Huge Diversity Gaps in Business Leaders

A Systemic Issue Needing a Systemic Approach

Many people in the business industry continue to state that our corporate leadership is getting more and more diverse, touting the increase in women, people of color and LGBTQ people reaching the highest echelons of business leadership. In addition to these optimistic statements being heard nationwide, they are frequently spread across my local area of Raleigh/Durham/Chapel Hill, N.C., often called the Triangle. We are a leading center for the high tech, healthcare, pharmaceutical and education industries.

So I was in for a shock when I received my Nov. 22, 2019 Triangle Business Journal. This issue featured the 50 fastest-growing privately-held companies in the Triangle with brief descriptions and photos of the CEOs. As I went through the first several, I noticed how all the photos started looking similar; and then I decided to count them. These 50 fastest-growing companies are led by 44 white men, 3 white women, 2 Asian men and 1 black woman. What extraordinary optics! I immediately reached out to share this with an area consultant I often collaborate with, Al Sullivan of Inspirus Consulting, to discuss these numbers.

Even as I was drafting this in mid-December, a New York Times article by Lauretta Charlton titled “Few blacks to be found at the top of the corporate ladder,” also appeared in our Raleigh News and Observer. She reported that there are only four black CEOs of Fortune 500 companies (that’s less than 1 percent), down from 7 less than a decade ago.

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One report by the leading consulting company McKinsey & Company completed an extensive study across 222 companies employing more than 12 million people. Some of their findings include:

• Women remain significantly underrepresented in the corporate pipeline from the outset. Even though women represent 57 percent of college graduates, fewer women than men are hired at the entry-level.

• White men are in 36 percent of the entry-level roles. That increases to 47 percent of management, 61 percent of vice presidents and 67 percent of the C-Suite (C-Suite individuals are those are executive-level managers within a company).

• White women fare worse; 31 percent of entry roles, 26 percent of management, 23 percent of VPs and 18 percent of C-Suite.

• Men of color are somewhat underrepresented compared to white men, 16 percent of entry roles, 16 percent of management, 11 percent of vice presidents and 12 percent of C-Suite.

• And women of color are far under-represented in leadership roles, declining from 17 percent of entry roles down to 11 percent of management, 6 percent of VPs and only 3 percent in the C-suite.

Another way of looking at the data is a percentage under-represented or over-represented. They are in senior leadership compared to entry-level jobs.

All things being equal (and we know they are not), the ideal fair state would be each particular demographic being the same percentage of the workforce across all levels from entry-level to vice president to C-suite. Looking at the data this way:

• White men are over-represented in VP and C-suite roles by 91 percent

• Men of color are under-represented in VP and C-suite roles by 38 percent

• White women are under-represented in VP and C-suite roles by 42 percent

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• And women of color are under-represented in VP and C-suite roles by 77 percent!

Clearly we are not moving along in the area of diversity in career progression as we should. Why might this be happening, and systemically, what can be done?

Here are five tactics to systemically address this issue:

1) Training and commitment of senior leadership. The very top leadership has to understand the extreme criticality of building a more diverse leadership team. They need to understand the changing dynamics of the talent pool and how it is much more diverse. If most of the people progressing into higher levels are white men, they will eventually run out of qualified leaders.

2) Robust investment in minority coaching and training. Due to Unconscious Bias, particularly the “Like Me” syndrome, it is far too easy for current leaders to mentor and teach people similar to themselves. This is not necessarily done intentionally, but is a natural human tendency. Deliberate thought has to be given, and intentional action taken, to provide mentoring and development opportunities for underrepresented minorities. Extra investment may be needed since it is more challenging for someone to lead a group of which they are not in the majority.

3) Building an earlier pipeline. Companies as a whole need to get more engaged in building a diverse pipeline of future talent at far earlier stages. Investment needs to be made in education at the elementary and secondary levels, particularly in economically disadvantaged areas which historically have seen less investment in education than affluent areas. Companies can encourage and even provide paid time for employees to engage junior high and high school kids in career discussions, sharing the wide diversity of vocational options and encouraging youngsters to further their college or vocational education.

4) Never let up. One issue that is slowing down progress and even at times leading us backward is lack of an ongoing continual commitment to diversity, equity and inclusion. So often executives see a little progress (“we now have an African-American in the C-Suite, women in management has gone up from 18 percent to 20 percent”) and then the budget gets cut and work stops. Then things will take their natural course and revert back to the old pattern. Dr. Vida Robertson, professor at the University of Houston, often states “you cannot take the foot off the gas or the vehicle will stop.” In this case, since it is an uphill battle, the car will go backwards once you take your foot off the gas!

5) Enforce with incentives. And finally, senior leaders and boards of directors need to spend more effort in measuring diversity statistics and even tying part of executive pay to diversity metrics. But do be careful that the incentives don’t drive leaders to haphazardly promoting underrepresented groups to simply get their bonuses, but need to be accountable for doing the real work or grooming diverse, competent leaders.

The business world as a whole needs to invest much more to deliberate building more diverse talent and senior leadership that truly reflects the demographics of our country and individual communities.

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Posted by Stan Kimer

Stan Kimer is the owner of TotalEngagement Consulting by Kimer and has published “A 2015 More Comprehensive Outline on Human Resources Support for Transgender Employees” which can be found online at workforcediversitynetwork.com/res_articles_ ComprehensiveOutlineHumanResourcesSupportTransgenderEmployees_ kimer.aspx. He can be reached at stan@totalengagementconsulting.com.

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