Sandra Navidi - SuperHubs - How the Financial Elite and Their Networks Rule our World

Despite the various ups and downs, Ackermann had always managed to gain the upper hand and prevail, but toward the end of his tenure things didn’t seem to quite go his way anymore, which prompted critics to argue that he had missed the right time to abdicate. Because neither he nor Deutsche Bank’s board had groomed a successor, he agreed to stay on for a few more months following the end of his term. Thereafter, he let it be known that he was available for the position of chairman of the supervisory board, but shareholders, the political establishment in Berlin, and other critics pushed back, fearing a dangerous concentration of power and possible interference with the work of his successors. When the lack of support became evident, Ackermann withdrew his bid.

Shortly thereafter, he accepted the offer to become chairman of the board of directors of Zürich Insurance, where he planned on utilizing his international network and his experience with Switzerland as a financial center. A few months into his tenure the company’s CFO, Pierre Wauthier, committed suicide and implicated Ackermann in his note, as discussed earlier in this chapter. Although an official inquiry completely exonerated Ackermann, a certain unquantifiable stigma—however unjustified—remained. A couple of weeks following Ackermann’s resignation, he also resigned from the supervisory board of Siemens.

Subsequently, Ackermann joined the board of private equity firm EQT Partners, as well as the board of Renova Group, which is primarily owned by the billionaire oligarch Viktor Vekselberg, Russia’s second-richest man. Shortly thereafter, Ackermann was elected chairman of the Bank of Cyprus, of which Vekselberg was a significant shareholder. Another large investor in the bank, financier Wilbur Ross, emphasized the reasoning for this choice: “[Ackermann] has a huge Rolodex. You can imagine he knows practically everybody in Europe, everybody in Eastern Europe, and huge numbers of people in the U.S. and elsewhere.”15 Ackermann’s choice of joining Renova raised some eyebrows, and one economist characterized his involvement with the Bank of Cyprus as “not exactly a career-enhancing move, from a G7 economy to $22 billion Cyprus. . . . They used to call Cyprus the graveyard for diplomats because of the Cyprus problem. Maybe it is now the graveyard for bankers.”16

Regardless, few will have sympathy for this multimillionaire, who is still highly regarded. But superhubs measure their self-worth with a different yardstick, as their values and sensitivity are calibrated differently. Since public recognition, status and success are of utmost importance to them, public defeats impact the very core of their existence.

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In this chapter, we have looked beyond the façade and shone a light on the personal sacrifices that superhubs must make. For top executives, work is not a job but a lifestyle, one with enormous demands and pressures. Financial superhubs are married to their jobs at the expense of their families and the massive workload, competitive pressure, and public scrutiny have subjected numerous superhubs to burnout, serious illness, and even suicide. This reputation fuels the perception that women are ill-equipped to succeed in such a cutthroat, family-unfriendly work environment. However, the lack of women at the top rather results from their systematic exclusion from the old boys’ network, as we’ll see in the next chapter.

CHAPTER 9

“Womenomics”: The Missing Link

THE GENDER GAP: WOMEN MISSING IN ACTION

You may wonder why so far I have written almost exclusively about men. The reason is that, regrettably, women are largely absent from the top levels of finance, as homophily dominates and heterophily, or diversity, only exists at rudimentary levels.

I regularly hold speeches at industry conferences, and whenever I enter the stage and stand behind the podium, I see before me a sea of gray—gray suits typically paired with gray hair and glasses. The lack of women is palpable. The small female minority mostly consists of support staff: secretaries, assistants, and the like, huddled off to the side. Male attendees frequently assume that I am someone’s assistant or a translator. In fact, I’m often asked, “Who are you here with?” “Who’s your husband?” or, at more-social events, with curiosity that overcomes politeness, “Do you . . . work?” They automatically assume that I can’t possibly be a peer but instead must be an accessory. When I mention that I am an attorney, 99 percent of the time I receive the dubious compliment, “But you don’t look like an attorney,” typically followed by a joke like “I wish my attorney looked like that.” Upon disclosing that I have my own firm, the usual response is, “Oh. Marketing or public relations?”—two disciplines traditionally viewed as female domains.

THE ACCESS GAP: EXCLUSIVE MEANS EXCLUDING

As a woman in the homogeneous, testosterone-infused world of finance, occasional insults must be borne with stoicism and advances fended off diplomatically, so as not to bruise the perpetrator’s ego for fear of being perceived as difficult, suffering retaliation, or other negative ramifications. Women are underrepresented in the U.S. elite in general, but nowhere more so than in the financial industry. As of 2013, only 6 out of the 150 largest financial firms in the world are led by women, 5 percent of CEOs of Fortune 500 companies are women, and only one woman heads a major U.S. financial institution, namely Abigail Johnson, who in 2014 became CEO of Fidelity Investments after her father’s retirement. The same applies to Europe, where, as of this writing, only one woman leads a large financial institution: Ana Patricia Botín, who upon her father’s death in 2014 became his successor and chair of Banco Santander.1 In addition, women only run 2 percent of mutual fund assets in the U.S., and for every female hedge fund manager, there are eighty males.

A decade ago, the New York Times stated that “Wall Street is still dominated by the white men who fill the bulk of the most powerful and highest-paying jobs in the industry,”2 and not much has changed since. As studies have shown, success on Wall Street is not attainable through hard work and outperformance alone, considering that women who make it on average are smarter and better educated than their male counterparts. Despite women holding around half of all professional-level jobs, only 16 percent of senior positions are held by them, and they occupy merely 5 percent of executive positions in the largest U.S. firms.3 The financial industry makes use of only half of our collective human capital. What impact does this fact have on the resilience of the overall system? Would the crisis have panned out differently if there had been a Lehman Sisters as opposed to Lehman Brothers?

The cost of discrimination against minorities in business amounts to $64 billion a year in the U.S. alone.4 That women are capable of excelling in senior positions is a relatively recent realization,5 and the business case for women seems obvious: For globally operating financial institutions, diversity is more important than ever, and the inclusion of women makes for a better representation to the customer base. They have different experiences and, thus, add more perspectives to the problem-solving process. For instance, companies’ boards benefit from including a greater number of women, as their more holistic perspective of the company’s wider context is an important asset in terms of assessing risks as well as capitalizing on opportunities.6 Several MIT studies also demonstrate that women are much better at “mind-reading”—recognizing nonverbal clues—than their male counterparts. These skills, not just diversity, are ultimately what makes certain groups outperform others.7