By Lawrence Wagner
There have been only 15 black CEOs in the history of the Fortune 500, of whom five are currently in the role. Ursula Burns, CEO of Xerox, the only woman of the 15, stepped down in February of 2017. According to a corporate diversity survey released June, 2016 by the office of Senator Bob Menendez, a New Jersey Democrat, black men and women account for a mere 4.7% of executive team members in the Fortune 100. Even at smaller companies, African Americans hold an estimated 6.7% of the nation’s 16.2 million “management” jobs, according to the latest figures from the Bureau of Labor Statistics, though they make up twice that share of the population at large.
Also, in the nonprofit arena, the retention of program officers of color is an ongoing challenge for major foundations – the majority of boards are still comprised of white males. Asset management firms that steward the 95% of foundation resources not used to make grants remain largely off-limits to diversity’s moral and efficacy imperatives.
Venture capital (VC) firms also have a diversity problem. The lack of diversity among top investment partners translates to a lack of diversity in the companies that they invest in. In 2015, while $60 billion in venture capital funding was disbursed, female founders received only 7% of that windfall, and black male founders only received 2%. That’s not surprising given the report found that while women make up 45% of the total venture capital workforce, they are mainly centered in administrative, marketing and communication roles. The proportion of women dwindles to 11% when it comes to high-ranking investment partner positions. The numbers illustrating racial or ethnic diversity from the Deloitte survey were even more dismal. In the sample surveyed, black employees made up 3% of the VC workforce and had zero representation among investment partners. The numbers for Hispanic or Latino employees sit at 4% and 2%, respectively.
Besides moral obligation, why should a company create culture that incorporates diversity and inclusion?
In an ideal world, hiring practices across the entire company would strive to build a team comprised of people from varied educational, social, and geographic histories. A study conducted by Cedric Herring, sociology professor at the University of Illinois at Chicago, linked racial diversity and gender diversity to profitability, noting, “For every percentage increase in the rate of racial or gender diversity up to the rate represented in the relevant population, there was an increase in sales revenues of approximately 9 and 3 percent, respectively.”
In addition, diversity and inclusion are potent tools in cultivating leadership, especially in flatter organizations, because of their profound effect on risk taking. A less hierarchical system demands that all members self-govern, self-lead, and mutually submit to the leadership of their peers. When that peer group isn’t homogenous and, therefore, less susceptible to group think, a variety of ideas are promoted and explored and greater risks are taken. A Forbes Insights study surveying 321 companies with more than $500 million in revenue found that 85% agreed or strongly agreed that diversity is key to driving workplace innovation. A culture of inclusion fosters a willingness to take risks, push boundaries, and attain new collective heights, simply because all people and all ideas are deemed valuable.
If being around people who are different from us makes us more creative, more diligent and harder-working, then how do we invite a mix of people to the party, where everyone is dancing together?
Check back next week for Part II.