The C-Suite Still Has a Huge Diversity Problem

In a company-wide memo sent after the George Floyd protests, Wells Fargo CEO Charles Scharf wrote that some of the bank’s diversity hiring goals were hard to reach because “there is a very limited pool of Black talent to recruit from.”

After those comments came to light, several executives pushed back. Procter & Gamble Chief Brand Officer Marc Pritchard said this thinking is “absolutely inaccurate.” He added that he’s “heard that before and the reality is there are talented people out there. There are talented Black people, brown people and Asian people.”

But Scharf’s attitude is still prevalent. For example, Chuck Robbins, CEO of Cisco Systems said that his company is making progress, but still has a “long way to go.” And that is exactly what the numbers show for most major companies.

  • As of 2020, 92.6% of Fortune 500 CEOs are white, 3.4% are Latinx, 2.4% are East or South Asian, and only 1% are Black, per calculations from the University of California at Santa Cruz. 
  • Last year, Stanford published a report lamenting the “dismal state” of diversity at the senior executive level. Per their research, as of 2019, women made up 27% of all directors at S&P 500 companies, and only 19% in the Russell 3000 (excluding S&P 500 companies). And only 10% of senior execs at Russell 3000 companies are people of color. 

There are many reasons why recruiting pipelines are still so white, including implicit biases built into hiring from personal networks, explicit biases exhibited during the interview process, or rigid requirements regarding school sourcing, higher education degrees, or geography. 

Another factor cited by the authors of the Stanford research is that most CEO and board candidate hires come from operating or finance backgrounds, and only rarely from marketing, risk management, or other disciplines. But women and people of color are underrepresented in operations and finance, which leads to non-diverse funnels into C-level positions.

Fortune 100 Leadership

To create diverse recruitment pipelines, companies will need to re-think their entire recruitment process. And they should also make significant investments in cultivating internal candidates.

Anne Chow, CEO of AT&T Business, who co-authored a book on unconscious bias, said companies that are “not purposeful about building long-term relationships with those who are developing diverse talent pools won’t be successful at systematically altering the course and complexion of [their] hiring.” SAP, for example, has a program called Project Propel, which works with historically Black colleges and universities to provide certifications to students.

A 2019 report from The Conference Board and Korn Ferry found that, at companies with revenues of $10 billion or more, the most successful ones at increasing the female representation in their pipelines are those that have dedicated committees or task forces that look to increase the number of women in leadership roles. Also successful were programs that provide senior female leaders regular exposure to the CEO and the executive team and recognition programs that promote high-achieving female leaders as role models.

Bottom line, to make senior leadership truly representative of the demographic makeup of the country, companies need to change the way they recruit and follow where the talent is. Leadership across the board need to understand their own biases and have honest conversations about their own assumptions, push for investments in equity and sponsorship programs, while also empowering their companies to engage with high-potential recruits early on to strengthen their pipelines.

Additional Reading on the Subject

  • STEM Jobs See Uneven Progress in Increasing Gender, Racial and Ethnic Diversity (Pew Research)
  • Finding diverse talent: Your processes and perceptions are the problem, not the pipeline (Fortune) AND Don’t blame your lack of diversity on the pipeline. Blame your process (Fast Company)
  • As companies prioritize diversity, startups are trying to productize diverse hiring (TechCrunch)
  • The Pipeline Isn’t the Problem for Diversity (Bloomberg)
  • To Increase Diversity, U.S. Tech Companies Need to Follow the Talent (Harvard Business Review)

Need human capital data for your planning?