Diversity initiatives are failing minority groups in the workplace
Despite a focus by many organizations on improving diversity, women and people of colour are still underrepresented in senior level positions in corporate America. Black Americans, which compromise 13.4% of the United States population, only represent 3.2% of executive and senior manager roles. At the very top of the house, only 0.6% or three Fortune 500 CEOs are Black.
Recently one of those three CEOs, Ken Frazier, CEO of pharmaceutical giant Merck & Co. reflected on the lack of representation of Black people in leadership roles: “what we have to be willing to do is to talk about the subtleties of race. It's really easy to lament when you see something as brutal and aggressive and blatant as what happened in Minneapolis [the killing of George Floyd]. But the subtleties of racism in terms of the belief, for example, that African Americans, as a group are not as capable as whites are. And the fact that if an African American is trying to move forward in a corporation, because he or she belongs to that disadvantaged group, they have to be better in order to get to the same place. People don't want to admit that, especially companies that believe they have a ‘merit system.“
These disparities exist not only amongst Black workers but across minority groups. Only 19% of directors of the top 200 companies within the S&P 500 are minorities (African-American/Black, Asian or Hispanic/Latino). This lack of representation persists even though 40% of Americans identify as non-White. Women face similar challenges. Only 7.6% or 38 Fortune 500 CEOs are women despite the fact that 47% of the workforce is female.
Source: Catalyst
“There’s a very clear trend that women are having a harder time in the workplace than men, women of color are having a harder work experience than White women and Black women are having sort of the hardest experience overall,” says Lean In’s Deputy Director of Communications, Rachel E. Cooke.
When discussing the lack of representation of women and people of colour in leadership roles critics often argue that there is a “lack of supply” of qualified candidates. The ascension of women to corporate boards tells a different story. In 2019 women represented nearly 27% of all board seats for S&P 500 companies up significantly from only 16% in 2009.
How did this happen if a lack of qualified talent is causing the disparity? As Bloomberg writes: “perhaps the biggest uptick in female board representation came after California required all companies based in the state to have at least one woman director by the end of last year [2019] and three by the end of 2021.” Companies that do not comply with the law face a $100,000 fine.
Nearly 33% of the more than 600 companies in California listed on a major stock exchange did not have a female board member before the law was enacted in 2018. Since the law has been in place 45% of new board seats for Russel 3,000 companies based in California were filled by women. Once a quota was mandated in California by law the supply issue became well, less of an issue.
Lawmakers in California are now proposing that all white boards be banned by the end of 2021, paving the way for more people of colour to step into positions on corporate boards. Bloomberg also writes: “increasing Black representation, however, poses challenges that adding women may not: most of the women elected to boards are White, selected because they had professional connections with the White men who still dominate boardrooms. Similar networks between White corporate leaders and potential Black directors are less well developed.”
Other initiatives that have helped to increase female representation on boards include prominent companies like BlackRock requiring a minimum of two female directors on the boards of companies within its portfolio. Media scrutiny has also helped. “There are watchdogs that count how many women you have on boards or call you out if you have too few,” said Corinne Post, a management professor at Lehigh University. Companies are also much more knowledgeable about the positive impact diversity has on business results. “I think norms would not have changed nearly as much if there had not been this drumbeat that gender diversity on the board improves corporate performance,” said Katherine Klein, a management professor in the Wharton School at the University of Pennsylvania.
At Merck, Frazier walks the talk, that more than enough qualified and diverse candidates exist. 30% of Frazier’s senior team is African American. “I would actually say at the top 10 people in the company, white males are only four of that 10. We have three African Americans. We have one Asian American, we have two women. So we've done a good job on diversity at the top, but we haven't had the pull through at the levels below that I think we need to have. And I take responsibility for that,” says Frazier.