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INSIGHT: Corporate America Must Fill the D&I Leadership Gap

June 15, 2020, 8:01 AM

Corporate CEOs and other business leaders have spoken strongly in the wake of the killing of George Floyd, acknowledging their obligation to support African American employees, customers, and shareholders even as these leaders struggle to realign their work models and workforce.

It is now time to act.

One concrete way companies can fulfill their pledges to support the African American community is to ensure they are diverse and inclusive from the boardroom to the mail room. Even companies with aggressive diversity and inclusion (D&I) programs need to adapt, enhance and respond to the Covid-19 pandemic and continuing crisis of violence against African Americans.

“What the African American community sees on that videotape is that this African American man, who could be me or any other African American man, is being treated as less than human,” said Merck’s Kenneth Frazier, one of only four African American CEOs of a Fortune 500 company. “Even though we don’t have laws that separate people on the basis of race anymore, we still have customs, we still have beliefs, we still have policies and practices that lead to inequities.”

As General Motors CEO Mary Barra observed, “Let’s stop asking why and start asking what we can do—individually and collectively—to drive change, meaningful, deliberate change.”

Addressing Societal Inequities While Protecting Business Goals

There is much we can do. The challenges of Covid-19 and the senseless killings of unarmed African Americans by renegade police highlight a need for corporate America to dramatically address societal inequities while protecting business goals.

To emerge from these dual crises, improving D&I performance will be critical. With Census Bureau forecasts that America will be majority minority—no single group a majority—by 2042, businesses must appeal and sell to the fastest growing segments of the consumer market: African Americans, Hispanics and Asian Americans, whose combined buying power of $3.9 trillion already exceeds the gross domestic product of all but four countries.

Even before racial tensions boiled into America’s streets, work from home and social distancing upended many employee engagement initiatives, with minorities and women disproportionately suffering economic consequences.

The Covid-19 death rate for African Americans has been shocking—in many locations double their representation in the population. Asian Americans have been subjected to overt discrimination and harassment due to the virus’ origination in China. Minorities and women have sustained the greatest number of job losses.

Given a U.S. economy dominated by consumer spending, for a complete recovery, the entire population (including minorities and women) must be fully re-employed and re-engaged. The disproportionate impact is not inherent in being minority. It stems from discrimination that limits access to health care, creates greater risk of job loss, and spurs living conditions that increase risks of disease.

Minorities’ exclusion from boardrooms, C-suites, and senior management positions render them unable to protect their communities from disproportionate suffering.

The economic consequences of the virus are further compounded by long-standing discriminatory barriers to accessing capital. Goldman Sachs found only 40% of African American business applications for Paycheck Protection Program (PPP) loans were approved, compared to 52% overall.

Federal Government Abdicates Role as Champion of Civil Rights, Diversity, Inclusion

While Congress has enacted recovery programs providing temporary assistance to businesses and workers, the federal government has largely abdicated its traditional role as champion of civil rights, diversity and inclusion. The primary burden of putting America, including minorities and woman, back to work falls on the business community.

McKinsey’s seminal “Diversity Matters” report confirmed that companies with strong D&I performance consistently out-produce, out-innovate, out-perform, and are more successful in the “war for talent.”

Mid-pandemic in May 2020, McKinsey’s update “Diversity Still Matters” found companies pulling back on inclusion and diversity now may be placing themselves at a disadvantage: they could not only face a backlash from customers and talent now but also, down the line, fail to better position themselves for growth and renewal.”

Companies with Covid-related furloughs, layoffs, and pay cuts need to regain the trust and engagement of all employees. Groups hardest hit during the crisis— minorities and women—require special attention. Business can emerge stronger from the crisis only if management takes this opportunity to ensure full inclusion of those who will soon represent a majority of U.S. employees, customers and even investors.

There is a real-world corporate model that focuses on both business results and on addressing exclusion. In the summer of 2017, 250 CEOs led by PricewaterhouseCoopers Chairman Tim Ryan launched “CEO Action for Diversity and Inclusion.” Currently, more than 950 CEOs have publicly acknowledged the need not only to significantly enhance their own D&I performance, but also to help bring about societal change.

CEOs now need to take more aggressive action. The deaths of George Floyd, Ahmaud Arbery, Breonna Taylor, and others and the impact of COVID-19 underscore the urgency of action.

Changing With Actions

Companies with brilliant leaders can still fail to change. Even CEOs that acknowledge the business imperative to achieve credible D&I performance may not know how to change the paradigm. Diversity must be addressed like any other complex business problem:

  • Recognize vested and competing interests fueling resistance to change.
  • Quantify the nature, analytics and scope of the problem.
  • Identify barriers, real and perceived.
  • Set aggressive, yet achievable, performance improvement goals and timetables.
  • Seek assistance from objective advisers for honest assessments and expert advice.

Whether companies embraced diversity years ago, have mixed success, or are newly at the table, all will benefit from a candid, independent assessment: a targeted “audit” and report of current performance for the best, or a comprehensive baseline assessment and action plan for those less D&I advanced.

American business, employees (including minorities and females), and the nation as a whole need constructive leadership to create a fairer, safer, and more productive environment that continually seeks to overcome the adverse impacts of systemic discrimination.

The anger on our streets, the pandemic that has upended the workplace, and the absence of governmental leadership generate additional impetus for corporate America to lead the response to these vexing challenges. It is well past time to act.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

Author Information

Weldon H. Latham is a principal with Jackson Lewis P.C., founder and chair of the firm’s Corporate Diversity Counseling Group, with over 25 years’ experience advising numerous Fortune 200 CEOs, ranking Government officials, and executive management teams on diversity & inclusion policy, legal matters, and resolution of major public D&I disputes. He also advised President Clinton on diversity matters, serves as legal counsel to the Barack Obama Foundation Inclusion Council, and regularly writes and speaks concerning D&I matters.

Special thanks to Michael R. Hatcher, a Jackson Lewis principal in the Washington, D.C., region, who is a colleague and an expert in corporate diversity law, for his significant assistance with this article.

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