After more than 20 years on Wall Street, most recently as former president of the global wealth and investment management division of Bank of America, Sallie Krawcheck was widely considered one of the most powerful women in banking. Recently, Krawcheck purchased the global women’s network 85 Broads and has taken her experience in a new direction.
In an interview with Wharton management professor Adam M. Grant, Krawcheck speaks about the “subtle, well-meaning biases” against women, how they can be overcome and why diverse leadership at the top is critical for “higher returns, lower volatility, lower risk, more client-focus and more innovation.”
An edited transcript of the conversation follows.
Adam Grant: What are your views on leadership, and how have they evolved over the course of your career?
Krawcheck: Leadership is a lot of hard work. I hoped when I was younger that I would just be a natural leader or that it was something that was innate, but it is really a learned skill. It is the result of thousands and thousands of micro lessons over long periods of time, in which you try [one style] of leadership. It works. You try [another] method of leadership. You fall on your face. Somebody gives you feedback. You adjust. It can be some big lessons at the end of your review. But, more importantly, it is those micro lessons that occur.
One of my passions is women in business and helping women to get ahead in business. For women, that feedback loop can be broken. Women won’t get as much feedback from male bosses as men will get. Therefore, they have to make an extra effort, whether that is unfortunate, good, bad, indifferent. They have to make an extra effort, as I did during the entire course of my career, to say, “How did I do? Did I do an OK job on answering that question? How did I do in terms of that business presentation? How did I do in that meeting?” [They must] constantly look for feedback that might otherwise not be offered in order to learn leadership and to get ahead.
Grant: That is a fascinating dilemma to navigate. One of my mentors, Sue Ashford, spent about the last 30 years studying feedback-seeking. She finds that people who seek out criticism get better ratings and tend to rise faster. Of course, fishing for compliments is bad, but there is also the risk of being perceived as insecure if you are constantly asking, “How did I do? What could I be doing better?” How did you manage that?
Krawcheck: I think it is tone. There is, “How did I do? Did I do OK?” Then there is, “How could I make that better? What did you think of that? Was that OK?” I think there is a certain matter-of-factness to it. You do not need to do it 12 times a day. But if you present to the board of directors, it is worth asking when it is over, “What can I do next time to do a better job?” What that does is give other individuals — those who give you feedback — a stake in you. Because they gave that feedback, they are there for you then in a way that they would not be if you finished the presentation, left the room, and that was that.
Grant: That assumes, of course, that you actually listen to their feedback and take it into account the next time around.
Krawcheck: This is where people can run into trouble because if you ask for feedback, you are not going to get positive feedback 100% of the time. Indeed, sometimes you will get feedback that just does not feel right. There is always that desire, particularly among younger professionals I have seen, to fight the feedback or get defensive about the feedback. The truth is, if that is the feedback, that’s the reality. It might not be what you were intending and it might not be what you think, but that is even more valuable if it does not feel quite right because you are learning new information that you can incorporate.
“Leadership … is the result of thousands and thousands of micro lessons.”
Grant: You mentioned that seeking feedback is actually one way to increase the investment that other people have in you. That relates to one of your favorite observations, which is that networking is probably the most undervalued skill. What are your favorite tips on how to build a great network?
Krawcheck: The problem is many individuals think of networking as schmoozing. What can pop into our head is a couple of folks on a golf course, and then there is a beer afterward. I have nothing against that whatsoever. I prefer wine, but beer is perfectly good, too. But what a network actually can be is a network of nerve endings — a feedback mechanism…. If you and I are the only people we know in the world, we will have a pretty limited set of information.
As you know more and more people, you are able to hear much more quickly about the new research that impacts your company, the start-up that can impact your company, the RFP that is being done, the board position that has opened up or the really talented individual who is now available for hire. You name it. Loose connections are more likely to lead to your next business opportunity than close connections. So it is really having a network out there.
My advice for folks on networking is give, give, give. You will later receive. But you are really planting these seeds. Some of them will die, and they won’t become anything. Many of them will take many, many years before they pay off for you if at all.
Grant: Are there favorite acts of giving that you focused on as you built your own network?
Krawcheck: It does not have to be big stuff. It does not have to be, “Adam, I am presenting you with a business gift.” But instead it can be, I met with Adam a couple weeks ago, and I know he was interested in X, and here is an article on X, so let me send it over to him. Or I met someone, and I think he and Adam would really hit it off. Let me make that introduction or offer to make it.
It is the little things that one can do — just keeping other people in mind — that I find come back double and triple time. In fact, I do not think I have gotten a new business opportunity or a new job from an executive search person — terrific though many of them are — since I graduated from business school. But the opportunities that I have come across have come from my network.
Grant: What do most people do wrong when they build their networks? One problem you mentioned is dealing with people who are too similar to you or having a closed loop. Another is focusing on schmoozing or what you can get as opposed to what you can contribute. Any other errors that you see?
Krawcheck: As we think about women, as they move through their 20s into their 30s, they are not doing enough networking. I can feel what so many of them are thinking: I do not have enough time to do everything I am doing, much less that. But some of the research I have seen shows that as we get into our mid-30s, as some of the men move ahead in their careers and the women do not, one part of it is who you know and what you know. It is not [about] how good you are at your job. By that time, if you are not good at that job you are in a different job. But as the individuals get the promotion, it can be those people who have those strong networks…. Again, it does not have to be the day at the golf course. It can be the e-mail connection that occurs.
Grant: You used a word that is music to my ears a moment ago, which is “research.” It is something that we do not hear leaders do very often, but it is something that I have noticed is very distinctive about your writing — that there is often a “research shows” or “here is what the evidence suggests.” How do you stay up to date on evidence, and what advice would you offer to leaders on that?
Krawcheck: It is so funny. Earlier today I was saying I consider myself to be a recovering research analyst. My first job was not as a research analyst on Wall Street, but it was very early on, and it was sort of my foundational job. What I love about research is you can just vacuum it all up, and you can piece a very interesting portrait together from the little bits of research you put together. I always said as a manager and a leader, I embrace your opinion; I would love to hear your opinion, but we are making decisions off of facts and off of research. I read research like other people read sports magazines or fashion magazines.
Grant: The other thing that I have admired most when reading your work over the past few years is how candid you are about failure. It is extremely unusual to hear a leader, with so much experience and so many accomplishments, admit, “I got fired not once but twice and here is what I took away from it.” How did you get to that level of candor?
Krawcheck: I do not know. I have an underlying gratitude for the opportunities I have had. If you had told me when I was a girl growing up in Charleston, S.C., in the 1960s and the 1970s that I would be on the front page of The Wall Street Journal … it would have flabbergasted me. If you had said then, “By the way, you are going to be fired on the front page of The Wall Street Journal,” I would have said, “Score! Wow. I get to do something that is going to have an impact.” I still … cannot believe I get to do what I get to do.
“Women won’t get as much feedback from male bosses as men will get. Therefore, they have to make an extra effort.”
It is by accident of birth — it is by accident of who my parents were — that I have had this set of opportunities, which is to take nothing away from [my] hard work…. There is a sense of gratitude [for] all the folks who have helped me along the way, and [the hope that] I can share some of my experiences and keep one young person from making one of the mistakes I have made….
This is particularly true for those of us who were in the banking industry during the downturn; every one of us should be talking about what happened and really exploring and thinking about the causes of those downturns. We owe it to the next generation. We owe it to our country, quite frankly…. By the way, it was all in the paper anyway, so what the heck am I going to hide?…
Grant: You have mentioned that women in business is a big passion of yours and a relatively newly discovered one. What are your favorite recommendations for, first of all, increasing the representation of women in leadership positions; and, secondly, not just representation, but making sure that women end up having a real impact?
Krawcheck: This is incredibly important. There is an enormous amount of good advice — much of it directed to women — about what they can do to achieve. There are terrific best-selling books on it. There is another avenue for us to explore. Because if we take that to an extreme, we have to remember that the positive part — the benefit of diversity — is diversity. If we try to put everyone into the same box, how much of that benefit of diversity are you giving up? As I think about it, I think a lot about getting the men into the conversation on gender diversity.
We were having conversations earlier today about some of the subtle, well-meaning biases men and women have about women and how to see those as being a friction in the system that if we can overcome it, can enable business to be more successful. While all the analysts out there will say we have not necessarily proven causation … it is an awfully big coincidence that more diverse companies have higher returns, lower volatility, lower risk, more client-focus, more innovation. Diverse leadership teams out-perform smarter, more capable leadership teams. All these things are good. If it was easy, we would have already fixed it. So what are the many different means to helping get more diversity to the top?…
Grant: Let’s bring this then to Wall Street specifically. I spent some time working with Goldman Sachs over the summer on the culture change initiatives that they were beginning, including not working on Saturdays and redesigning jobs to make them more enriched, to offer more learning opportunities and more client contact. I was quite impressed with their commitment to reinvent what work was like for analysts and associates. Where do you see Wall Street moving?
Krawcheck: Thank goodness companies are starting to address that because there is just no way that is good for anybody. Even if we think it is a good idea to drive these young people into the ground, you have seen the research that I have seen on business creativity and business productivity. There is no [way] that someone who has pulled all-nighter after all-nighter [can do] as good a job for the clients, and eventually for the shareholders, as someone who is able to string two thoughts together.
“If you and I are the only people we know in the world, we will have a pretty limited set of information.”
That is a worthy undertaking and that is at the bottom of these organizations. We have talked about diversity getting to the top of these organizations. One of the truly unexamined causes of the financial crisis — and we have spent so much time as a country on the topic of greed as a cause — is groupthink. In the popular press, there is this view that these were Wall Street evil geniuses who foresaw the downturn. You have probably seen the research that I have that shows that subprime bankers had worse personal real estate performance than the average American. So these were not evil geniuses. These were individuals who made the soup and ate the soup.
How do we inject skepticism, questioning and different thinking into these companies? One [way] is let people get some sleep, so they can think. Another is diversity. We need to keep chipping away at this.
Grant: I love the idea of focusing on groupthink. When [Irving] Janis first did the research on this topic, he thought it was all about becoming too cohesive and that if a group got too tight-knit, then they would actually stop questioning and challenging each other. Now the evidence suggests something quite different, which is that it is actually about overconfidence. A group can be tight, but as long as we know we do not have all the answers and we are willing to question each other, we can actually get diverse perspectives. How do you then keep confidence in check, especially as you gain success in your career?
Krawcheck: That is one question; the other question is the tone from the top. I have worked for seven financial services CEOs directly. That is more than anybody. The real question is how does that CEO encourage an active debate and drive an active debate? The best I have seen is, “Adam, give us your point of view. Take the other side. OK. You do not believe in the other side? Take it anyway.” Let’s argue, and let’s scream at each other. Let’s really get into this.
On another side, I have seen CEOs who have shut people off and shut people down: “We do not have time for this. We do not have the luxury for this. This is the path we have chosen. Let’s go.” They have put quickness of decision-making over quality of decision-making. There is an individual question of how does one do that, but I think there is a tone from the top … that has to come from the CEO or the business leader, as well as the board.
Grant: What do you do with a leader who does not quite appreciate the importance of that?
Krawcheck: Find another job.
Krawcheck: There are some times when one has to fold one’s tent and go someplace else because there are plenty of companies in this world. You do not have to stay at one company for forever if there is not the environment one wants, if the company does not have the values that one wants. You can try to work from within, but if you are a mid-level employee and the company is doing things that you do not agree with, you are allowed to get another job.
“While all the analysts out there will say we have not necessarily proven causation … it is an awfully big coincidence that more diverse companies have higher returns, lower volatility, lower risk, more client-focus and more innovation.”
Grant: You have a chance to make a huge impact on many of these issues through the work that you are doing with 85 Broads. What is your vision?
Krawcheck: 85 Broads — or as I say, “the cheekily named 85 Broads” — is such an interesting business because it is modern in many ways. It is a network. I am so fascinated by the idea that if we wanted to accomplish things in business until five years ago, 10 years ago, it was a company. Now people can come together with a common goal and a network. That is fascinating for me to watch how a network can move and evolve. This is a network around helping women advance their careers and helping companies advance their women, which as we have discussed is something that can have a real economic impact.
If women were as engaged in the economy as men are, our GDP would be 9% bigger. In many countries around the world, it would grow even more. We have talked, of course, about the positive impact to individual companies. Networking, as we mentioned, is the number one unwritten rule of success in business. Those things coming together for me is a topic that matters, something I feel passionate about and my team feels passionate about. It is heaven. It is absolute heaven. We have lots of cool and interesting things to try. Many of which will fail. But the opportunity to try it and be nimble and entrepreneurial at this stage of my career is about the most fun thing I have done in a long time.
Grant: That is encouraging to hear. It makes me wonder what men can do to get into this conversation. I have talked frequently with executives and with students about the fact that oftentimes conversations about women in business shut the door to men. It is a topic that I care a lot about, and it is not always easy to get into that dialogue. So what can we do?
Krawcheck: I will take the other point of view; I would say get into that conversation. I have sort of a joke — except it is not a joke — that I often tell when I go to these conferences in which I say, we have convinced each other. We women all agree that gender diversity matters. But I will tell you I worked in businesses that were mostly men — and by mostly men, I mean, by far mostly men — for more than 20-plus years. I have interrupted a lot of men having discussions … over that time. Never once did it go like this, “Hey, guys. What are you all talking about?” “Oh, Sallie, interesting to see you. We are talking about the importance of gender diversity for business.”
That has never happened. So, I would say, get in the conversation. Begin to talk about it. Begin to live it. Take actions to overcome those subtle biases. The tone from the top of a business matters. Recognize that we all have these biases. Learn about them, and learn to overcome them.