There’s a famous story that when President John F. Kennedy was visiting the NASA space center in 1962, he noticed a man carrying a broom. (In some versions it’s a woman mopping the floor.) Kennedy decided to introduce himself to the employee and asked what his job was. The employee, a janitor, responded, “Well, Mr. President, I’m helping to put a man on the moon.”
The story resonates with Jonathan McBride, managing director and global head of inclusion and diversity at BlackRock, who recounted it at the recent Wharton People Analytics Conference. For him, it expresses how NASA as an organization managed to create an exceptional sense of common purpose. He noted that Steve Jobs, however mercurial he was, nevertheless fostered a similar outcome at Apple: “Somehow [he] got people at Apple to care personally about what they were doing on a daily basis.”
McBride said achieving that sense of belonging is the ultimate goal at BlackRock, the world’s largest asset manager with more than $7 trillion under management. But while hiring a workforce that reflects different backgrounds, beliefs, and genders is essential, it’s not enough.
Getting the Facts on Diversity
McBride, who had worked in the White House as a special assistant to President Obama and later as director of the presidential personnel office, described the current human resources structure and the emerging awareness around diversity at BlackRock as a work in progress. It is one that has only existed for about five years within the three-decades-old firm.
Recently, the company distributed a booklet called BlackRock at Our Best: The Power of Diversity that captured the diversity and inclusion guidance that the company had been providing to its managers for about a year and a half. He said it was placed on every U.S. employees’ seat on International Women’s Day (March 8), which was also the last day of an extended company “jam.”
“Firms in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above the industry median.”
At the gathering, he said, all 14,000 people “talked to each other about belonging, the future of learning, our sense of purpose and our collective purpose, deliberately, for three days.” BlackRock’s CEO Larry Fink and president Robert Kapito (both co-founders of the firm) were there, “jamming alongside everybody else.”
The booklet included research findings about diversity in business, which McBride describes as “a key unlock” for getting people on board. He said it shifts the burden of proof away from the individual person arguing for diversity, where it traditionally has been. Having hard data, he said, helps managers respond to questions such as “So has diversity ever worked?” or to statements implying that because a particular employee didn’t do well, diversity must be wrongheaded. And to those suggesting the company is fine as is — if it ain’t broke, why fix it? — you can hit the ball right back over the net. Said McBride: “The data says we can do even better.”
McBride said there’s ample evidence that diverse teams outperform homogenous teams by substantial margins. One reason is that people who are different tend to prepare harder to persuade everyone else and will vet their ideas more. That means a team makes better decisions and is more resilient over time, he said.
There have been a number of notable studies in this area over the past few years. According to a recent McKinsey report on 366 public companies in Canada, Latin America, the U.K., and the U.S., firms in the top quartile for racial and ethnic diversity are 35% more likely to have financial returns above the industry median. Moreover, studies on stock-pricing abilities have shown that ethnically diverse teams are 58% more likely to price stocks correctly, according to Harvard Business Review.
“It’s also a more diverse and interconnected world,” McBride said. “So you need a diverse, global, well-functioning, highly inclusive team to solve problems.”
Presenting hard data also reassures managers who might be asked to take risks, such as holding off filling a position for a while or hiring somebody who is “maybe slightly less qualified, who might not have direct experience but who would be more additive to the table.”
Some of McBride’s biggest doubters became staunch supporters after the firm brought in prominent diversity experts to talk about their findings, such as Scott Page, a University of Michigan professor of complex systems, political science and economics, and University of Texas management professor Sheen Levine. McBride said the first group exposed to the talks consisted of BlackRock’s most influential people, followed by a group from the more analytical, quantitative parts of the business. “The transition from ‘I’m a skeptic’ to ‘I’m not sure’ to ‘I’m in’ was rapid,” he said.
The ‘Best Candidate’
McBride identified three key principles of BlackRock’s diversity and inclusion efforts. First is the redefining of the word “best,” as in “best candidate.” “We’re looking at ‘best’ not as an individual but … what a team has to do to deliver.” The person who fills that gap is the most competent person for the job.
The company’s business itself — investing — could be seen as a metaphor for diversity in teams. “When I take this individual asset and put it in the portfolio with all the other assets, how does that affect the expected return? What does the risk profile look like?” We need to look at what this human being does when combined with these other human beings, McBride said. “We’ve been investing that way forever, which is why the word ‘diversification’ is well-ensconced in the investment world.”
“My first stop was Tokyo and I found out there is no word for ‘inclusion’ in Japanese.”
The second principle was a phrase he heard again and again from Fink: “no replicants.” McBride said research shows that although there’s an innate human desire to surround ourselves with people who are just like us, indulging this tendency is costly. It increases risk, hampers resiliency, and lowers performance.
The third principle: Inclusion is necessary to access the power of a company’s diversity. Behaving inclusively is a skill that can be learned; you don’t have to be born with it, McBride pointed out, while emphasizing the value of communication. “At BlackRock we use this funny new technology called ‘talking to the people who work with you.’”
McBride joined BlackRock, in part, because the firm’s CEO has made diversity and inclusion a priority. In January, Fink sent out a letter to other CEOs — an annual practice for several years — exhorting companies to think about how their business positively contributes to society.
In the letter, now on the company’s website, one of the changes Fink advocates for is more diverse corporate boards in terms of gender, ethnicity, career experiences and ways of thinking. He wrote that they are less likely to “succumb to groupthink” or to miss new threats to a company’s business model. He also endorses the idea of a more diverse workforce. “When the head of a global company is saying that, that’s no small potatoes,” McBride said.
Diversity’s Different Meanings
As a global head of inclusion and diversity, McBride is responsible for BlackRock’s non-U.S. offices as well. He recounted that his first trip to Asia for a major inclusion and diversity tour did not exactly go as planned. “My first stop was Tokyo and I found out there is no word for ‘inclusion’ in Japanese.” (Later in his trip he discovered there was none in Mandarin or Hindi either.) The closest concept in Japanese was “did you get invited to the meeting,” so he re-framed his approach more in terms of participation.
McBride observed other cultural differences between the U.S. and Japan, “especially from a gender perspective. It just is [different].” He added that while his team did need to adjust for local sensitivities, and resist proselytizing, it was also important to assert BlackRock’s core values.
In his travels overall, McBride found that diversity is a universal concept and translates in many cultures as “belonging-ness.” You pick groups you want to be a part of, he said, and you want to be accepted unconditionally. One thing seen the world over is that people want to work at companies where diversity is baked into the DNA: “Reflexive, as opposed to something that’s like the fourth thing on the agenda.”
At BlackRock, McBride is trying to put some hard numbers around the sense of belonging. Employees are surveyed with questions like: Do you feel like you belong here? In your team? In your global function? Do you belong in your country and do you belong in the firm? He said he was encouraged by the data so far because employees had not simply marked all “yes” or all “no” straight down the line. They seemed to be trying to answer carefully and honestly.
McBride was asked about the fact that many companies want to hire a diverse workforce but also feel it’s important to consider culture fit. Did he see that as a tension — culture fit versus diversity — and how did BlackRock think about balancing those ideas? His answer: “We’re making our culture about diversity and inclusion.”