The May 25 death of George Floyd while in police custody — together with the deaths of Breonna Taylor, Philando Castile and others — prompted a massive protest movement that is supported by the majority of American adults across every racial and ethnic group and many consider to be the largest social movement in U.S. history. Along the way, it has also served as a prompt for difficult, yet critically important conversations about race, inclusion, representation and equality in America. And while companies can take part in that conversation, too, in light of the fact that only four out of America's 500 largest companies have black chief executives, it’s clear that they must also take action.
How? For starters, too many organizations today continue to perceive D&I as a false dichotomy. In one study, for example, 78 percent of companies said they would double down on D&I with the goal of improving organizational culture, while another 62 percent said the goal of D&I was to bolster financial performance. Yet it should go without saying that improving culture and improving financial performance are by no means mutually exclusive. In fact, where the former goes, the latter has been shown to follow.
Particularly with the emergence of movements like #PullUpOrShutUp, which calls on companies to disclose the number of black employees they currently employ in corporate and executive-level roles, many organizations are publicly proclaiming their renewed commitment to D&I goals. Yet the question remains: How will they bring those goals to life — and finally move the needle on D&I — at such a critical juncture? In this article, we'll dig into the latest data around D&I and organizational performance, then highlight the positive role that executive search partners can play in delivering on D&I priorities for companies across the board.
exploding the false dichotomy
D&I can seem like a sprawling topic. So, before diving into the numbers, it may be productive to first define a few key terms. Audra Jenkins, Chief Diversity & Inclusion Officer at Randstad North America, usefully distinguishes between "diversity," "inclusion" and a third concept, "belonging," as follows:
- diversity: how we describe our own unique characteristics, as well as our differences
- inclusion: how and where we are embraced and welcomed, whether in the context of organizations, groups or society in general
- belonging: the feeling that we are empowered to “unmask” ourselves — that is, to be who we truly are, without labels, stereotypes, fear, conflict or discomfort
Definitions aside, it's also remarkable just how easy the case for D&I is to make from a business standpoint. For starters, there's McKinsey's landmark study, which persuasively demonstrates the extent to which increased diversity — along racial and ethnic lines, gender lines or both — positively impacts the bottom line. Two findings to note:
- Organizations that rank in the top 25 percent for racial and ethnic diversity are also 35 percent more likely to see financial returns above the mean for their industry.
- Likewise, organizations that rank in the top 25 percent for gender diversity are 15 percent more likely to have financial returns above the mean for their industry.
Why might this be the case?
For one, an evolving body of research suggests that bringing diverse viewpoints to the table results in smarter, more innovative decision-making — and leads to improved strategic outcomes, too. One large-scale analysis of 600 business-related decisions made by 200 different teams (defined as three or more people), for example, found that diverse teams performed better than individual decision-makers as much as 87 percent of the time. That's a significant improvement. And what's more, those diverse teams were able to arrive at their decisions faster than their counterparts, too.
Straightforward though the business case may be, however, meaningful change in the make-up of C-suite executives, board members and more isn't going to happen by accident, nor will that change take place overnight. Rather, it will require specific practices, and even interventions, on behalf of hiring organizations and their partners.
That's where executive recruiting firms have a role to play. Let's explore how.
D&I best practices — and the role of executive recruiting firms in spearheading change
To finally change the composition of C-suite leadership and the board, organizations today should first consider the messages they may be broadcasting, consciously or not, to potentially interested candidates.
For starters, how diverse is the recruiting team at your organization? To effectively engage and build relationships with diverse talent — particularly at the executive level — companies should do everything they can to help these candidates visualize themselves as future employees, and there are concrete opportunities to make that happen during the recruitment process. Think, on the other hand, what would happen if you walked into an executive conference room or entered into a virtual interview as an applicant, only to find that no one on the other side looks like you? The message that sends to candidates is both powerful and disheartening: You may not readily fit in here. You don’t belong.
From a messaging standpoint, companies can also do more to highlight their own evolving diversity journeys. Transparency today is absolutely key, as emerging movements like #PullUpOrShutUp, which we touched on earlier, should make clear. In such an environment, organizations should do everything they can to share success stories that connect diverse talent to the story of where their business is today — and where it’s going tomorrow. Demonstrate that diverse talent not only have a place, but will be welcomed as drivers who bring that journey to life.
For companies looking to move the needle on D&I, there’s another key ingredient for success that might seem fairly obvious at first: namely, having more diverse candidates in candidate pipelines and candidate pools to begin with. Yet this is also an area where many organizations still struggle — and as such, one where executive search firms can contribute considerable value.
The reality right now, however, is that not enough is being done at many executive recruiting firms to push in this direction. In one sobering survey of professionals in the executive recruiting space, for example, nearly half (46%) of respondents pointed to the relative scarcity of diverse candidates on recruiters' long- and short-lists as a limiting factor in the number of new diverse appointments being made at the C-suite level.
Jodi Chavez, President of Tatum, pointed out some of the ways his team has been actively working to counteract that. In fact, Jodi explained, he now views D&I as occupying a central place in how his team approaches the sourcing process itself.
"While being attentive to the unique needs of every client, we also think of it as a given that all of our clients are going to want and expect to see diversity in their candidate pools," he said. "Delivering on those expectations, having a diverse and inclusive pipeline of executive talent ready to go — these things are simply table stakes at this point. Diversity and inclusion has become in effect a built-in component of our executive search practice at Tatum."
Jodi also observed that executive recruiting firms like Tatum are able to contribute additional value — and help move the needle on D&I — by acting in a consultative capacity across the end-to-end hiring process. That can make all the difference in terms of outcomes, particularly in light of research that shows hiring managers, regardless of their gender, are twice as likely to hire male candidates, for example.
Bear in mind, too, that diversity is not a stable or fixed concept, but rather one that's invariably going to be relative, relational and context-dependent. From age to nationality, veteran status, sexual orientation, socioeconomic background and more, what constitutes a "diverse" new executive hire is going to differ from one organization to the next. But companies should know that they can rely on leading executive search firms for all of these needs, and more.
Organizations across the board have made considerable headway in bringing to life D&I initiatives in recent years, but it's equally clear that more work needs to be done. In this article, we've laid out a clear business case for doing so, along with the value-adding role that executive recruitment firms should play in the process.
Finally, Tatum was recently named one of America's Best Executive Recruiting Firms by Forbes — and our ongoing commitment to delivering on the wide-ranging D&I goals of our clients is a key part of what differentiates us from the competition. So if you're looking for more advice, guidance and support around D&I and the executive suite at your organization, be sure to get in touch with us today.