Chief Executive Officers continue to struggle with improving diversity and inclusion on their leadership teams, but despite best efforts, the results are falling short.
CEOWORLD magazine turned to the career transition, coaching and assessment experts from Shields Meneley Partners to help today’s CEOs with best practices and to chart a course within leadership ranks.
CEOWORLD magazine: What’s the state of C-Suite diversity?
Nicholas C. Cianciola : Nationally, it’s embarrassing. Let’s start with the most recent data available pertaining to Fortune 500 companies for female, African-American and Hispanic CEOs.
There are 31 CEO women, and only two are people of color. Furthermore, there is not a single female African-American CEO within the Fortune 500. There are only four male African-American CEOs, and there will be three by year-end unless someone ratchets it up. As of January 2016, there were just nine Hispanic CEOs.
Digging deeper women hold more than 50 percent of all professional positions yet only 6.2 percent are CEOs. There have only been 15 black executives at the Chairman, or CEO level of Fortune 500 companies and Hispanics account for all of 2 percent.
Q: Why is a long-term diversity of the C-Suite so important?
Elizabeth K. Olson: Until we frame that, solutions don’t make sense. We should not be diversifying just for the sake of diversifying. There are true, long-term business drivers for diversifying the C-suite. Harvard Business Review recently found when going from having no women in corporate leadership, the CEO, the board, and other C-suite positions, to a 30 percent female share, there is an associated one percentage point increase in net margin, which translates to a 15 percent increase in profitability for a typical business.
Diversity is also driven by external environmental pressures. CEOs need to look at the customers their companies are serving. What do their demographics look like?
What do peers and competition look like? How effective will market penetration be in a global economy with very different ethnic cultures and buying patterns? Diversity in the C-suite and the leadership ranks are a business decision and must be monitored like other critical decisions.
Q: What programs do CEOs and the C-suite need to continue to build out now to diversity leadership in the near future and beyond?
Nick: Few companies emphasize the need for a strong succession planning program. They may say they have one, but it is seldom driven by the CEO. There is no quick fix here. There may be some short term “wins,” concurrent with long-term planning that includes identifying talent that are positioned for a C-Suite seat from three to seven years out. The CEO needs to address senior hires that they can bring up the ranks during this time period that will make an everlasting difference. That said the experiences along the way are tremendously important in terms of grooming the executive for a C-Suite seat because the last thing you want is for the rank-and-file to brand that individual as a “token hire.” The succession plan is the foundation that drives change and provides the necessary tools when it comes to senior executive selection, executive coaching, and a strong mentoring program. Another important factor when selecting a future C-Suite executive is cultural fit. I cannot stress enough the importance of an executive assessment program at time of hire as well as the continual implementation of certain assessment tools when an executive coaching program is implemented. If you do all of the above, the likelihood of diverse talent being hired away decreases because they know they are being groomed.
Q: How can the CEO make a difference when it comes to hiring diverse candidates?
Elizabeth: Search firms are a big part of the solution because they assist in creating the spec with the CEO and CHRO. They need to be directed to write the spec so diverse candidates can be screened in.
For instance, if there is a need for CFO talent three to five years out, a good search partner can help shed light on qualified diversity talent that have not traveled the conventional CFO track, yet have had very meaningful experiences. An excellent search partner that is immersed in the company culture brings an outside perspective worth listening to, especially when it comes to competing in a market where demand is off the chart for great diversity talent, yet the supply remains limited.
Nick: I think a CEO would have impact if he or she were to say to their search partners and talent acquisition: “We’re going to have X executive hires this year, and I want to make sure that at least 50 percent of those candidates presented and interviewed for these positions, are diverse.” That doesn’t mean it will be a diverse hire every time but it holds the search partner and talent acquisition accountable for supplying a diverse candidate pool while never losing sight that the best candidate will earn the offer..
Q: Elizabeth, you are an executive coach — how does coaching factor into this discussion?
Elizabeth: When it comes to hiring and grooming for the C-Suite, there are a ton of hidden biases that people don’t see. Improvement takes a continual examination of the culture and policies of the organization. Coaching can benefit both hiring executives as well as new diverse entrants to an organization. Also, leadership assessment instruments can play a crucial role in developing leaders, identifying high-potentials, as well as in vetting potential hires.
Q: Where is the C-Suite headed in terms of diversity?
Nick: Statistics tells us that things are improving but at a snail’s pace. We’ve gone from very poor to poor. In order to get to good, it starts with the CEO and funnels down to their direct reports.
Elizabeth: The good news, however, is there is a tremendous opportunity right now for CEOs to access a talented pool of candidates who will positively impact companies’ bottom lines.
Nick: The opportunity is there for CEOs – they just need to take it.