President Biden Righted The Ship On Diversity; Will CEOs Act?

One of the most powerful questions leaders can ask is, “Who is missing?”

On his first day in office, President Joe Biden signed an executive order reversing former President Trump’s mandate that federal agencies and anyone doing business with the U.S. government can abandon their diversity and inclusion programs. This is good news because, as I wrote in an op-ed for the Chicago Tribune last fall, Trump’s mandate was out of touch with reality and bad for business.
 

The even better news is that Biden’s order goes far beyond rescinding Trump’s diversity training restrictions. It establishes a blueprint for any CEO who wants to uncover the root causes of minority underrepresentation within the upper ranks of their organization and take steps to resolve them. The order echoes the systemic approach to diversity, equity, and inclusion (DEI) that I’ve long advocated, including:    

Conduct an Internal Review 

Biden’s mandate gives government agencies six months to assess the extent to which their programs and policies block opportunities for people of color and other underrepresented groups. Corporations should follow suit. 

One of the most powerful questions leaders can ask is, “Who is missing?” This extends not only to internal meetings and project teams but to customers. When designing a new product or service, leaders need to ask, “Who are we developing this for?” and “Who’s not represented?” The answers can inspire meaningful action. 

For example, executives at Fortune 500 bank didn’t see a need to focus on diversity because they were generating plenty of revenue with an all-white staff and customer base. But once the business banking division leader was shown the data about the markets the bank was ignoring, he appointed two ethnic minorities to start new business lines especially for the Black, Asian and Hispanic customers. 

Share Your Findings

Only 3% of Fortune 500 companies disclose the complete race and gender breakdown of their workforce, according to Fortune.com. That’s because for many firms the numbers are embarrassing. But until leaders are willing to face reality, change is unlikely. 

That’s why Biden’s order requires federal agencies to report the findings from their six-month assessment. It’s also why Nasdaq proposed new rules in December that, if approved by the SEC, would require Nasdaq-listed companies to disclose the diversity of their board members annually. 

When sharing data, it’s essential to resist the temptation to gloss over the real problem. For example, a Fortune 50 retailer noted in its diversity report that 45% of its workforce was Black and Hispanic. However, a closer look showed that most of those workers held lower-level positions in distribution and logistics. Disclosing DEI data segmented by things like job level provides a level of transparency that shows you’re taking the issue seriously and willing to be held accountable. 

Research Best-in-Class Practices

Progress in getting more women and people of color into corporate leadership has been notoriously slow. In the last 30 years, the number of black CEOs running Fortune 500 companies has increased only 0.5% despite all the DEI initiatives corporations has embarked on. 

Biden’s order not only requires federal agencies to report the findings of their internal reviews, but also to work with the White House’s Office of Management and Budget (OMB) to identify best practices for creating greater equity and make recommendations for implementing them. 

Corporate leaders can look to other companies to see who’s making meaningful progress in this area, identify the actions they’re taking, and find ways to adapt those policies and procedures to their own organizations. 

Allocate Company Resources to Increase Diversity, Equity, and Inclusion

Under Biden’s order, once federal agencies identify the barriers to equity, they must allocate agency resources in ways that promote diversity and fairness. In other words, once they know what the pain points are, they need to invest in easing them. This is easier said than done. Too many U.S. companies are sincere in their commitment to DEI but stuck in their ability to make progress. This is where data can be helpful. 

For example, as per Burning Glass Technologies study, only 5% of actuaries are Black or Hispanic, but 14% of risk managers are people of color. Because these positions have overlapping skills, turning one of these risk managers into an actuary would require training them to acquire a few additional skills, such as SAS and python. 

Similarly, companies can use data to identify parts of the country with higher percentages of minorities in the positions for which they are recruiting. For example, in the Miami job market, 55% of software developers are Black or Hispanic, followed by Memphis with 43% and Atlanta with 31%. 

The Time Is Now

The proper measures for solving a lack of diversity problem will vary by organization. What’s important is for corporate leaders to use a systemic framework like Biden’s. By acting now, decisions to appoint women of color like Kamala Harris to leadership positions just might become yesterday’s story. 

Karen Brown is the Founder & Managing Director of Bridge Arrow. With an understanding born of over 25 years in the corporate world, Karen advises global companies on how to drive growth and profitability by promoting diversity and inclusion in their organizations. Her forthcoming book, Gender Equity: How Women Leaders Make Companies Stronger, Smarter and More Profitable, based on in-depth interviews with both female and male executives, explores the business advantages of gender equity. Visit https://bridgearrow.com/  Connect Karen Brown  Follow @karenbrownRC