DEI: Mission Possible

This article was originally published June 7, 2021 on LinkedIn by Tammira Philippe, CFA

White male founder. Quantitative asset management firm. Female CEO. 67% of all professionals, 60% of portfolio managers, and 60% of senior leadership identify as a woman or person of color, or both. 100% of staff believe the firm provides sufficient resources to foster the success of a diverse team.

Are these statistics probable? No. Possible? Absolutely! I know this kind of diversity is achievable because this is real data from Bridgeway Capital Management, the asset management firm that I lead as CEO. Of course, even a quant like me will say with certainty that there’s a whole lot more that numbers can’t tell you about diversity, equity, and inclusion (DEI) at Bridgeway or any organization.

As more companies recognize the benefits and tackle the challenges of making progress on DEI, we get asked a lot of questions on this topic. Our favorites by far are: How did you do it? How can I do it? How can others do it? Our answer is: Be Intentional[1]. We accept the challenge of this simple and complex solution because it’s part of discovering the power in the paradox, a principle in our approach to relational investing.

So, what do we mean when we say “Be Intentional”? Our outcomes did not happen overnight; they are the result of continuous work and learning over more than two decades. Since 1993, Bridgeway has been intentional on our journey towards DEI, starting with clear commitments in our mission and vision statement and carrying through to our actions every day. As one example, both the Head of US Equity and I are women who started in the industry at Bridgeway and were mentored and developed internally over more than a decade to become leaders of the firm.

Bridgeway is still a work in progress on DEI, and we will never stop learning. By sharing some of our story, I hope to spark more action on this vital topic that is crucial to prosperity[2] in the decades ahead for every individual and organization. It’s time to reclaim prosperity for all.

As the leader of an investment manager who invests in public equity around the globe, I want to see progress on DEI at Bridgeway and all the public companies globally that we hold in our portfolios. I firmly believe, based on the evidence, that diverse and inclusive teams and organizations make better decisions and achieve better outcomes. I want to see companies strive, as we do at Bridgeway, for both cognitive and identity diversity[3]. Cognitive diversity is about bringing together different ways of thinking, while identity diversity is about bringing together different demographics of people, and they are, of course, often related. Cognitive diversity without identity diversity falls short of achieving true diversity, equity, and inclusion. Cognitive and identity diversity must also permeate an organization at all levels – from interns through the C-suite to the board room, and especially on the research and portfolio management team in investment management.

Being intentional on DEI starts at the top: “Want progress on diversity? Link it to your CEO’s pay,” said Phil Wahba in an April 2021 Fortune article. According to the same Fortune article, only 97 of the companies in the Russell 3000 have at least one diversity goal for at least one top executive; that leaves gigantic room for improvement. The Fortune article also cites the 320 to 1 CEO-to-worker pay ratio as a cause for scrutiny and concern. In contrast, Bridgeway has a stewardship commitment that sets a cap on the highest compensation after considering pay ratios and other financial outcomes. This helps us focus on stewardship which we define as having the passion and discipline to care for an asset for the benefit of others. I wholeheartedly support moves to address the CEO pay gap that has grown dramatically over the last three decades. It is hard to have equity and inclusion with a 300x pay gap – a diverse workforce notices that and cares.

My experience and the research I’ve seen also tells me that links to pay will be only part of the equation to make the massive progress needed on DEI. While explicit diversity metrics tied to pay may be necessary to accelerate DEI efforts in many businesses today, we must also realize that pay is already tied to business goals that depend on DEI for success. This is the mindset that we have successfully fostered at Bridgeway and how we have recruited and retained a diverse team with a strong culture and sense of belonging over decades. I hope to see a future when more people cultivate DEI in more places and capture the innovation, profitability, and other benefits that a diverse, motivated, and collaborative workforce can bring.

Going way beyond pay, in the Lean In/McKinsey 2020 Women in the Workplace Study, 25% of women are contemplating downshifting their careers or leaving the workforce due to the challenges of the last year which have disproportionately impacted women, the Black community, and other under-represented groups in our organizations. This could unwind years of progress toward gender and other dimensions of diversity. Not one of the considerations for leaving is related to pay (or the CEO’s pay, for that matter). Flexibility is a key aspect of establishing equity in a DEI program in our experience at Bridgeway, and both men and women benefit from it. Solutions that we have implemented successfully include flexible schedules, part-time roles, and a results-focused work environment.

You have to get pay right, but it is not enough. A clear sense of purpose is essential for companies and individuals to create a vibrant culture and workplace with diversity, equity, and inclusion.

This is highlighted in the work of Daniel Pink in DRiVE where his research and experience show that mastery, autonomy, and purpose are what really motivate us. In addition, a 2020 McKinsey survey revealed that only 18% of respondents get as much purpose from work as they want, and this is even more prevalent among women and people of color based on my experience.

At Bridgeway, our vision is “A world without genocide. Partnering to create an extraordinary future for our clients, community, and world.” Our purpose comes from the nobility of being entrusted to steward assets for the future well-being of our clients and from donating 50% of our earnings to generate returns for humanity. We ask every person who joins Bridgeway to commit to servant leadership, to put our clients’ interests ahead of our own, and to help make a positive impact in the world with our united commitment to Bridgeway Foundation and by supporting community organizations in other personal areas of interest.

When 67% of your firm identifies as a woman or person of color, you get asked a lot about how you did it. Be Intentional is our simple and complex answer. What keeps me up at night is how we are going to keep doing it and where we are falling short. We are still learning and growing on our own journey for DEI and will never stop. Staying curious and striving for continuous improvement is in the fabric of our firm. Being intentional about pay and purpose is at the heart of what we have been able to accomplish so far, and we expect that to continue. Join us on Mission Possible for diversity, equity, and inclusion and see the success that awaits.

[1] Be Intentional is one of five principles that we practice at Bridgeway as leaders in relational investing, an approach that unites results for investors and returns for humanity. We believe everyone can implement all five principles. For more, see Relational Investing in Action.

[2] Prosperity is more than financial success. Prosperity is the success we achieve when we follow principles and strive for our highest aspirations for ourselves and others. See An Open Letter on Relational Investing for more. https://bridgeway.com/perspectives/an-open-letter-on-relational-investing/

[3] The Diversity Bonus and other work by Scott Page is a great resource on cognitive and identity diversity.