Sallie Krawcheck used to be the most powerful woman on Wall Street – before two very public sackings at the height of the financial collapse.
Now the head of women’s networking organisation 85 Broads, she says she’s grateful she was fired.
From 2007-2011, Ms Krawcheck held prominent roles at banks Citigroup and Merrill Lynch.
Those positions made her, arguably, the highest ranking woman on Wall Street.
But, at the height of the financial crisis of 2008-2009, she had very public clashes with Vikram Pandit, the then chief executive of Citigroup, over her insistence that the bank should repay investors who had lost money using defective financial instruments that Citi had created.
Eventually, she was forced out – a fate that would once again befall her, just a few years later, after taking on the role of chief executive at Merrill Lynch, a subsidiary of Bank of America.
Although those firings certainly stung, they gave Ms Krawcheck an epiphany – in times of distress, companies react by closing ranks, and diversity, particularly gender diversity, suffers.
“What I saw a thousand times during the downturn was, ‘We’d like to give her that opportunity, but we need to go with the sure thing – we can’t afford diversity right now,'” she says.
So now, as the boss of 85 Broads, Ms Krawcheck says her goal is to work in a more active way to correct the gender balance at the top.
‘Invest in women’
Ms Krawcheck bought 85 Broads for an undisclosed fee from its founder, Janet Hanson, in May.
Created by a group of women who worked at Goldman Sachs’ former headquarters at 85 Broad Street, it was initially created to mentor women in the bank. Now, it’s exploded to a membership organisation with more than 30,000 paid subscribers from 130 countries.
Ms Krawcheck is candid in acknowledging that her purchase surprised many people.
“For most of my career, I tried to avoid the topic of being a woman in business, vaguely concerned that talking too much about it would hold me back in some way,” she wrote in a post announcing her purchase.
“My standard response: ‘Oh gosh, I never really think about being a woman in business. I’m just focused on getting the job done.'”
However, she says her first job – as a research analyst at Solomon Brothers in the 1980s – taught her to invest in what is supported by research.
And she says research shows that “women are a phenomenal investment and that is true in almost any way you can define it”.
Ms Krawcheck cites data showing that companies with greater diversity in senior management have higher returns, lower volatility, more innovation, greater customer focus, better stockholder returns and lower gender pay disparity.
However, despite those statistics, she thinks that gender diversity – particularly in the financial services industry – has stalled, mostly as a result of the fallout from the financial crisis.
‘Talked at’
“During periods of stress, it’s easier for all of us to be with people like ourselves,” she says about Wall Street’s behaviour during that time.
“But eventually it becomes a shortcut.”
She thinks that as a result of this impulse to push out outsiders, bad decisions can often get made.
“What I saw was a good deal of groupthink [during the financial collapse],” she says. “The same people, same types of backgrounds, looking at the same data coming to the same conclusion – which in this case was wrong.
During that time, she adds, she was “talked at” a couple of times – but not necessarily listened to.
She says that her goal at 85 Broads is to listen to the membership to figure out ways to convince Wall Street bosses and other large organisations that gender diversity is crucial to their success – that in times of stress, instead of closing ranks, companies should look for an outsider perspective.
Furthermore, she wants to expand the mission of 85 Broads to invest in companies helmed by some of its members or by other powerful women.
‘Ups and downs’
Ms Krawcheck is candid that while her two firings helped her crystallise what she wanted to do as an executive, it certainly wasn’t easy to fall so swiftly, twice.
“In my mind, I sat on my sofa in my sweatpants for nine months and waited for the phone to ring,” says Ms Krawcheck, about the time after she was sacked by Citigroup.
But she says she is grateful for both the highs – and the lows.
“I’ve had a lot of ups and some downs and people have asked about how I’ve weathered them,” she says.
“I know for a lot of entrepreneurs there’s a sense of optimism [in being boss of your own company]. I’d say the more overwhelming emotion is one of gratitude.
