Goldman Sachs, since launching an initiative more than three years ago to improve the diversity of corporate boards, has helped place over 100 such executives at companies—while another 300 businesses that adhere to the bank’s standards have gone public. But the road wasn’t without some speed bumps.
In July 2020, Goldman, a leading underwriter of IPOs, began telling businesses that it wouldn’t take them public in the U.S. or Europe if they didn’t have at least one diverse board member. In 2021, Goldman boosted the requirement to two members, including at least one woman. The investment bank considers gender and race, as well as sexual orientation, in its DEI metrics for board placements. It often found companies needed help with these mandates.
“What we were seeing was that the supply was there, and demand was increasingly there. It was a market mechanism problem, and the two were not connecting,” Ilana Wolfe, who currently oversees Goldman’s efforts as head of corporate board engagement, recently told Fortune.
Goldman’s solution was to establish a board diversity and engagement team, led by Wolfe, to help businesses by leveraging its numerous relationships with companies. Doing so helps find candidates that board placement firms may not consider, Wolfe explained, because some placement firms often rotate through the same list of names—plus they don’t have the networking reach of Goldman.
Many of Goldman’s referrals come from CEOs and CFOs with whom they’ve worked, Wolfe added. When a client reaches out for a certain profile, Goldman, often within a day, can produce a subset of its network highlighting individuals who could be a good fit.
“We are not a search firm,” added Wolfe, explaining that, instead, Goldman will often play matchmaker, likening the firm to “Aunt Sally,” a family member who helps relatives meet someone wonderful, she said. “I am the ‘Aunt Sally’ of the board matchmaking universe.”
Goldman’s diversity placement service is free to clients and part of its investment banking offerings. “This is something unique to Goldman. This isn’t a transactional area for service. It’s additive to the long-term relationship,” Wolfe said. While the service started out focused on private companies, public companies also are now using it.
A lack of diversity in governance has been cited in the blowups of the cryptocurrency trading firm FTX and Silicon Valley Bank, and it continues to be a big issue on Wall Street. A 2021 report from McKinsey & Co. found that women in North America remained dramatically underrepresented in the financial services workforce, especially at the senior management level and above.
Goldman’s board is composed of 13 executives, including five women and three people of color, and the firm's senior management committee, which has 27 members, includes eight women and two members who identify as people of color. (Among the eight women, just two run a revenue-generating business: Stephanie Cohen, global head of Goldman’s platform solutions, and Beth Hammack, co-head of the global financing group.)
The strategy is working for Goldman. Of the more than 100 diverse executives placed at public and private companies, 90% are women and 38% are racially or ethnically diverse, according to Goldman’s website. Wolfe is also benefiting: In November, she was one of 608 executives promoted to managing director.
“Diversity of all forms leads to diversity of thought and perspective,” Wolfe said, “which is strategically important to effective governance.”
