations, leaders will need to change the script.

Unspoken Expectations

The burden of being “the only” is often compounded by both external and internal forces unique to African Americans more than any other group, as there is an unspoken expectation that the leader should address the needs of other black employees. While this is natural given the limited number of those with a leadership voice, this expectation may sometimes be unrealistic or complex. “People need to recalibrate their expectations of African American leaders,” one executive said. “This would go a long way in improving the relationship we have with each other.”

A few of our leaders shared that their history within their firms has often been tethered to elements directly connected to their “minority status,” most often their presence in diversity recruitment activities. “There are responsibilities that come with your role as a diverse leader that you can rarely talk about—if you did, peers would view it as complaining, even those in your own community, which is disheartening. But trying to fulfill these expectations of helping ‘my own’ can come with a cost; this responsibility can require a lot of extra time and emotional energy and often gets relegated to ‘personal’ time, which, of no surprise, is a scarce commodity for senior leaders with obligations for family or others,” commented one senior African American executive.

Another executive stated, “Diversity recruiting activities can be the kiss of death.” As a result of being professionals of color, many diverse leaders are asked to assist. “The natural instinct is to be with people like you. But then you realize, there’s a big conflict. Those events aren’t on your boss’s radar and you have work to be done. I almost lost my job because my time and attention kept getting diverted—and I was a party to it.” As one executive noted, efforts to assist minorities that appear too visible and aligned with inclusive efforts may backfire on the individual, even if the organizational goal is achieved and the individual is qualified. Some have dubbed this implied requirement “two jobs”—the official one the individual was hired to do and a second one as a champion for members of the individual’s own minority group.

Efforts by leaders to assist rising African American professionals within their organizations often require a more measured or softened approach compared with the more overt way in which other talent is championed. “The academic pedigree of my team is the same if not better than the majority,” one leader noted. “I can do a lot, but it’s got to be stealth. I can’t do it in a way that shoves ‘I’m black’ in everybody’s face.”

Center for Talent Innovation research presented in the report Vaulting the Color Bar: How Sponsorship Levers Multicultural Professionals into Leadership (Hewlett, Jackson, & Cose, 2012) shows that 26 percent of senior-level African Americans felt obligated to sponsor employees of the same gender or ethnicity as themselves; in contrast, 7 percent of their white counterparts felt the same and hesitated to act. “To sponsors of color who often feel insecure in their positions of power, backing a protégé of color who doesn’t fit the prototypical model of success seems like an extra high-risk gamble” the report noted. Assistance must be subtle, one leader asserted.

That may be why just 21 percent of African Americans step up to sponsorship, versus 25 percent of Hispanics and 27 percent of Caucasians, the Center for Talent Innovation report noted. Sadly, the lower percentage suggests that African Americans perceive much greater risk in using their position and influence to aid sponsorship and advocacy for those rising up the ranks, even though they feel a sense of obligation to do so. What may on the surface appear to be disinterest or a lack of commitment by those who come behind the leader is, in fact, often the diverse leader attempting to calibrate the best way forward. There is a lack of understanding and appreciation in general of the careful balance between “public and private activity” necessary to position and promote others.

When asked about the experience our interviewees had of mentoring and sponsorship, none of the leaders reported a traditional mentor or sponsor history. For one executive, the process was “transient and contextual,” occurring only when interactions would provide critical insights. She reflected on that fact when she set out to build her team, working to ensure that mentoring and sponsorship were part of the mix for her diverse hires.

In that process, she experienced heightened scrutiny about the diverse staffing in her area; she likened the process of building a diverse team to “making moves in a chess game.” She observed that many minorities underestimate what it takes, even from the C-suite, to effect significant change in organizational structure and practice. And while she agreed that leaders should do all they can to open doors, “these efforts may not manifest themselves as people anticipate, especially when it comes to the method and speed these interactions require. That’s when negativity kicks in,” she explained.

Paving the Path through Shared Experiences

The traditions of African American culture are rooted in the power of storytelling—the passage of experience, struggles, and wisdom from the days of slavery to the dining rooms of many homes. One executive summed it up in this way: “I’ve committed twenty-five years to my career. It is a journey for me and others, not a ride. The emotions that surround African American business leaders’ ascent in their careers could provide a deeper road map into the direction others might consider to ensure the momentum and legacy of African American leadership is not lost at the C-suite level and beyond.”

The wisdom and knowledge passed from one African American leader to another can provide invaluable guidance and profound inspiration; yet too few engage in this way. The impact of a more open leadership narrative within the African American community is immeasurable. And, unlike diversity programs, these efforts would not require millions of dollars of investments and corporate underwriting. It’s a human-powered movement, leader to leader. What is needed is a shift in openness and in the value assigned to what the narrative offers to both the teller and the listener.

Organizations must create a safe environment to foster a richer, more substantive narrative by encouraging their own diverse leaders to be candid and open about their leadership paths. The media, too, must play a critical part by promoting successes and providing more details about how challenges were addressed. In fact, it’s the twists and turns of a leader’s career—the obstacles and how they were navigated—that can be the most telling. We’ve seen the narrative about failure take off in Silicon Valley among technology entrepreneurs; no surprise, many venture capitalists are now using those shared moments of failure as a leadership metric for grit, determination, and resiliency, all the sought-after qualities in a startup CEO.

Above all, a concerted individual effort by African American leaders to be more open to sharing their stories will serve as the foundation for much deeper emotional connections among other black men and women seeking leadership. Deeper bonds are forged and needed inspiration stoked when honest stories of success and challenges overcome are shared; it’s a needed and missing foundation for keeping future African American leaders focused on what’s possible. In interview after interview—and in feedback from rising MBAs and leaders of color—the dearth of stories and insights shared by one African American professional with another was pronounced. Those who have the insights and road map to help fuel the dreams of contemporary leaders exist, but sadly, few have yet to share.

What is at the root of this reluctance among senior African American professionals to share their complete stories—to speak their truth? Some stated that they had worked hard to build a personal brand that echoed strength, and worried that showing any sign of weakness or setback would undermine that persona. If hardship and socioeconomic challenges were part of their upbringing, feelings of shame, weakness, and vulnerability could create a reluctance to be forthcoming. With today’s rising leaders increasingly seeking more personal connection and authenticity, sharing these stories is imperative. An open exchange of stories of both success and failure by African American leaders could be one of the most powerful and profound ways to support emerging senior leaders as they navigate their way forward. “We must be more open—and trusting,” one shared.

Reaching Beyond

Inclusion, as evidenced through our interviews and many of our real-world interactions and experiences, can be an illusion. The “like likes like” element of our nature—the comfort in the familiar, in surrounding ourselves with others who think and look like us—can overwhelm even the best of intentions and business practices. Corporate practices engineered to meet the basic level of diversity recruitment and retention must reach for a more systemic and systematic way of working—and leading. Toigo often draws parallels between implementing a true culture of inclusiveness and the total quality management movement of the 1980s, which became a pervasive way of working and thinking that permeated every corner of an organization. The push for quality became a mindset infused in the culture of the organization, not a side initiative or program or the domain of a small group within the institution. It penetrated every area of the business, at every level of leadership. It was also measurable, which made its impact and meaning even greater—and more sustainable.

Focused efforts to help African Americans deepen their professional networks to match those their majority peers enjoy are an area that could net tremendous results. Creating a vibrant network is fundamental for leaders at the senior level—the needed antidote for addressing the isolation and vulnerability that interviewees expressed.

As Toigo has shared, several leaders voiced their opinion that too few senior, influential African American executives are leveraging their influence on behalf of the next wave of senior leaders. This cautious approach has a compound effect for future leaders. “It may be generational,” one leader said. “But it creates a critical missing link—the transfer of connectivity and endorsement from generation to generation.” This affects opportunities for further corporate leadership success, greater visibility, growth in income for families, and presence on corporate boards or in entrepreneurship.

What is clear is that efforts and investments by organizations to address diversity and a culture of inclusion cannot be made in isolation or as “add-on” initiatives. They must be authentic, thoughtful, and sustained. They must be supported by more organic efforts built on the perspectives of African American leaders; without this combined force to drive change, we will forever be in the cycle of illusion, not inclusion. As one leader stated, “For those who have achieved executive status, it is incumbent on them to consider not just how they arrived but what they experienced. Sharing these treasures of wisdom is part of the building blocks of the African American leadership legacy.”

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