No one knows precisely when, but at some point amid the avalanche of responsibilities of a career in or related to financial services, the realization strikes that loads of time has passed since one’s undergraduate years.
Perhaps it occurs while coaching an intern through a task. When referencing one’s favorite musical act or actor, the protégé might gush that “my mom” loved them! Good-naturedly, of course. It is not always easy to identify common concerns between undergraduate students and professionals in a hard-charging line of work like financial services. But business and academics sometimes agree, and one example is the recent case that was argued before the Supreme Court, Fisher v. University of Texas.
The case made headlines because the high court affirmed that the University of Texas could continue to use the race-conscious component of its admissions policy when admitting students. In Texas, African-American and Latino high school students were likely paying attention, especially if they are hoping for a spot in the university’s freshman class one day. But what do financial services firms have to gain, or even learn, from the outcome of the Fisher v. University of Texas?
Mainly, the industry’s interest was intellectual. The Securities Industry and Financial Markets Association, or SIFMA, presented a fireside chat to discuss the case and its outcome.
“When the court agreed to hear the case, most observers were skeptical of how the university’s program would fare before the court,” said Greg Garre, a partner in the Washington, D.C., office of Latham & Watkins, an international law firm. Garre argued the case on behalf of the University of Texas and spoke at the event, along with Mei-Kin Gwan Gett; deputy general counsel & global head of litigation at Citi.
The high court’s decision came as a surprise to most court watchers, Garre said.
At least one group was particularly pleased with the outcome of the case – top U.S. companies. Deloitte, Northern Trust and Prudential Financial, were among scores of Fortune 100 and other leading U.S. firms to file an amici brief with the court, noting that they have a compelling interest in pursuing diversity in higher education. From their perspective, the brief said, their business success depends partially on their ability to hire highly trained employees from every cultural, religious, racial and economic background.
“It is also critical to amici that all of their university-trained employees have had the opportunity to share ideas, experiences, viewpoints and approaches with a broadly diverse student body,” the brief read, arguing that the business world is increasingly diverse. “To amici, this is a business and economic imperative.”
While this certainly sounds like progressive thinking from U.S. companies, they are in business and want to remain profitable. A growing body of research, in the last 18 months years alone, suggests that companies with diverse workforces, both in terms of the gender and ethnicity of their employees, achieve higher profits.
In February 2016, the Peterson Institute for International Economics published compelling findings in its study, Is Gender Diversity Profitable? Evidence from a Global Survey. The think tank found that an organization with 30% female leaders could increase its net margin by six percentage points.
In “Diversity Matters,” a report that McKinsey released in January 2015, the consultancy found strong correlations between diversity and good business results. Companies that were more gender diverse were 15% more likely to outperform their peers, and companies with a mix based on the ethnicity of employees were 35% more likely to surpass others.
Garre does not have a specialty in the area of affirmative action cases, but he is the global chair of Latham & Watkins’ Supreme Court and Appellate practice. That has positioned him to argue nine cases before the Supreme Court.
In Fisher v. University of Texas, one of the most compelling facts was the state’s Top 10% Plan, or Texas House Bill 588. The law offers Texas high school students who graduate in the top ten percent of their high school class automatic admission to all state-funded universities.
“The law was very important to understanding the case, and it was important to the courts’ analysis of the case,” Garre said.
For students who miss the cutoff, Texas universities use a traditional, so-called holistic program, to examine other in-state applicants’ entire high school careers, according to media reports. That standard did not include race. The racial component in admissions did come back into the picture after a case called Grutter v. Bollinger, however.
The petitioner, Abigail Fisher, is white and was rejected for admission to UT Austin in 2007. Fisher finished in the top 12% of her high school class, and so was not offered automatic admission. Her application was put into a pool of applicants judged by the holistic standard. Fisher sued the university, arguing that simply being in a pool of applicants where race was considered had injured her.
But the university did not adhere to a race-driven quota system – much like the firms represented in the amici brief. For them, diversity is not about window dressing.
“Diversity should not be treated in purely numerical terms,” according to the amici brief. “Rather, amici seek to hire the most qualified group of employees, while taking into account all of the characteristics of those employees that will enrich the amici’s workplaces, and strengthen their businesses.”
This article was written exclusively for GoRion.