When I began consulting, a human resources leader called me from a successful, innovative San Francisco biotech company to discuss diversity: “We haven’t moved the needle. We are looking for solutions that work.”
I told him he was not alone. Many companies that have had diversity initiatives for ten to thirty years have come to the same conclusion: “We haven’t moved the needle,” particularly with women in top level roles and with African Americans and Hispanics beyond middle management. In the past year, many high tech companies have received a lot of public pressure to change their “bro” cultures and improve their diversity numbers. All too often, traditional diversity initiatives are about diversity itself and they don’t focus on the strategies of the business, and how to best recruit, develop and retain the best—and diverse—employees.
I offered him a prescription, which I outline below, but first, because it’s Martin Luther King, Jr. Day, let’s look at the numbers.
In 2015, women made up 5.2% of CEOs in U.S. Fortune 500 companies and 17% of the corporate board members. This represents some, but slow, progress for women at the very top, since virtually no women were CEOs among Fortune 500 companies in 1995.[i]
Women have made more progress elsewhere.
The percentage of women in the U.S. who participated in the workforce rose from 39% in 1965 to a peak of 60% in 1999 and then fell to 57% in 2014. In 2014, 69% of U.S. men were in the workforce.[ii] Women today outnumber men in college graduations. In 2013, 37% of U.S. women ages 25 to 29 had at least bachelor’s degrees, compared to 30% of men in the same age range. The same trend continues for master’s degrees. In 2012, women earned 60% of all master’s degrees (up from 46% in 1977) and 51% of all doctorates (up from 21% in 1977). In 2013, women earned 36% of MBAs.[iii]
Despite their earning more college degrees and their high participation in the workforce, women, although making progress, still trail men in pay. In 2012, the median hourly earnings for female workers 16 and older were 84% of men’s earnings. However, the gap was smaller among younger workers, ages 25 to 34, where women made 93% of what men made. In 1980, by comparison, the median hourly earnings for all employed women were 64% of what men made. Good progress, but more is needed!
African Americans and Hispanics have made far less progress.
Data on unemployment dating back to the 1960s shows that African Americans had unemployment rates twice that of Caucasians. Hispanics had unemployment rates 1.5 times higher than Caucasians. Unfortunately, that trend still holds true today. In May, 2015, the unemployment rate for Caucasians was 4.7%. For African Americans, it was 10.2%. For Latinos, it was 6.7%[iv]
Today, African Americans account for only 5 of the CEOs in U.S. Fortune 500 companies. One of them is a women, Ursula Burns of Xerox.[v] Hispanics account for nearly 17% of the U.S. population and will account for nearly 60% of the population growth in the United States over the next 40 years; however, Hispanics represent less than 1% of the top executive position in our largest corporations.[vi] Data shows that African American and Hispanic high school, college and graduate school graduation rates have improved slightly, but not like it has for women. When you look at pay, white men and women out earn black men and women, who, in turn, out earn Hispanic men and women.[vii]
Many of these differences are no doubt due to a lack of social and professional networks for higher echelon jobs, as well as education. The higher the education level, the higher the earnings across all groups. Until the education gap for African Americans and Hispanics is closed, we will probably not break down the stratefication in U.S. employment rates and earnings. However, companies can still improve the diversity, earnings and career paths of their own employees!
My prescription for having a lasting impact on improving diversity.
When I was the HR leader for a strategic business unit of a large medical device company in a semi-rural California region, we had one of the most diverse workforces for the corporation in the United States. How did we do it? Following are strategies that any company can implement.
- Management endorsement for an agile, integrated performance-based talent management mindset. My experience and empirical research shows that the same talent management strategies that improve investor earnings by 22%, such as outlined by McKinsey and Company’s book, The War for Talent, also work for increasing and retaining a diverse workforce. (For more on a talent management mindset visit https://victorhrconsultant.com/why-talent-management/ ). This means that the tactics you use to attract, develop and retain your high potential employees can also be used for diverse employees. You don’t have to implement separate diversity programs—which can sometimes be divisive—but you do need to make sure you are inclusive!
- Recruiting based on robust job competencies, objective structured interviews and assessments to drive out selection biases and subjective criteria. There are many studies showing that managers make hiring decisions based on first-impressions and subjective criteria, which often leads to suboptimal hiring outcomes.[viii]
- Great leadership development programs, training programs, mentoring and learning circles for each level of management to support progression. There is an urban legend going around that most employee learning occurs by the 70/20/10 rule – meaning that 70% occurs by rotating through diverse and challenging jobs, 20% by working with others, and 10% through training and mentoring programs. That’s rubbish! Empirical analysis shows that it’s really a 33/33/33 rule.[ix] Timely classroom or on-line training, along with individual coaching and mentoring and ongoing learning circles substantially improves performance.
- Measure and track results for continuous improvement. You can implement what you understand and manage what you measure. Measure your best sources of top-notch diversity job candidates, which of your managers lead in diversity hiring, and which jobs and areas underpay women and minorities for equal work and equal performance. Track the numbers, learn from it, and act upon it!
- Onboarding program with a 3-month focus to accelerate new hires’ time to full productivity. Outstanding onboarding has moved well beyond benefits enrollment and signing the company’s human resources handbook. Onboarding is now about the acclimation of new hires to the company’s culture and accelerating her or his time to full productivity through focused training, coaching and career development planning.
- Minimum 90% pay floor, which prevents underpaying women and minorities – you want to pay your top performers extraordinarily well! I have successfully and repeatedly implemented this framework. When managers complained that we were overpaying new and inexperienced workers, my question to them was, “Then why are they in this pay grade?”
- Flexible work environment. Enabling employees to work flexible schedules and sometimes offsite, if their job function allows, leads to increased productivity and morale, as well as less costs[x]. The average telecommuter today is 48 years old and probably male. Due to our cultural norms (which are changing!) and biology, however, many women need “on and off ramps” and flexible work environments for child/senior care, without damaging their career progression. Flexible work is so popular with women, in fact, studies show that women are often willing to work for companies that pay less but offer this option. (This is not an endorsement for paying women less!)
Are you looking to move the diversity needle at your company? I recommend you throw out the old diversity handbook and try this integrated approach. Please let me know your experience. I would love to hear from you.
Victor Assad is a Managing Partner of InnovationOne.US and the CEO of Victor Assad Strategic Human Resources Consulting. He works with key decision makers and human resources leaders on talent management, innovation, accelerating change, leadership development, executive coaching, and other strategic initiatives. Please e-mail Victor at firstname.lastname@example.org or visit Victor’s website at www.victorhrconsultant.com to download his free case study on flexible work environments, “Form Follows Function.”
[i] “Chapter 1: Women in Leadership,” Pew Social Trends. Pew Research Center. Found at http://www.pewsocialtrends.org/2015/01/14/chapter-1-women-in-leadership/.
[iv] Caroline May (June 5, 2015), “Black Unemployment Nearly Double National Rate, Twice as High as White Unemployment,” Breitbart. Found at http://www.breitbart.com/big-government/2015/06/05/black-unemployment-nearly-double-national-rate-twice-as-high-as-white-unemployment/.
[v] Gregory Wallace, (Jan 29, 2015) “Only 5 black CEOS at 500 biggest companies,” Money. Found at http://money.cnn.com/2015/01/29/news/economy/mcdonalds-ceo-diversity/.
[vi] Miguel A. Quinones, (August 23, 20110, 2:28PM) “Getting More Hispanics to The Top,” Forbes. Found at http://www.forbes.com/2010/08/23/hispanic-cox-school-leadership-citizenship-training.html.
[vii] Derek Thompson (Nov. 6, 2013), “The Workforce is More Divided by Race than You Think,” The Atlantic. Found at http://www.theatlantic.com/business/archive/2013/11/the-workforce-is-even-more-divided-by-race-than-you-think/281175/.
[viii] I reference several studies here: Bertrand, Marianne, and Sendhil Mullainathan. 2004. “Are Emily and Greg More Employable Than Lakisha and Jamal? A Field Experiment on Labor Market Discrimination.” American Economic Review, 94(4): 991-1013. DOI: 10.1257/0002828042002561. Found at https://www.aeaweb.org/articles.php?doi=10.1257/0002828042002561. Nancy Ditomaso (May 5, 2013) “How Social Networks Drive Black Unemployment,” The New York Times. Found at http://opinionator.blogs.nytimes.com/2013/05/05/how-social-networks-drive-black-unemployment/?_r=0. Miguel A. Quinones, (August 23, 20110, 2:28PM) “Getting More Hispanics to The Top,” Forbes. Found at http://www.forbes.com/2010/08/23/hispanic-cox-school-leadership-citizenship-training.html.
[ix] Ibid. D. Scott DeRue and Christopher G. Myers, “Leadership Development: A Review and Agenda for Future Research,” in The Oxford Handbook of Leadership and Organizations, ed. David V. Day (New York: Oxford University Press, 2014). Download PDF from http://www-personal.umich.edu/~cgmyers/deruemyersoxfordhandbookcha.pdf.
[x] Read my blog “Flexible work arrangements will help you win the “war for talent”! Found at http://wp.me/p5FLSC-N . Or download my free white paper “Form Follows Function”. Found at https://www.victorhrconsultant.com/