By Maitane Sardon and Dieter Holger
Much has been said about the importance of having a diverse and
inclusive workforce, yet when it comes to promoting ethnically and
racially diverse people to boards and senior leadership positions,
U.S. companies continue to struggle.
Why is that the case?
Those who study the issue cite a plethora of challenges. Some,
for instance, say educational disparities leave companies fighting
over a small pool of qualified candidates. Others argue that
companies can't fix the problem without measuring the extent of it
first -- something many companies don't do. And still others
believe the problem is more basic than that: The issue, they say,
is that many companies simply don't like to talk about race and
institutional bias that makes it harder for minorities to advance
through the ranks.
"Over time we have erased race from the conversations about
diversity and inclusion," says Laura Morgan Roberts, a professor of
practice at the University of Virginia's Darden School of Business.
"I know it makes us uncomfortable, but we are all losing out in
creating a more sustainable world if we continue to overlook some
of the racial dynamics."
In recent years, U.S. companies have put an emphasis on adding
women to their boards, and they have achieved some progress. This
year, for the first time in history, every company in the S&P
500 index has at least one woman on its board. The milestone was
reached in July, when online vehicle-auction company Copart Inc.
announced the appointment of Diane Morefield as a director,
according to the first diversity and inclusion ranking of companies
and sectors in the S&P 500 by research analysts at The Wall
Street Journal.
That said, the research also suggests there is still a lot of
room for improvement. Only 2% of S&P 500 companies have boards
in which at least half of the members are women, and at only seven
companies in the index are at least half of senior managers women.
In fact, at 80% of S&P 500 firms, fewer than one-third of
senior managers are women.
Meanwhile, the percentage of open board seats filled by people
from diverse ethnic and racial backgrounds remained unchanged last
year at 23%, according to Heidrick & Struggles, a research and
consulting firm.
Some say disparities in higher education could be partly to
blame for the lack of progress.
Though the number of black and Hispanic students earning college
degrees is growing, white students earned 67.5% of bachelor's
degrees, 68.2% of master's degrees and 70.1% of doctorates in the
2015-16 academic year, according to the U.S. Department of
Education's National Center for Educational Statistics.
"If there is not a pipeline of diverse applicants getting their
professional degrees, there are simply fewer diverse people to
choose from," says Mikki Hebl, a professor of management and
psychology at Rice University in Houston.
To address that issue, companies need to actively seek out
underrepresented voices instead of waiting for the talent to come
to them, academics say. PayPal Holdings Inc., for example,
participates in the Year Up program, which trains and places people
from disadvantaged backgrounds into corporate internships that
often turn into full-time work.
Nahtifa Wright, a 30-year-old African-American woman from
Oakland, Calif., had dropped out of college and was working two
retail jobs when she joined the program. She interned at PayPal and
eventually got a degree from San Jose State University and a
full-time job at the company, where she has worked for the past
seven years supporting IT needs for the internal communications
team. Since 2015, PayPal has hosted 108 Year Up interns and hired
more than 50 of them full time.
PayPal, which placed above 92% of S&P 500 companies in the
Journal diversity ranking, has also made an effort to promote more
diverse people into senior management.
Last year, the San Jose, Calif.-based company started requiring
that at least one diverse candidate be considered for every open
position at the director level and above, with at least one diverse
employee on the interview panel. Since then and through its other
diverse hiring policies, the company has increased the share of
diverse people at the vice president level by more than 5%.
The existence of biases around gender and race, which can
influence decisions and result in discrimination when recruiting
and promoting staff, is another issue companies continue to grapple
with. From 2010 to 2017, more than one million cases of alleged
violations of federal workplace antidiscrimination laws were filed
with the Equal Employment Opportunity Commission or its partner
agencies, according to the Center for Public Integrity. These
ranged from racial and sexual discrimination to retaliation, age
discrimination, and discrimination related to a medical condition
or disability.
"Because of long-term institutional bias, many women and ethnic
minorities haven't had the opportunity to get the type of
experience that many companies require," says Matt Moore, chief
talent officer at Alpine Investors, a private-equity firm based in
San Francisco that recruits people for its CEO-in-training program.
"But that doesn't mean they don't have the skills and insight to do
the job well."
American Express Co., one of the 20 most diverse companies in
the S&P 500 based on the data compiled by the Journal analysts,
rolled out a program in 2015 to train employees on how to identify
and break unconscious bias in their decisions and build inclusive
teams. The company also launched a mentorship program in 2018 to
help women and people from underrepresented backgrounds develop in
their careers.
Those efforts attracted Lily Doxy, a 34-year-old black woman
with an executive M.B.A. in digital marketing from Rutgers Business
School in Newark, N.J., and an M.B.A. in marketing and management
from St. Peter's University in Jersey City, N.J. Her bachelor's
degree is from Howard University.
"They [American Express] encourage moving around the company and
making sure that you move up," says Ms. Doxy, who recently joined
American Express as senior manager of digital experience, global
commercial services. "It is a very diverse place and reminiscent of
what America actually is, a melting pot of people."
Some say one of the biggest barriers to improving diversity in
corporate leadership is that many companies don't accurately
measure -- or disclose -- the extent of the problem. Only 3% of
companies in the S&P 500 share a full breakdown of their
boards' ethnic diversity, and only 4% publicly disclose how
ethnically diverse their senior management team is, according to
the data compiled by the Journal analysts.
Experts say many groups, including people with disabilities and
nonbinary people, are barely acknowledged in corporate reporting
because the diversity and inclusion data that is collected isn't
nuanced enough.
Without precise data, company executives may struggle to put the
right D&I initiatives into place, they say.
"Regarding ethnicity and age, good data is even harder to come
by," says Travis Korte, data science lead at Ethic, a tech-driven
sustainable asset manager. He adds that when companies report their
racial and ethnic makeup, there is no reliable way of knowing how a
company's reporting methods compare with those of its peers.
"Until we see companies reporting much more deeply and
thoughtfully about employee makeup in general, any assessments of
diversity we make will have to be conditional," says Mr. Korte.
Ms. Sardon and Mr. Holger are reporters for The Wall Street
Journal in Barcelona. Email them at maitane.sardon@wsj.com and
dieter.holger@wsj.com.
(END) Dow Jones Newswires
October 26, 2019 08:14 ET (12:14 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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