We founded the Black Corporate Directors Conference along with Ariel Investments co-chief executive officer Mellody Hobson 18 years ago to ensure civil rights and diversity are addressed in corporate boardrooms. We all know that diversity has been a line item on board agendas for decades, but the data suggests the issue has gotten more lip service than elbow grease. A colleague of ours once shared how his board spent two days hammering out a complicated, multibillion-dollar acquisition. The transaction seemed impossible to close. Still, the board kept at it and got the deal done. But when diversity was next on the agenda, the executives said, “We can’t solve for this.”
We believe we can solve for diversity with actionable solutions. To hold institutions accountable for their commitment to inclusion at every level, we propose attention to the three P’s: people, purchasing and philanthropy.
With people, companies need to take a hard, careful look at the demographics of their employees and leadership. Math has no opinion, and the data will tell the truth. Too often, businesses roll up minorities into one big multicultural group — or they lump together all people of color, along with White women, without recognizing that members of different communities face different challenges in corporate America. This umbrella approach must change.
The board is the real boss, so start there. In 2018, Fortune 500 companies had 5,670 board seats, but only 486 were filled by Black directors and 213 by Latinx directors. Then, examine the C-suite to see if your organization is preparing minority employees to ascend into leadership positions. Indra Nooyi was chief financial officer of PepsiCo before becoming CEO. Kenneth Frazier started as general counsel at Merck & Co. before several big promotions led him to CEO.
Next, break your employee data down to see the numbers across every hiring level and publish the information. Then keep counting. If 30 percent of your employees are Black women but 90 percent of them are administrative assistants, you might refrain from patting yourself on the back.
If you find, as many of you will, that your organization doesn’t represent America, you’re not powerless. As seasoned corporate directors, we know that when a diverse group of candidates is considered for any job, the best talent surfaces and the best outcomes result. These three actions can help.
First, every company needs clear hiring goals. The only way to hit a target is to have a target. Second, go beyond the Rooney Rule. Research shows the likelihood of hiring a diverse candidate increases when there is more than one on the slate. When there’s only one, implicit bias makes the candidate seem like a bigger risk. Third, you get what you incentivize. Even as companies insist that diversity is vital to future business success, few incentives exist for attracting and retaining a diverse workforce. If diversity is mission-critical, should a superstar in your company or the CEO receive their full bonus if they lead a homogenous team?
Corporations should direct the next P, purchasing, toward minority businesses. The terms “procurement” and “supplier diversity” are obsolete. A better term is “business diversity.” Black businesses must be included in the biggest areas of corporate spending where wealth and jobs are created today: professional services, financial services and technology.
To ensure a fair, competitive and inclusive corporate purchasing process, we believe the use of minority firms should be measured across every category in which companies spend money on outside goods and services. And corporations can multiply their influence by holding your company’s service providers to your same business diversity standards. African Americans have $1.3 trillion in buying power. Growing and vibrant minority businesses are good for corporate America. Investing in our people and our businesses means we can invest in yours.
Philanthropy may be top of mind these days, but it’s last on our list. We certainly applaud the generosity of many corporations that have partnered with civil rights organizations to address systematic inequities such as poverty, but deep-seated economic inequality will not be fixed by donations and scholarships. The wealth gap is now wider than in 1950.
And college, instead of being the great equalizer, appears to be an engine of the wealth gap. According to the St. Louis Federal Reserve Bank’s Center for Household Financial Stability, between 1992 and 2016, college-educated White Americans saw their net worth rise 96 percent, while the net worth of college-educated Black Americans fell 10 percent. Less than half of African American adults are currently employed.
The pandemic proves one of us is all of us. Increasing inequality demands that we boldly and unapologetically address the rapid decline of our at-risk populations. We must seize this moment and urgently move from good intentions to measurable results. Systemic racism exists. Make sure it’s not at your company.
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