A video montage superimposing the faces of CEOs from the top 100 firms on the Fortune 500 list reveals a startling lack of diversity showing only 2 women, Marry Barra of GM and Indra Nooyi of Pepsi, who has recently announced she will step down. This is paired with a 25% decrease in women leaders on the list who make up a little more than 5% of the total. Non-white CEOs did not fair much better, with a 22% decrease in black CEOs of large enterprises compared to 2017, which signaled the loss of AmEx’s long time CEO, Ken Chenault, bringing the number to the lowest point since 2002. Indeed, by this measure, Microsoft’s CEO, Satya Nadella, carries the double burden of representing not only one of the world’s largest technology firms and one of the world’s most populated countries, but of carrying the leadership mantle for brown people everywhere. By other measures of diversity, such as gender, race, religion, sexual preference and educational attainment, among others, the business world seems to be deliberately missing out on a diversity dividend. Why?
Some countries, such as the UK, have opted for a degree of forced transparency revealing a gender pay gap that is more of a chasm in certain mainstay industries such as banking and insurance. For many of the UK’s largest employers the gender pay gap, along with broad male-female equilibrium in leadership roles shows much work to be done, with 8 in 10 firms reporting that they pay men more than women. The gender pay gap in finance and insurance was 22% in favor of men with few women represented in top positions. How this shakes out for smaller firms may soon be known, as the UK is likely to mandate similar self-reporting on pay parity for firms with 50 or more employees. Countries that are serious about confronting pay parity, like Iceland, are making it illegal to pay women less than men for comparable roles. Iceland has recently instituted such sweeping laws with no signs of eroding economic competitiveness or riots in the streets. Iceland is aiming to capture its diversity dividend by encouraging equal economic participation for men and women. Iceland, like other Nordic countries, can make these sweeping changes more readily because it does not stigmatize maternity by treating pregnancy like an illness and children like a handicap as many advanced economies do, especially the U.S.
While entrenched societal tendencies about diversity run deep and cut across all countries and classes, some industries are worse than others, where technology and finance are among the leading culprits. Both tend to shield their poor diversity scorecards behind arguments of meritocracy or the relatively shallow talent pool of diverse yet qualified candidates they can draw from. The more insidious arguments that grease the slippery slope of improving board-level diversity, for example, is the lack of prior experience defense. When challenged, many of these firms claim “diversity of thought” as their defense for being deeply un-diverse and all too often woefully ineffective when it comes to pernicious issues of workplace sexual harassment, assault and discrimination. Not to mention other repetitive governance failures that are verging on the clinical definition of insanity given their frequency and similitude. This lack of diversity at the senior most governance levels is proving to be very costly. Just ask the once mighty The Weinstein Company (TWC), which fell on its own governance sword over Harvey Weinstein’s pervasive sexual transgressions having to offload the firm in a bankruptcy fire sale. The firm was presided over by an all-male board with an average age of 62 at the time this crisis broke. While diversity alone is not a cure all, challenging conventional wisdom and convenient arguments that can make business and society at once more participatory and compensatory to underrepresented groups can only be a net positive for business and the world.
Indeed, based on gender-parity alone, as revealed by the gender pay gap, the global economy is like a car with a 6-cylinder engine where the male driver, passengers and mechanics choose to run on only 3. Shifting attitudes towards improved diversity outcomes implies breaking free of the notion that improving these standards is a zero-sum proposition where a woman’s gain is a man’s loss. Rather, diversity and inclusion improvements across quantitative and qualitative measures is closer to an all ships rising proposition. Renowned economist, Anthony Haldane with the Bank of England, espouses this very point by highlighting that diversity recruitment efforts that look at a candidates’ qualifications in isolation without taking into account the “portfolio” or team they would contribute too is one way “unsafe” candidates are set up to fail and firms short change their talent pool. Instead, hiring managers and leaders, much like they structure their personal investment portfolios, ought to construct diverse environments across multiple dimensions that function better together than apart.
Another aspect that sets up a prohibitive barrier to entry for diverse candidates is the algorithmic hiring process that is almost entirely machine-driven at the widest, thus most opportunistic, segments of the recruitment funnel. At these stages, a candidates’ lack of certain preset qualifications eliminates them entirely. Insidiously, as evidenced by the video montage, how many diverse candidates opt out all together because they literally do not see themselves reflected when they peer in to a particular company or industry’s hiring window? Sadly, even in U.S. politics, women and diverse candidates, who by every measure are qualified yet have the temerity to raise their hands to serve their country, are dismissively mischaracterized as “this girl…whatever she is” and “rappers,” rather than as otherwise qualified political candidates who happen to be women or musically inclined. While this barrier to entry reflects a toxic strain of political and social tribalism that has crept into U.S. and global politics, it nevertheless underscores how far we have yet to go in creating rainbow nations. Indeed, because these barriers still exist more women like the Boricua Alexandria Ocasio-Cortez and black candidates, like Anthony Delgado, should enter and remain in the race until their presence becomes normal.
Against this backdrop of continued studies, self-reporting and preserving a decidedly un-diverse status quo, capturing a clear diversity dividend remains a domain for challengers. It took Lloyd’s, the world’s leading insurance marketplace nearly 330 years before a woman, Dame Inga Beale, was appointed to the helm. While Inga Beale will soon step down from her role leading Lloyd’s, she has measurably improved diversity and inclusion at Lloyd’s and in the insurance industry. Not singularly through her considerable presence, but through the initiatives she championed, such as the Dive In Festival, which has become the insurance industry’s global call to action on improving industry diversity and inclusion outcomes. While Lloyd’s under Inga Beale’s watch has certainly become a diversity champion, other industry firms, such as Willis Towers Watson, which temporarily changed its logo during Pride Month to capture the diversity dividend in its employees shows the impact of enterprise-wide commitments to these priorities. Diversity and inclusion are not just about morale and altruism, McKinsey’s report on diversity espouses the competitive advantages of talent, for which diversity is the key to opening a wider gate and inclusion illuminates the path.
By this measure, industry associations, such as Gamma Iota Sigma (GIS), which is the world’s preeminent risk, actuarial and insurance collegiate association, are not contented with the industry’s perception that risk and insurance are your “grandfather’s” trade. Like Lloyd’s, with Noelle Codispodi in charge, GIS has worked actively and with conscience about confronting the industry’s real and perceived diversity and inclusion challenges, catching them early enough in the talent pipeline before the road forks into some dead ends. Taking these cues, which begin to cut at systemic positioning and perception issues, the only way to improve diversity long term is to get more diverse candidates on the playing field and on the radar of hiring managers in the first place. For this, apprenticeships, job shadowing programs and initiatives that address the skills, participation and pay gaps should be implemented more broadly. Indeed, for a sure pathway to the middle class, a professional credential, such as an insurance license, risk certification or project management designation are often all that is needed to get a foot in the door of a $5.5 trillion-dollar industry. For a sure career path, bet on the risk business. For a sure dividend, bet on diversity.