Companies Engage Diversity
Over the past several years, Corporate America has increasingly engaged in the work to become more diverse and inclusive. Out of the largest 3,000 publicly traded companies, only 21% of their board seats are occupied by women. Only 12.5% of the seats are occupied by underrepresented minority groups.
Among the many companies taking strides to change these metrics and what they represent, Nasdaq filed a proposal with the SEC to adopt new listing rules specifically targeting the diversity of its boards. Adena Friedman, the president and CEO of Nasdaq, recently stated, “Nasdaq’s purpose is to champion inclusive growth and prosperity to power stronger economies…we believe this listing rule is one step in a broader journey to achieve inclusive representation across corporate America.”
Diversity Increases Performance
A 2015 McKinsey study, “Why Diversity Matters,” correlated diversity among staff with improved financial performance. The study compared two kinds of companies, those with staff demographics at the national average in racial & ethnic diversity and those with staff demographics above the national average. Companies performed 35% better if their staff was above the national average.
The study also explored the impact of gender diversity. It was found that companies above the national average in gender diversity performed 15% better than those at the national average.
In its 271-page filing, Nasdaq presented a meta-analysis that “found an association between diverse boards and better financial performance and corporate governance.” While financial performance is a strong motivator to adopt diversity and inclusion initiatives, the core reason is that it is the right thing to do.
Challenge Traditional Hiring Sources
The majority of companies agree that diversity enhances performance. However, companies still struggle to attract diverse corporate leadership. Most companies have more diversity in management roles than in board-ready, high-level leadership. Only 4% of board-level seats are occupied by Black directors in the largest 3,000 publicly traded companies. Black women only make up 1.5% of them.
One consideration is to examine sourcing strategies. Approximately 90% of leadership positions are filled through networking; however, most of these networks are comprised of 85% historically majority groups. Current sourcing strategies need to be reimagined for diversity and inclusion. Truly diverse companies create opportunities to find diverse candidates rather than fall back on traditional hiring pathways.
One tactic to reevaluate is how companies develop their hiring pipelines. Inclusive and well thought through pipelining can become a keystone to diverse hiring. It has the power to open the door to a variety of diverse candidates. The more accessible the networks that underpin pipelines are, the more they will attract and engage a representative spectrum of leadership talent. Enhancing inclusivity in sourcing provides access to diverse candidates in support of overall company performance. Most importantly, great companies build inclusive sourcing processes because it is the right thing to do.
Inclusive Pipelining Strategies
- Create networking opportunities that cater to diverse candidates
- Reevaluate job requirements and avoid exclusive language
- Employ different outreach tactics that account for the impact of bias
- Teach staff about unconscious biases and obstacles to diverse hiring
- Engage employee resource groups to support the search for diverse candidates
BrainWorks is a prominent boutique executive search firm offering a 29-year track record of successfully sourcing and placing top talent. By harnessing proven strategies, collaborating with stakeholders and leveraging a diverse and talented candidate network, BrainWorks helps businesses find, attract, and ultimately hire talented professionals that create differentiated results.