Is the Company Serious About Diversity? Check the Executive Officers

by Julie Graber | on 27 May 2020

"Look at the company’s board and senior leadership team." - that’s just one of the tips offered in a recent article on how to tell if a company actually cares about diversity. 

I can make it even easier. There is one indicator above all others that will tell you if the company is committed to diversity and inclusion at the gut level: the diversity of the executive officers.

Companies have gotten smart - they realize folks are looking for diversity on their boards, and many have decided it’s easier to get with the program than to continue to face the criticism (although more so with gender than minority representation). 

But many of those same companies fail miserably at diversity inside the organization. And frankly, that is more telling than the diversity found in a group of external advisors who meet periodically through the year. 

If it’s a public company, you want to look at executive officers/named executive officers as listed in SEC documents like the 10-K and proxy statement (and not on the website under Leadership - that list is more about optics). With private companies, it’s a little tougher - the best equivalent may be finding out what you can about direct reports to the CEO or members of an operating/executive committee. You can also look at the titles: C-suite or Executive Vice Presidents for example (and where there are natural breaks between levels like EVPs and SVPs).

Keep in mind, too, that not all executive positions are created equal. If there are women and/or minorities on the list, you then have to evaluate is whether or not they’re in “traditional” roles vs. the power positions. For women, some of these traditional spots are Chief Human Resource Officer, General Counsel, and CIO. For minorities, it’s often government/corporate affairs or diversity & inclusion. I'm a bit of a cynic, but I find the company's commitment to diversity is less credible when the only diverse executives are in these traditional roles that provide support vs. run a line of business.

Take for example Costco. 

  • 2020 Women on Boards lists Costco as a "Winning" company where women hold 20% or more of the board seats. And Costco does them even better; they now have three women and one African American male  serving on the board of ten. 
  • But there are no women among Costco's executive officers according to their latest annual report (10-K dated 10-11-2019) and 8-K updates. I'm not sure there's ever been a female executive officer - at least not in the last ten years. 

Navient, is another example of a company with a diverse board but no diversity internally. 

  • The board of the student loan management company, formerly part of Sallie Mae, is majority female: 55% of the seats are held by women. 
  • But there are no women among its executive officers per their most recent proxy (04-09-2020). 

There are any number of metrics that companies will report out as indicators of how seriously they take their diversity & inclusion programs, but most of these metrics focus on activities like the presence of policy, the active engagement of senior leadership, and the availability of employee resource groups, mentoring, and development programs. But what really matters is the outcomes of these efforts - the impact. What you want to know is whether or not any of these activities has created an open pipeline to the top. 

If there isn't diversity at that most senior level internally, the rest is unfortunately just busy work.

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