Author’s Note: This piece was prepared before the death of George Floyd and the protests and important public discussions that followed. If anything, it is even more relevant now.
The Center for Talent Innovation (CTI) recently released a study entitled “Being Black in Corporate America.” The findings of the study make it clear that corporate America has a significant human capital issue with potential risk overtones, an issue that should be addressed with concrete steps to be taken by boards of directors and members of senior management. The study was based upon survey data collected by the National Opinion Research Center at The University of Chicago. The study was sponsored by some of the largest public corporations and professional firms in the U.S.
Among the findings were:
- Representation of black professionals in leadership still lags far behind college graduation rates.
- The majority of black professionals have experienced racial prejudice at work, in higher percentages than Latino and Asian professionals.
- One in five black professionals feel that someone of their race/ethnicity would never achieve a top position at their companies.
- More than one in three black employees intend to leave and black employees are 30% more likely to intend to leave than white employees.
- Less than half of all professionals — regardless of race or ethnicity — think their companies have effective diversity and inclusion (D&I) efforts.
No company should be willing to risk losing talent or to waste time and money on ineffective D&I programs. No company should accept financial and/or reputational exposure to claims of racial or ethnic (or any other kind of) discrimination. And boards can expect to hear from some of the institutional shareholders who are interested in corporate social responsibility about what they intend to do in light of the CTI study.
Many directors are, or should be, asking “What should we, as a board, be doing about all of this?”
Addressing the findings of, and recommended actions in, the CTI study should be a task for management, ideally with leadership involvement of the CEO. Management should receive encouragement and oversight by the board. That oversight should include inquiring into the effectiveness of the D&I programs relating to “persons of color,” not in the aggregate but by racial/ethnic subsets. Aside from oversight, a board should consider doing four things to advance the position of its company with, and enhance the retention of, its black professionals.
A board should look to its own diversity in light of the report — specifically, does the board include black directors? While all board members should be invested in the progress of black professionals within the organization, from personal observation I can vouch for the fact that black directors are especially alert. Even more importantly, having black role models on the board should enhance the retention rate of black professionals. The progress that most boards have recently made in addressing gender diversity should be matched in racial/ethnic diversity. While statutorily mandated quotas and pressure from investors have been the tools for enhancing gender diversity, the starting point for increasing the number of blacks on boards might be to adopt a different approach — namely, the voluntary adoption of a corporate version of the NFL’s “Rooney Rule.” This rule requires teams looking for a new head coach to interview at least one minority candidate for that position. Moreover, boards that have already achieved desired diversity should be thinking ahead about succession for their diverse directors.
The board can also recommend its company to establish or participate in pipeline and internship programs to increase the number of blacks in the professional areas that are most critical to the company’s business. Such programs do more than just increase the pool of recruits; they demonstrate to the black professionals already at the company a commitment to the advancement of black professionals.
As part of its oversight of talent management, the board should encourage members of senior management to directly act as mentors to black (and other diverse) professionals. This also demonstrates commitment to black professionals, and for the rest of management leads by example. Those senior management mentors should have the authority to make sure that opportunities for advancement are made available to their mentees.
Fourth, the board should insist that the CEO — indeed, the entire C-suite — again lead by example in creating a corporate culture of respect for individuals and declare and enforce a zero-tolerance policy when it comes to discrimination, bullying and harassment.
The success of these efforts should be monitored and assessed. Clearly, success can be defined quantitatively through statistics. But boards should recognize that successful programs can lead to “poaching” and black professionals who progress within one corporation will attract attention from recruiters for other corporations. It is also the case that an uptick in the numbers can mask on-going issues of the type reflected in the CTI study. So, there should also be qualitative monitoring—through employee surveys, exit interviews, analysis of whistle-blower hotline reports and otherwise.
The CTI study — and its critical lesson that we can’t treat all diversity the same — deserves attention.
Thomas A. Cole is Chair Emeritus of the Executive Committee of Sidley Austin LLP. He teaches a seminar on corporate governance at the University of Chicago Law School and is the author of CEO Leadership: Navigating the New Era in Corporate Governance. In recognition of his support of diversity initiatives, he was the inaugural recipient of the Thurgood Marshall Legacy Award presented by the Thurgood Marshall College Fund. The views expressed in this essay are not necessarily the views of his law firm or the University or its law school.