A Review of the Business Case for Diversity and Inclusion
Total Page:16
File Type:pdf, Size:1020Kb
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 ( U.S. GOVERNMENT PUBLISHING OFFICE 37–521 PDF WASHINGTON : 2019 VerDate Nov 24 2008 14:54 Nov 19, 2019 Jkt 095071 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 K:\DOCS\37521.TXT TERRI HOUSE COMMITTEE ON FINANCIAL SERVICES MAXINE WATERS, California, Chairwoman CAROLYN B. MALONEY, New York PATRICK MCHENRY, North Carolina, NYDIA M. VELA´ ZQUEZ, 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 JESU´ S ‘‘CHUY’’ GARCIA, Illinois SYLVIA GARCIA, Texas DEAN PHILLIPS, Minnesota CHARLA OUERTATANI, Staff Director (II) VerDate Nov 24 2008 14:54 Nov 19, 2019 Jkt 095071 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 K:\DOCS\37521.TXT TERRI SUBCOMMITTEE ON DIVERSITY AND INCLUSION JOYCE BEATTY, Ohio, Chairwoman WM. LACY CLAY, Missouri ANN WAGNER, Missouri, Ranking Member AL GREEN, Texas FRANK D. LUCAS, Oklahoma JOSH GOTTHEIMER, New Jersey ALEXANDER X. MOONEY, West Virginia VICENTE GONZALEZ, Texas TED BUDD, North Carolina AL LAWSON, Florida DAVID KUSTOFF, Tennessee AYANNA PRESSLEY, Massachusetts TREY HOLLINGSWORTH, Indiana TULSI GABBARD, Hawaii ANTHONY GONZALEZ, Ohio, Vice Ranking ALMA ADAMS, North Carolina Member MADELEINE DEAN, Pennsylvania BRYAN STEIL, Wisconsin SYLVIA GARCIA, Texas LANCE GOODEN, Texas DEAN PHILLIPS, Minnesota (III) VerDate Nov 24 2008 14:54 Nov 19, 2019 Jkt 095071 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 K:\DOCS\37521.TXT TERRI VerDate Nov 24 2008 14:54 Nov 19, 2019 Jkt 095071 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 K:\DOCS\37521.TXT TERRI 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 Coun- cil ........................................................................................................................... 6 Verrett, Rory E., Founder and Managing Partner, Protege Search .................... 9 Von Hoene, William A., Jr., Senior Executive Vice President and Chief Strat- egy 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 (V) VerDate Nov 24 2008 14:54 Nov 19, 2019 Jkt 095071 PO 00000 Frm 00005 Fmt 5904 Sfmt 5904 K:\DOCS\37521.TXT TERRI VerDate Nov 24 2008 14:54 Nov 19, 2019 Jkt 095071 PO 00000 Frm 00006 Fmt 5904 Sfmt 5904 K:\DOCS\37521.TXT TERRI 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 [chair- woman of the subcommittee] presiding. Members present: Representatives Beatty, Green, Gottheimer, Gonzalez of Texas, Lawson, Pressley, Dean, Garcia of Texas, Phil- lips; 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 Inclu- sion 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 author- ized 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 enti- tled, ‘‘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 out- perform 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. (1) VerDate Nov 24 2008 14:54 Nov 19, 2019 Jkt 095071 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\37521.TXT TERRI 2 This narrative applies equally across corporate America. Accord- ing to a Harvard Business Review article entitled, ‘‘How Diversity Can Drive Innovation,’’ employees at diverse companies are 45 per- cent 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 rep- resents 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 diver- sity, so I am proud to have today’s hearing establish new policy set- ting for diversity and inclusion established by the Democratic Ma- jority 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 trans- forming the culture of the financial services industry and beyond. I reserve the balance of my time for the Chair of the full Finan- cial Services Committee, Chairwoman Maxine Waters. The Chair now recognizes the ranking member of the sub- committee, 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 fac- ets. It can mean,