This post includes analysis conducted by Hernando Cortina, JUST Capital Director of Indexes & Analytics.
Earlier this month, having served as the CEO of American Express for 16 years, Kenneth Chenault retired. Chenault was one of just a few African American CEOs leading the largest publicly-traded corporations in the United States and, without him, there are only three remaining (that we are aware of) in the Russell 1000 companies we evaluate: Craig Arnold of Eaton, Arnold Donald of Carnival, and Kenneth Frazier of Merck.
With Black Americans comprising an estimated 14% of the U.S. workforce, their under-representation in the C-Suite is clear. However, studies have demonstrated a connection between diversity and financial performance – including a recent McKinsey report which shows that, globally, diverse executive teams are 33% more likely to outperform their peers on profitability. As Black History Month comes to a close, we’ve taken a closer look at the companies we rank to better understand how they are tackling this issue.
In 2017, JUST Capital polled the American public on the issues most important to them when it comes to just business behavior, and initiatives in anti-discrimination are chief among them – with 82% of Americans agreeing that companies should not discriminate in pay and 83% agreeing that companies should not base personnel decisions on race, religion, gender, age, ethnicity, sexual orientation, or disability status.
Of the companies in the Russell 1000, there are 47 that stand out for their efforts in creating equal opportunity and working to eliminate discrimination for both their employees and customers. These companies:
- Have a policy to drive diversity and equal opportunity.
- Have set targets and objectives on diversity and equal opportunity.
- Have had no fines over the past 3 years by the Equal Employment Opportunity Commission.
- Have had no controversies pertaining to discrimination in employment over the past three years.
- Have had no controversies pertaining to discrimination in customer treatment over the past three years.
Further, our own analysis supports McKinsey’s report. In looking at these 47 companies, we found that they perform well not only on issues of diversity and inclusion, they are actually more profitable than the other companies we analyze, with a 5-Year median Return on Equity (ROE) of 19.2% versus a 13.8% ROE for the rest of the Russell 1000.
Of these 47 companies, we’ve identified five in particular that have created opportunities specifically for Black employees, both within their workforce and in the larger community through training and scholarships. The programs initiated by these corporations provide an example to other companies on the journey toward cultivating more future-forward, diverse, and profitable workforces, in greater support of Black Americans:
- At American Express, led formerly by Chenault, diversity and inclusion in general has been a consistent and critical focus for nearly three decades. The company’s Black Employee Network (BEN) has partnered with management teams to develop financial inclusion solutions and products, such as American Express Serveand Bluebird. Every year, the network holds the Executive BEN Global Forum, which brings together black leaders to provide development resources and networking opportunities, in an effort to foster future leaders at American Express.
- Fundamental to Intel’s work is the belief that wide ranging perspectives, backgrounds, and experiences can encourage innovation around the world’s toughest challenges. In June 2017, founded on this belief, Intel created a three-year $4.5 million initiative to encourage students to remain in STEM programs at six historically black colleges and universities (HBCUs) through scholarships, student experiences, and tech industry workshops. Intel’s Chief Diversity and Inclusion Officer, Barbara Whye, expressed that Intel had “more work to do in achieving full representation by African Americans in technical roles,” and the company’s HBCU program represents a key step in that direction.
- Merck, whose CEO Ken Frazier is currently one of just two African American CEOs in the Russell 1000, has a number of programs to promote equal opportunity, including integrated training in diversity and inclusion and Employee Resource Groups. The UNCF-Merck Science Initiative (USMI) provides significant financial support to outstanding African American students pursuing studies in biomedical research. Students intern in Merck laboratories, with access to mentoring and network opportunities with Merck scientists and mentors.
- Microsoft’s Blacks at Microsoft (BAM) Employee Resource Group encourages career development through its employee and intern mentoring programs, diversity initiatives, and career speaker series. The company’s BAM Minority Student Day, first held in 1992, provides high school students from underrepresented ethnic backgrounds with information on career opportunities available to them in technology. The BAM Scholarship Program provides scholarships to high school seniors and connects recipients with BAM members who mentor them throughout college – many graduates eventually find employment at Microsoft.
- Xerox’s regional caucus groups of Black employees, The National Black Employee Association, was established in 1965, making it the first Employee Resource Group for African Americans. The group’s initiatives for members include a speaker series, mentorship, and community service, along with a Corporate Champion program that matches senior Xerox executives with caucus groups for support in advancement.
With so few Black Americans in top executive positions today, the programs initiated by these companies are essential to helping create more diverse leadership tomorrow. Not only can these efforts improve opportunities and workplace conditions for Black employees, studies are beginning to indicate that their effects on leadership can positively influence corporate financial performance. It stands to benefit any company to grow initiatives supporting employees of diverse backgrounds – not for those employees to then instigate change themselves, but for inclusive and diverse strategy to be embedded in a company’s long term growth. With the Black community representing a considerable percentage of our national workforce yet so few in leadership positions today, these programs have the potential to spark positive change across corporate America.
This article was originally published on Forbes.com.