Women and racially diverse executives are underrepresented in C-suite positions that lead to CEO and board appointments and overrepresented in staff/administrative roles. That's not a good sign if you're looking for a company truly committed to diversity and inclusion.
I recently wrote that the best indicator of a company’s commitment to diversity is the diversity of its executive officers. And unfortunately, there aren't too many companies that shine when it comes to diversity in their senior leadership ranks (internal). That's the conclusion of a recent report on the “dismal state” of diversity among Fortune 100 senior executives.
The report, from the Rock Center for Corporate Governance at Stanford, looks at the demographic make-up of C-suite executives with an eye on the diversity in positions most likely to lead to CEO and board appointments (which they identify as positions with profit & loss/operating responsibility and senior finance positions). The authors note that 68% of new independent board directors were individuals with experience in one or both of these areas as did 90% of the CEOs who were promoted from within their organization in 2019.
The report findings illustrate the lack of gender diversity at the highest levels in F100 organizations:
- Overall, women hold only 25% of C-suite positions, even among organizations with high degrees of board diversity (according to the Alliance for Board Diversity, nearly 40% of F100 board members are women and minorities).
- Women are underrepresented in C-suite positions that lead to CEO and board appointments - CEO, CFO, and P&L leaders - women hold only 13% of these positions in the Fortune 100.
- Women are overrepresented in the positions that don’t lead to CEO and board opportunities: they hold 38% of these positions, which include General Counsel, Chief Human Resources Office and Chief Risk Officers. (As I noted and this article reinforces, not all executive positions are created equal).
- Even among Fortune 100 companies, few have what the authors refer to as a “deep bench:” only 39 companies have women in 33% or more of their executive leadership positions (and nine Fortune 100 companies have no women in C-suite positions). There are no Fortune 100 companies where women hold the majority of C-suite positions.
The findings for racial and ethic diversity are similar:
- Racially diverse executives hold only 16% of the C-suite positions in the Fortune 100 and only 13% of the high-value positions likely to lead to a CEO role or board appointment.
- Racially diverse executives hold only 20% of the low-potential C-suite positions.
- There are only 4 companies with non-white CFOs.
- There are 26 companies with no racially diverse executives in their senior leadership.
As the authors note, almost all of these companies profess a deep commitment to diversity & inclusion; many publish diversity & inclusion (D&I) reports and include D&I in their missions and values. But most D&I metrics focus on activities and the presence of policy, not on outcomes and impact.
The Rock Center report makes it clear - most companies are doing a better job of talking the talk than walking the walk when it comes to diversity and inclusion.
Note: The authors compiled demographic breakdowns for all of the C-suite positions and provide organizational charts with pictures of the executives for each of the companies included in the study; it makes for very interesting viewing.