Remarks From the Global Diversity Leadership Exchange

Richard G. Ketchum

Chairman and CEO

New York, NY

February 1, 2012

As prepared for delivery.

Welcome and Introduction

Good morning and thank you Ray [Pellechia] for that introduction and the invitation to join you here today. It's a pleasure to be back at the NYSE.

We're here today to talk about the business value of diversity and inclusion.

There are many different businesses represented in this room—from financial regulators, to the financial services industry, to other corporations that operate with thousands of employees around the world.

While each of us may be focused on a different mission, we all share a common belief: that diversity and inclusion are not only important—but critical—to our continued innovation and business success.

So this morning, let me get the conversation started about what we can do to lead the way on this issue.

Business Case: FINRA as Regulator

For FINRA, building a culture that embraces diversity and inclusion benefits us on multiple levels. As a regulator of the U.S. securities industry, it's our job to make sure that investors are protected. That mission requires us to have deep and diverse pools of knowledge around the country about how firms and the markets operate.

For example, in the last two years FINRA has enhanced its firm examination program to better detect potential fraud and to focus on areas of risk. One important change to the program is the way we deploy our staff resources to regulate and examine firms. In this area, we have had to recruit from a different and more diverse pool of talent for employees who have strong risk analysis backgrounds.

And, as the financial services industry and markets continue to expand globally—both from a product and trading standpoint—we are finding that we need to keep pace by attracting and retaining employees with different experience and backgrounds, including the ability to speak different languages.

The increase in number and complexity of financial products sold by the firms we regulate has necessitated a shift in how we recruit—and enriched the pool of regulatory and surveillance talent that we already have at FINRA. We have had a similar experience in attracting staff for our Office of Fraud Detection and Market Intelligence, drawing more heavily on individuals with law enforcement and criminal investigation backgrounds.

In short, the more diverse a workforce we have, the greater our combined knowledge and skills—and the better prepared we are to meet new regulatory challenges.

FINRA's business goal in embracing diversity is actually not that different from any of the companies participating here today. When it comes to the bottom line, if we do not have a diverse pool of talent to draw from, we cannot keep pace with changing markets, and our chances of success are compromised.

Business Case: FINRA as Employer

So, what is FINRA doing to strengthen the diversity of our workplace and ensure that we are not only a top regulator, but an employer of choice?

From our standpoint as a self-regulatory organization, we're in a unique position between the financial industry and the government.

On the one hand, we can afford to attract and retain talent in a way that government can't. Yet, on the other hand, we're in constant competition with the financial industry, which needs the kind of experienced talent we employ and they can often pay a lot more for them.

To manage this, we have invested significant time and effort in building a strong diversity and worklife program that helps underscore our commitment to being a great place to work.

Initiatives at FINRA

Let me talk about some of FINRA's recent initiatives that support that commitment.

In 2009, we formed a Diversity Leadership Council. It's tasked with recommending ways FINRA can foster a diverse workplace culture where employees feel valued and recognized, and are given the opportunity to perform their best work in support of our mission.

The Council—which is represented by FINRA staff in the audience today—has worked over the last few years to recommend diversity programs and initiatives that we have since implemented.

Let me spend a few minutes giving you the highlights.

This past year, we introduced a company-wide diversity awareness and training program. The goal of this campaign was to build awareness of FINRA's diversity and inclusion programs, reinforce the business case for them, and ensure that all FINRA employees are on the same page as far as understanding how—and why—we value these elements in our workplace.

We have also launched an improved flexible work arrangements program, which was purposefully re-designed to better support our employees' diverse work styles and scheduling needs. The response has been overwhelmingly positive, and today, 387 employees are enrolled—or approximately 9 percent of our total population.

Also at the advice of the Council, we now offer two formal mentoring programs focused on developing managers. Each program offers high-performing, mid-level employees the opportunity to partner with senior FINRA leaders on their professional development. Both programs have allowed us to increase our pool of future leaders—as well as the diversity of that pool.

The Council also recommended that we expand our employee resource groups, which we are doing this year. The primary purpose of these groups is to organize employees around a common characteristic or experience and serve as a platform to raise business-focused issues to our attention. Our employee resource groups include the FINRA Women's Network, which launched in 2006, and three new groups launching early this year, including one for African Americans, another for parents and one for lesbian, gay, bisexual and transgender employees.

Finally, we conduct "Diversity Dialogues" among FINRA staff, which I have been privileged to lead. These dialogues are candid conversations with groups of employees to get their perspective on "the state of the union" at FINRA and hear from them about how we can attract and engage talent more effectively.

Since November 2010, we've hosted eight sessions in seven of our office locations with 150 employees, and I've met with a number of groups, including Generation Y, women, African Americans, Hispanic Americans and Generation X.

It's been a great experience, and I've gotten to hear—and share—some good ideas with those employees about how we can make FINRA a better place to work.


I want to close with some of the specific benefits we've seen—and how, ultimately, those benefits tie back to business value and the success of our mission.

Employees who are part of our new flexible work arrangements program have come right out and told us that it has improved their overall quality of life—as well as their productivity. Both are direct benefits for FINRA in terms of retention and meeting our business goals.

On other fronts, we're now in the third cycle of our group mentoring program, which has benefited dozens of employees. The positive feedback we've received from the participants leads me to believe we're moving in the right direction in terms of developing future leadership.

And since rolling out last year's diversity awareness campaign, we've seen that it has helped build a sense of community among FINRA employees across the country. There has been more of an active conversation among employees about what diversity means not only to them, but to FINRA as a company.


All of this ties back to the idea that by embracing the different backgrounds, skills and perspectives of our workforce, FINRA is better positioned to carry out its mission of protecting investors.

What we've seen is that our focus on diversity has brought increased creativity and innovation to solving regulatory challenges, and also helped us build morale and unite employees around our mission. When you foster an inclusive culture where everyone takes the time to consider and appreciate each other's differences, people feel good about coming to work every day and are inspired to do their very best.

As we like to say at FINRA, we are one company with one mission. And I firmly believe that our diversity initiatives are helping us move our mission forward—and achieve our full potential as an organization.