A Dissatisfied Workforce Is the Biggest Risk of All
Boards and companies ignore DEI concerns at their own peril.
In this edition of Directors & Boards, we run the gamut in covering the risks that face public companies. We tackle geopolitical risk and the need for international directors. Cybersecurity has its moment in the spotlight. Risks in the supply chain are addressed. All of these are vital concerns for directors. But, in my opinion, the number one risk facing boards and public companies is people — their people.
Public company boards should pay close attention to trends around DEI and related social issues or risk being put out of business by the watchful people who work for them now and the people who might have worked for them but decided not to because the company’s standards on diversity are lacking.
Diverse Executives Want to Work for Diverse Companies
We recently published a story on the Directors & Boards website that cites the views of diverse executive candidates who decline to join companies whose boards and management teams are not fully committed to DEI (see “Diverse Executive Candidates Demand a Commitment to DEI”). I figured, “OK, that’s something people say, but when it comes time to receive a needed paycheck, you’re probably going to make some compromises.” (Full disclosure: If you somehow missed my photo, I am a somewhat middle-aged white guy who has lived in a bubble of privilege.) As I worked on the story and scoured the survey results it cites, however, I was floored by this nugget: More than one in three diverse executive candidates (36%) have declined a job offer because the organization lacked diverse representation at the leadership level.
According to Michelle Delcambre, operating partner of early-stage venture capital firm Felicis Ventures, “I’m encouraged to see this population of people taking the power back and not feeling forced into these opportunities just because they have presented themselves. Instead, they are looking into opportunities that have both presented themselves and are culturally values-aligned to what this population of people cares about and values.”
In other words, if you are on the board, or part of the leadership, of a company that is only paying lip service to diversity, the best and brightest candidates are increasingly likely to decline your offers of employment as they move on to their next interview.
Ignoring Social Issues Risks Losing Valued Employees
Boards that fail to heed these warnings on diversity not only have to worry about the views of prospective employees, but also must think about the concerns of those who are already on the team. As the Great Resignation has shown, employees have shown a willingness to hit the exits for a number of reasons, such as the effects of COVID, unsatisfactory pay and insufficient benefits. Might employees be willing to leave their positions because their companies are not paying sufficient attention to DEI?
Well, like any good lawyer, I would not ask that question if I did not at least think I knew the answer. The proof can be found in a survey conducted by McKinsey & Company in September 2021. In a quest to discover what was driving the Great Resignation, McKinsey queried almost 6,000 people of working age on their reasons for leaving their companies. The report saw 54% of respondents stating that their reason for quitting was that they didn’t feel valued by their organizations, with 51% stating that they did not feel a sense of belonging in the workplace. Notably, the likelihood to state that they did not feel as if they “belonged” at their place of business was much higher when the respondent was classified as non-White or multiracial.
To make matters worse, in the same survey, when employers were asked why their employees were leaving, senior executives were largely unaware of their charges’ reasons for departure. They cited compensation, work-life balance and poor physical and emotional health as the reasons their employees were heading for the exits.
Boards should help ensure a company maintains a diverse leadership and a watchful eye on DEI and related social issues because, if they don’t, they may not be able to find people who want to work for them. And then they are tangling with the biggest risk of all: the future of the business itself.
Disagree? Let me know at email@example.com.
Bill Hayes is managing editor of Directors & Boards.