In a recent Washington Post Op-Ed, Sallie Krawcheck posits that more diversity in the senior management of financial institutions will be critical moving forward. Why? According to the former President of Bank of America’s Global Wealth & Investment Management division, this will be key to preventing the sort of risky decisions that led to the financial crisis in the first place.

Whether you agree or not, this is an opinion that doesn’t seem to be shared by the majority of industry leaders — at least not in practice. Since 2008, the number of women at the top levels of the sector has declined.

Krawcheck doesn’t believe this trend away from diversity at the top is due to overt discrimination, but rather has been caused by efforts to batten down the hatches since the recession began. She writes:

“[Before the downturn] I saw the promotions of people who looked and talked and acted a lot like the person promoting them. The executives doing the promoting claimed to be certain that this person was the best for the job at hand — and that the culture of urgency permeating Wall Street meant that ‘stretch assignments,’ for people with whom they weren’t as familiar, were an unaffordable luxury. This was exacerbated as the downturn intensified, with senior executives placing more weight on having been in the trenches with the people they look to promote.”

In short, during this period of industry-wide upheaval, promotions have been given to known entities. Translation: A lot of women have been left out.

By not providing women access to the stretch assignments that would give them the experience they needed to land senior roles, the diversity initiatives that most financial institutions have established may very well fall short in the coming years. It’s a simple case of cause and effect. To change the disproportionate gender balance that is ubiquitous throughout the industry, women must have access to these stretch assignments.

The 70/20/10 Model: It’s Time to Walk the Walk

As any good recruiter can tell you, most companies approach the development of their leadership teams by adhering to the 70/20/10 model, which states that a manager’s qualifications should be gauged by the following formula:

  • 70% On-the-Job Experience
  • 20% Mentoring
  • 10% Education

Clearly, the financial sector recognizes that on-the-job training is, by far, the most important factor behind an executive’s career advancement. Yet, when it comes to addressing the lack of diversity within leadership pools, most companies seem to be overemphasizing the importance of mentoring and education in their efforts to ensure the advancement of women.

Those efforts are only helping women get 30% of the way there! So where is that coveted and critical experience to be gained?

In a recent Harvard Business Review blog post, INSEAD professor Herminia Ibarra calls for companies to address diversity issues by providing women access to pivotal positions within the company. She writes:

“Women’s assignments must become the number one priority for committed CEOs who want better results. Expecting to get more women into senior management via formal mentoring and self-improvement courses is Einstein’s definition of madness: doing more of the same and expecting a different result.”

Perhaps your company already acknowledges the positive impact diversity at the senior management level can bring. But is your company making moves to put that mindset into action?

The only way high-potential women will be able to rise into the executive ranks is through exposure to critical business assignments. Moreover, this moment of profound self-reflection throughout the industry is the perfect time to seek out new voices around the table.

In the wake of the crisis, Krawcheck is right. Nobody wants to be recklessly risky. But if you’re an executive know this: Your company will only find success in tackling its diversity issues by getting back to the old approach, at least in part. You need to get back to taking the right kind of risks.

Has your company struggled with translating diversity initiatives into true diversity? Do you think stretch assignments are risks worth taking?

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