Over a year into the nation’s reckoning with racial injustice, corporate America is experiencing a reckoning of its own. Companies that rushed to make pledges to advance racial equity last summer are now seeing their commitment put to the test. There’s concern that momentum is fleeting and “diversity fatigue” is setting in.
At the same time, Americans want to see more – with 83% of Black Americans and 64% of Americans overall believing that corporate America has more work to do to achieve racial equity. The private sector is taking steps in the right direction. Disclosure of EEO-1 and other workforce and board data is trending upward. Shareholders are increasingly holding companies to account. But Ariel Investments co-CEO and President and Starbucks Chair, Mellody Hobson, doesn’t want companies patting themselves on the back for “stepping over such low bars” yet.
“We can’t feel like this is tremendous progress because suddenly there are three Black women that have risen to some ranks in corporate America,” she said, referring to Roz Brewer and Thasunda Brown Duckett joining Ursula Burns as the only Black women to have run Fortune 500 companies. “Tremendous breakthrough on the one hand. On the other hand, definitely not good enough.”
We’re seeing this stalling of progress unfold in real-time with women and workers of color being left out of the beginnings of an economic recovery. Hobson and Jean Case, CEO of Case Impact Network and Chairman of the National Geographic Society, sat down with JUST CEO Martin Whittaker and Chief Strategy Officer Alison Omens to discuss how companies can address this through changing their approach to diversity, equity, and inclusion (DEI).
Watch the full conversation below and explore our key takeaways.
Be outcomes-driven in your approach to DEI
There’s no shortage of research making the business case for DEI. For Case and Hobson, it’s time companies leaned into this argument and treated DEI as a business outcome. Case pointed to the fact that the firms that are the C-suite’s go-tos for consulting are the ones putting out this research and yet, companies aren’t capitalizing on its economic value. Diversity is not philanthropy, Hobson said, and made the point that, when companies look at it through a more metric and outcome-oriented lens it will ultimately lead to greater transparency. “We need that same intentionality. We need the same kind of incentives. And we need that same level of accountability when it comes to race and gender.”
A board director at JPMorgan Chase, Hobson shared how CEO Jamie Dimon was upfront about the bank’s poor numbers around advancement for Black employees and committed to bringing them up. With that, it took on the same level of urgency as the success of the business. Both Hobson and Case want to see companies operating with that outcomes-driven mindset, following examples like that of Merck’s detailed DEI reporting to go beyond intention to act on racial and gender equity. “People want credit for intent as opposed to outcomes. That is problematic,” Hobson said.
Embed and institutionalize DEI as a core company value
When companies treat DEI as a business outcome, Case and Hobson stressed it’s easier for it to be treated as a core value. “The board is the boss,” Hobson said. And, once the board sees DEI as key to the company’s success, the impact of this work will last beyond the tenure of one CEO. At Ariel Investments, that’s manifested in an approach Hobson refers to as the “Three Ps”: People, Purchasing, and Philanthropy. She raised how McDonald’s has built long-standing relationships with Black, brown and women-owned businesses through its purchasing practices, proving “the power of process over personality.”
Case touched upon how important institutionalizing DEI is as the pandemic continues to put added strain on working parents. With employers looking to re-open offices, she wants to see policies designed to meet working parents where they are – like Merck’s Re-Invent Program, built to help professionals reenter the workforce after two or more years. While the burden over the last year has fallen more heavily on mothers, Case thinks the key to de-stigmatizing working as a parent is both for men to be more vocal and for them to be seen as parents.
“It’s on all of us, and I’m particularly talking to the men, who are leaders and executives to make it clear that they too are parents and to be a little transparent about what all parents need and that it’s not exclusively a working moms issue,” she said.
Acknowledge, and leverage, gaps in power and privilege
Hobson sees the need for those in leadership to champion all DEI work – a burden that too often falls to those these programs are designed to help. But she first wants corporate leaders to acknowledge the very real difference in the “‘line” used to measure performance for workers from marginalized groups. “It moves all the time for Black people, brown people, people with different sexual orientations, women,” she said. She shared that, more than once, while in meetings with her co-CEO and JUST Board Member, John Rogers, she’s had people not look her in the eye.
Hobson wants executives to see this, and also use the power and privilege they have to take on this work. She brought up the success of the 30% Club in the United Kingdom, surpassing its target of securing at least 30% of seats on FTSE 350 boards for women in less than a decade. Helena Morrissey, the campaign’s founder, told Hobson it came down to her approaching influential businessmen in the U.K. and tasking them with adding women to the boards they sat on, and had sway over. Ultimately, Hobson sees this as key to avoiding diversity fatigue and the burden women and workers of color feel having to shoulder this work.
‘Don’t say it if you don’t mean it’
As the pressure for companies to follow through on their DEI commitments intensifies, Hobson made the simple, but important point: “Don’t say it if you don’t mean it.” To her, everyone is an activist – employees especially. Companies should expect to be held accountable by their stakeholders, and plan accordingly. Case brought up the rise in shareholder activism on DEI that no company can afford to ignore. CEOs are going to have to pay attention when board members are being voted out, she said.
Case also stressed that startups should be taking this work seriously. While the numbers around venture funding are dire, she said, seeing listing requirements from Nasdaq and Goldman Sachs sends a clear signal to “companies who dream of IPO-ing, what they have to get together before they IPO.”
Whether companies are at day one or have made headway, Hobson wants them to keep one question in mind: Who’s not at the table? She urged leaders, white men in particular, to think about what it feels like, as a woman or a person of color, to walk into a room and be surrounded by only white or male colleagues.
“I am asking people every time they walk into a room to put that lens on so then they can see what is missing in the room,” Hobson said. “And to the extent that people are walking into rooms and see that, I think that we can start changing this conversation and really elevating this idea of what diversity and real inclusion look like.”