Companies Are Boasting Ethnic Diversity...But Something’s Not Adding Up
Historically in this nation, one of the hardest places for minorities to make meaningful inroads has been in business. Hindered by laws that made it illegal for them to own property, hold bank accounts, or control their own finances, women and people of color were relegated to working-class positions (where they were left unprotected from abuse, mistreatment, and unequal pay).
Even after the Civil Rights Act of 1964 made discrimination of protected classes illegal, powerful and wealthy white men still found methods of gatekeeping that circumvented those laws. A documented history of hiring bias kept (and continues to keep) qualified people with “ethnic-sounding” names out of work, while women were unable to sue for sexual harassment in the workplace until the Civil Rights Act was amended in 1991.
But in 2018, the corporate workforce is more diverse than ever, and continues to trend in that direction. The minority working-age portion of the workforce is projected to reach 37 percent within the next two years—almost double what it was in 1980, according to a report by the National Center for Public Policy and Higher Education. Women outnumber men on college campuses for the first time in history, and are projected to make up 57 percent of degree-earners by 2026. And what’s more, major companies are actively recruiting more diverse employees, implementing inclusion programs, and promoting themselves as upholding the values of diversity and inclusion in their everyday business.
But within these major companies, things aren’t always what they seem. “It would be misleading to suggest that simply looking at percentages of overall employees would represent the breakdown of who has the managerial spots or how progressive the company is with promoting,” says Dr. Wendy Patrick, a San Diego County Deputy District Attorney and business ethics lecturer at San Diego State University. “You must actually look at who does what and who is represented at each level of the hierarchy--particularly at the top.”
Though top companies like Apple, GE, Walgreens, and more tout themselves as leaders in diversity, leadership at Fortune 500 companies remains overwhelmingly white and male. In 2015, The New York Times famously reported that there were fewer female Fortune 500 CEOs than there were CEOs named John. That absurd statistic no longer applies; there are now more women than Johns occupying the top position in Fortune 500 companies—by a margin of exactly two. Ethnic diversity among top companies’ corporate leadership teams is even worse. As of 2018 there are only three Black CEOs at Fortune 500 companies, the lowest African-American representation has been in that group since 2002, and only two women of color count themselves among these ranks. Unsurprisingly, given the disappointing representation across CEOs, only 16 companies in the Fortune 500 publicly share full employee demographics. Among those companies, Forbes reports that senior executives are an overwhelming 80 percent male and 73 percent white.
These demographics, though limited in scope, give a good example of how a company’s overall diversity can be coming largely from the bottom ranks. “Take some of the call centers in America, for example. They’ll say, ’60 percent are women, what a great company!’ and it’s like yeah, but they’re on the phone,” says Tish Ferguson, a Talent Acquisition Manager for C&A Financial. “So, you’ve gotta force them to break it out by rank.”
That’s exactly why the Equal Employment Opportunity Commission, which collects demographic statistics from all companies with more than 100 employees privately, requires data reports to not only break out company hierarchy by race and gender, but also by job position. When ethnic representation skews higher toward the bottom of the payroll, economic power continues to rest with the white upper class. At the same time companies spin the ethnicities of their lower-income employees as indicative of their commitment to inclusion and sell themselves to the public as leaders in diversity.
“It’s embarrassing to see some of these statistics and have to ask, how did a company become so homogeneous that you have such woeful under representation of such important groups?” says Patrick.
Take Google, for example. In recent years, the company has made overtures to establish itself as an authority on diversity in the tech industry. It launched Black Girls Code, Code Next, CS First, and a host of other programs to expose Black and Latinx students to computer programming skills and resources at a young age. Under the talent engagement section of their diversity website, Google also advertises something called the “Sandbox series” which aims to “bring firsthand experiences of Google to communities around the world—particularly those untapped by the tech industry.”
But events themselves seem to be managed by the local communities that host them, rather than Google corporate, and finding one in your area can be tricky. It’s an apt metaphor for the stark difference between what the company claims to be doing to promote diversity and the reality reflected in their demographics. Despite all of the outreach Google is doing to promote programming among Black and Latinx communities, the company itself is only 3 percent Black and 5.3 percent Latinx worldwide—less in the United States. Among leadership these numbers are even worse: only 2 percent Black and 1.8 percent Latinx people are Google executives in the United States.
This pattern—promoting diversity externally while ignoring or underperforming in it at home—is not exclusive to Google, not by a long shot. Apple’s diversity and inclusion report places particular emphasis on its new hires, 50 percent of which are from “historically underrepresented groups in tech.” Among domestic leadership, though, just 3 percent of executives are Black and 7 percent are Hispanic. A similar pattern appears at Facebook, whose branding places heavy emphasis on the value and connection of people from all over the world, but where Black and Latinx leadership measure up at just 3 percent each.
By exaggerating the impact of their diversity initiatives, companies lose, too. It’s been proven that an increase in inclusion leads to an increase in profits—research firm McKinsey and Company found that culturally and ethnically diverse teams were 33 percent more likely to perform better economically. But those benefits don’t just come from the organic advantages generated by a culturally diverse team—they also come from simply marketing the company as a diverse brand.
Companies have learned they can cash in on simply appearing to value diversity. Marketing research shows that millennials identify more personally and emotionally with the brands they buy from, and in a BCG study 48 percent of millennials reported that they try to buy from brands who are “active in supporting social causes.” Patrick cites social media as the source for why people are more selective of the businesses they support. “They are very passionate, not only about giving business to those that are diverse but refusing to do business with companies that are not,” she says.
By seeming to prioritize millennial values, like an emphasis on ethnic and gender equity, brands can capture millennial loyalty, buying power and “wallet share”, whether or not those values are genuinely reflected in the company’s dealings. “It’s interesting because the reasons for it are still tied to the markets they’re trying to target, which is a disappointment,” says Ferguson. “Do we have to wait to accept the lives of people until we know their wallet share is that big?”
Whether their customers will actually look far enough into the data to realize that their claims on diversity are only surface level is a gamble that some brands are willing to take. “You do not want to be caught promoting or portraying your company as diverse and a great place to work and all the rest of it and then, when you look at the actual statistics, it doesn't reflect that,” says Patrick.
There are some companies that are doing diversity right. At Walmart, for instance, 21 percent of officers are people of color and 30 percent are women. Associate-level employees are 43 percent people of color and 55 percent women. While there’s still a pretty big diversity gap between associates and executives, Walmart’s leadership diversity is still leaps and bounds better than other Fortune 500 companies whose leadership diversity lags in the single digits. And Walmart is committed to increasing their ethnic diversity in the future—34 percent of management promotions go to people of color.
“You want to have representation that is ethnically diverse,” says Patrick. “It just benefits everybody, including the company and the shareholders.”
Another standout for leadership diversity is Comcast NBCUniversal, which is well-known for its programs recruiting women and people of color to prepare for careers in television writing and production. But unlike other companies, Comcast NBCUniversal’s diversity reaches far beyond the recruitment stage. Forty percent of the board is comprised of women or people of color, while 52 percent of its employees report to a woman or person of color in their daily job. In leadership positions, 21 percent of vice presidents and above, 26 percent of directors, and 32 percent of managers are people of color. The company supports their inclusive workplace environment with what they call Employee Resource Groups designed to help minority employees work effectively at and advance in their careers.
The state of corporate diversity today isn’t exactly dire, but it isn’t nearly as optimistic, either. Continuing to call out the realities that lie below the stories these statistics tell is a major step toward accomplishing better progress. “The fact that we’re looking at this is a step in the right direction,” says Patrick. “It’s a step to leveling the playing field and incorporating the type of diversity that makes a company better for all.”
“Leading with a purpose—that’s kind of the umbrella over it all,” says Ferguson. “You have to have good products and services and market offerings, don’t kid yourself. But competitive advantage and profitable growth will come, from this point forward, from organizations leading with a purpose.”
The business world is changing for the better, and leaders in diversity and inclusion are carving a path forward for other companies to follow. With the help of astute customers and public voices speaking up to identify places to improvement, business environments will continue to become more inclusive in years to come.