Companies are making bold promises about greater diversity — there’s a long way to go – By Pippa Stevens (CNBC) / June 11 2020
- As women and minorities continue to be underrepresented in leadership positions, companies are releasing statements and announcing initiatives aimed at promoting diversity. Whether this brings meaningful change remains to be seen.
- Companies that fail to promote inclusive policies face a number of financial risks, including acquiring and retaining employee talent. Additionally, as ESG investing becomes increasingly popular, companies that don’t prioritize diversity could see investors ditch their stocks.
- “I do think that this has been a call to action, and the corporate community and CEOs have been visible and vocal and making statements denouncing racism and standing up to injustice. But I think the hard work happens when you do the work internally so that you have the right to make those statements,” said Lanaya Irvin, president at non-profit Center for Talent Initiative.
- In recent days Americans have taken to the streets to protest the killing of George Floyd while in policy custody, as well as broader issues of systemic racism across the U.S.
As protests sweep the nation, more and more companies are releasing statements and announcing initiatives aimed at promoting diversity and inclusion within their walls. Whether these promises lead to tangible outcomes remains to be seen, especially since corporations are not presently required to disclose statistics on employee make-up, which makes tracking broad progress difficult at best.
The data that has been collected through surveys paints a picture of just how far things need to change before companies are truly representative of the makeup of society at large, and before salaries are comparable across categories like gender, race, ethnicity and sexual orientation.
Much attention has been given in recent years to the lack of diversity on corporate boards, which has forced companies to act on that front. All S&P 500 companies now have at least one woman on the board, and executive search firm Spencer Stuart found that last year, of the 432 new independent directors added to S&P 500 boards, 59% were women and minority men.
But statistics also show the lack of progress among the corporate workforce. According to data from human resources consulting company Mercer, 64% of workers in entry level positions are white. In the top executive ranks, however, 85% of positions are held by white employees, demonstrating the promotion gap that minorities face. And women and minorities continue to under-earn white male colleagues, according to the Economic Policy Institute.
Social values aside, there’s a real financial risk for companies that fail to put their money where their mouth is. A lack of diversity in background and experience can stifle innovation and promote group think, while companies that don’t prioritize inclusion may struggle to attract and retain top talent, as well as younger workers. Additionally, ESG investing–when a company’s environmental, social, and governance factors are considered alongside financial metrics–is growing in popularity. Experts say that following the coronavirus pandemic, the “S” element is set to become even more important, meaning that companies that don’t prioritize diversity could see investors ditch their stock.
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