The death of George Floyd has prompted soul-searching across the US, not least in boardrooms. Big companies have rushed out messages saying that they, too, believe black lives matter. Those messages have been met with an understandably cynical response, with critics pointing to the near-complete absence of black people at the top of large corporates and the longstanding relative underrepresentation of the African-American population. The contrast between public professions of support and the reality of US business life has reignited the debate about the dearth of ethnic minorities in boardrooms.
Just four Fortune 500 companies are run by black chief executives. In the UK, the picture is similarly bleak; the Parker review, set up to improve ethnic diversity on the boards of UK-listed businesses, in February revealed that 37 per cent of companies in the FTSE 100 had no non-white board members. Sharon White, chairman of department store chain John Lewis, is an oft-cited example of a rare black woman at the top of a large British company.
Today’s outcry is far from the first time that the US has had to confront its poor record on black economic empowerment. After the Civil Rights Act of 1964, which made racial and religious discrimination illegal, many companies set up diversity programmes. They have waxed and waned, but the numbers do not lie — only 17 black people have led Fortune 500 companies since the turn of the century, a pitiful return given that blacks make up nearly 14 per cent of the population.
If more companies are alert to the issue and executives are committed to advancing diversity, why the reality gap? Studies show that despite good intentions of employers they often fall short of creating equitable workplaces for black employees; a recent study by the Center for Talent Innovation found nearly one in five black professionals felt someone of their ethnicity would never achieve a top position in their company. The same report identified a brain drain of black executives opting to start their own businesses.
One of the challenges has been that in many cases companies’ diversity initiatives have focused simply on getting numbers through the door. A greater emphasis on gender diversity has meant that progress on other forms — such as racial or nationality — has suffered. Critics have also voiced concerns that companies have tended to focus on “tokenism” for the sake of diversity, believing that by simply appointing a black person to the board the issue has been addressed. True diversity will only come if change happens lower down.
There are reasons to be hopeful. More organisations are promising to hire a greater number of people of colour. A millennial workforce has shown it looks beyond mere financial rewards to other issues such as the treatment of minorities. Investors, too, must play their part; multiple studies show that racial equality, like gender equality, is not just a moral issue but makes business sense. Research has shown that diverse and inclusive teams outperform their peers. Reporting also matters; investors should push for greater disclosure of racial and ethnic diversity.
Company executives should acknowledge the influence they can wield to drive meaningful policy change. Many have found their voices in recent days to comment on what are deep-rooted social issues. They should use their lobbying power to support policies and politicians that advance diversity — and campaign against those that do not.