Building a Diverse Talent Pipeline at the Top: Research and Recommendations

Numerous studies validate the value of C-Suite diversity: enhanced profitability, innovation and reputation.  And as former Chief Human Resources Officer (CHRO) of SunTrust Banks, Sysco, Comcast, Continental Airlines, and PepsiCo, I experienced the value of building a diverse team of top leaders.

So why aren’t more companies developing a diverse senior executive pipeline?

A recent survey of 100 CHROs provides insights and answers to that question.  The study was led by the Center for Executive Succession (CES), a forum for corporate leaders to shape the future strategic direction of succession practices.  The center is housed in the Darla Moore School of Business at the University of South Carolina.  I’m the CES Executive Director and a member of the research team that conducted the survey.

Our goal was to assess the volume of women and racial minorities in senior executive pipelines, identify obstacles to increasing the number of diverse candidates, and recommend strategies for successfully building diversity in the senior talent pool.

Diversity Work in Progress

The survey validates the need for much more work. With 60 percent white males and 22 percent white females in senior executive pipelines, participating CHROs from Fortune 500 and PE-owned businesses report a lack of diversity in their top leadership pools.  Asian and African-American men each comprised 5 percent of the pipeline, followed by Hispanic men, Asian women, and African-American women each making up 2 percent of the pool.

How does this composition compare to the organizations’ goals for diversity?  Notably, 76 percent of CHROs said they fall short or far short of their diversity goals for the senior executive pipeline.

Some Glimmers of Hope

While these results are disheartening, some progress is being made.

78 percent of CHROs said diversity in senior talent pools has increased or greatly increased over the past five years.  And when asked about the inclusiveness of Executive Leadership Teams (ELT) in terms of diverse members being heard and treated as equal contributors to decisions, the feedback was more positive. CHROs reported that 24 percent of women and racial minority executives had more or much more impact, and 59% had equal impact on critical ELT decisions.

Obstacles to Overcome

So what’s getting in the way of creating a more diverse senior executive pipeline?

The top three obstacles CHROs cited were a dearth of ready talent in the internal candidate pool, lack of diverse talent in the external market/industry and a poor development process.  They also reported significant internal challenges, including insufficient attention to developing women and racial minorities and bias in hiring and promotion decisions.

One notable learning is where obstacles differed between women and racial minorities. Many CHROs cited “Unwillingness to apply/take career risk” and “Work/family challenges” with regard to women, yet none noted those challenges regarding racial minorities. By contrast, CHROs were far more likely to mention “Lack of CEO/ELT/Board commitment,” “Challenges in retaining talent,” and “Location” with regard to racial minorities. In addition, three CHROs cited “Identifying qualified candidates” as an obstacle with racial minorities, but none did so with women.

What Companies Are Doing About It

Based on the CHRO responses, it’s clear organizations are actively pursuing strategies to increase the number of women and racial minorities in the senior executive pipeline.  The top three steps companies are taking include intentional development, hiring external talent and sponsoring women and minorities earlier in their careers to prepare them for senior leadership roles.

Here are some examples of the strategies CHROs mentioned:

“We consistently measure and report on representation, leadership gap and promotion percentage for women and people of color. We are doing a lot of work on inclusive hiring practices and racial competency. Introducing a lot of structure around all of our talent processes to reduce bias.”

“Make it a priority and hold people accountable.  Many have placed emphasis on financial measures, but the reality is the process must be owned by someone committed to moving the needle and requires CEO and senior leader engagement.”

“Challenge search firms to provide diversified slates of candidates for any externally hired executive. Increasing CEO exposure to senior level diverse leaders in the business and assisting in their development.”

That’s some good news.  What’s concerning is that CHROs reported significantly more strategies for women than minorities.  In the top two categories – intentional development and external hires – far more CHROs said they are in place for women than minorities.  Notably, 22 CHROs did not even answer the question about successful strategies to increase the racial minority pipeline for senior executive roles.  And eight specifically said they had no successful strategies for minorities, compared to only three for women.

What Companies Can Do About It

Our research team analyzed the survey data and CHRO responses to the questions about the obstacle to and strategies for increasing the number of women and racial minorities in the senior executive pipeline.  Based on our analysis, we developed six recommendations:

• Set the tone from the top: Manage and measure the pipeline.
• Recharge recruitment: Build the pipeline.
• Lead development: Refine/expand the pipeline.
• Encourage promotion: Flow the pipeline.
• Enable external hires: Fill the pipeline.
• Facilitate retention: Prevent leakage in the pipeline.

Each of these recommendations warrants deeper explanation.  In my next article, I’ll detail the steps to enact these recommendations and help your organization create a more diverse senior leadership bench.

Is it easy?  No.  But if you want to strengthen your organization’s profitability, innovation and reputation, it’s well worth the journey.

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