By Fredrick Lee
Only 20% of Fortune 500 companies have diversity officers
More-diverse corporations outperform less-diverse competitors by 35%
Diversity and inclusion is a profitable avenue for corporations not to ignore. However, recent bad press from corporations like Gucci and Prada raise questions about their commitment to diversity. Many chief diversity officers lack leadership support, resources and training. Perhaps this makes promoting diversity a harder commitment and sets these executives up for failure.
Why This Matters: Only 20% of Fortune 500 companies employ chief diversity officers. In many cases corporate leaders listed diversity at the bottom of the top eight business strategies for their corporations. It’s easy to see why more than half of surveyed chief diversity officers in a 2018 McKinsey study, feels there is little or no support from corporate leaders for their work.
Additionally, the study found corporations with diverse boards and executive teams were up to 35% more likely to outperform their less-diverse competitors. Corporations like Gucci and Prada have long struggles with diversity, are now hiring executive search consultants to find qualified candidates in this space who can help fix their reputation. It’s estimated a company could lose up to $4 billion in market value due to bad media attention related to racism and sexism.
From Wall Street to Silicon Valley companies have been beefing up their diversity leadership. Netflix (NFLX +1.45%) brought on Verna Myers as the Vice President of Inclusion Strategy, Tony Prophet is the Chief Equality Officer at Salesforce (CRM -0.38%), while Corey Anthony and Erika Irish Brown serve as Chief Diversity Officers at AT&T (T -0.97%), Goldman Sachs (GS -0.24%).
Limited resources and data provided to diversity officers call into question a corporation’s commitment to diversity. Also, many of these executives serve in other official positions resulting in the lack of formal training and focus to promote diversity within an organization.
Situational Awareness: Consumers are becoming more aware of a company’s diversity activities, so their commitment to this cause will affect a consumer’s buying decisions. These diversity officers are only as good as the support and resources corporations are willing to invest. Otherwise, diversity will continue to be a losing battle inside and outside of the organization.
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