Somewhere, sometime in the deep 1990s, I accompanied my manager on my first out- of-the-office business meeting. I was inexperienced, nervous that I would say or do the wrong thing, rocking an Ann Taylor suit, and ready to impress. As we arrived at the meeting, we were greeted by a small sea of white men who comprised the executive suite of a major oil and gas company. I shook hands with the CEO. “Nice eyes,” he said to me. My older male co-worker also had very nice eyes but strangely, his lovely peepers remained un-complimented.
And that was the last time I would be addressed directly in that meeting.
This was just one CEO, in an industry that at the time was known for not being women or otherwise diversity-friendly, so I just rolled my nice eyes to myself. He could have said a lot worse, I thought. But I never forgot that moment.
Offhanded remarks such as these are not the overt acts of sexism and racism that lead to headlines or lawsuits. However, when one adds up moments like these over time, it makes for an environment where those who aren’t in the club by way of gender, racial, or cultural background don’t thrive, no matter how talented they are. And if they don’t thrive, they will not work up to their potential, or they will leave. Even when a company has the best diversity hiring practices, unless they are matched with a strong culture of inclusion and programs that promote it, that diverse talent will walk out the door. I don’t have any numbers to back it up, but my tiny glimpse into the culture of that oil and gas company led me to believe that a culture of inclusion was not pushed down from the top.
Why Should Companies Care?
We live in a diverse nation and our corporate workplaces should reflect that diversity – most of us know this intuitively. But beyond being “the right thing to do”, a diverse workforce has been shown to make for better performance on the balance sheet. Many recently published studies mete this assertion out:
1. A recent McKinsey study in 2015 found that diverse teams simply perform better, and the numbers prove it. In this report companies in the top quartile for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians. In the case of companies in the top quartile for racial and ethnic diversity, they are 35 percent more likely to have financial returns above their respective national industry medians.
2. A recent study conducted by Boston-based Quantopian found that Fortune 1000 companies with women CEOs between 2002 and 2014 drastically outperformed the S&P 500’s performance during that same period. The comparison showed that the 80 women CEOs during those 12 years produced equity returns 226% better than the S&P 500. Too bad for the economy that there are more men named John alone running big companies in the US than there are women in the same role with any name.
3. In the United States, there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes (EBIT) rise 0.8 percent.
How Much Progress Have We Really Made?
You would think today’s large companies would have a better record on diversity or gender in management roles, especially when the facts and figures show clearly that it’s simply better business. But consider the heart of this country’s technology industry, Silicon Valley, where innovation, open-mindedness, and novelty reign supreme. Google’s tech staff is only 1% black, and its Silicon Valley brethren (and I do mean brethren) don’t do much better. Twitter’s feet were held to the fire last yearwhen black engineer Leslie Miley left the company criticizing his former employer for its woeful lack of diversity and even worse track record for inclusion. The company recently reported that just 2% of its leadership is black, and 4% Hispanic.
What Do We Do Now?
Networking to hire key roles simply does not breed diversity, at least not yet. Until a company’s leadership truly reflects diversity in both appearance and practices, thoughtful and exhaustive steps must be taken to ensure that diversity and inclusion are a top priority in everything they do.
It is human nature that we will want to work with people who are like us, and when we find someone that reflects ourselves back at us who also has the technical and functional qualifications for a role, it is tempting to hire them right away. In most companies, however, that means a continuation of the status quo, and while it’s comfortable in the moment, it rarely breeds excellence.
A diverse workforce is a better workforce. From its early years of existence, The Alexander Group has known this and has partnered with numerous clients to help them transform into diverse teams. We are proud of that history.
Diverse hiring practices are just the first piece of the puzzle, however. Once a strong, diverse workforce is hired, companies must keep their eye on the ball by promoting a culture of inclusion through targeted and effective programs and communication if they want to see a return on that investment.
That oil and gas company, by the way? Out of business. But I still have nice eyes.
For more articles about Diversity in the Workplace by our sister company The Alexander Group:
Don't Have a Boring Board: Diversify
Women Mentoring Women: Holding the Corporate Ladder for Future Leaders
Your Blind Spots May Be Larger Than They Appear: First Impressions and Hidden Biases
Gender Quotas on American Boards? Outrageous! Or Good Business?