Our list demonstrates that major corporations that truly embrace diversity are leaders in creating a dynamic corporate culture and producing top performance.
Posted October 13, 2015 — In all venues of global business—from Hollywood studios to the corporate boardroom—the conversation around diversity has taken center stage in recent years. As the public takes greater interest in its definition and application, more and more companies have come to realize that inclusive policies and cultures can produce a competitive advantage in the marketplace and significant contributions to the bottom line—especially with our nation’s shifting demographics.
In a 2015 McKinsey & Co. study, researchers found that companies that were racially and ethnically diverse and gender-diverse were 35% and 15% more likely, respectively, to outperform those that didn’t make such a commitment. Moreover, the study found that among firms operating in the U.S., there is a “linear relationship” between racial and ethnic diversity and stronger financial performance: For every 10% increase in racial and ethnic diversity on the senior executive team, earnings before interest and taxes rise 0.8%.
From a historical perspective, corporate America traditionally defines diversity by demographics.
But what does diversity truly look like in 2015? Generational attitudes have shifted the dialogue. While prior generations look at diversity from the perspectives of racial, ethnic, and gender representation, a recent study by Deloitte L.L.P. and the Billie Jean King Leadership Initiative found that millennials (those born 1980-1995) are 35% more likely to focus on unique experiences, whereas 21% of non-millennials are more likely to focus on representation. Additional research found these professionals are the most diverse, digitally connected, and socially minded group and set to make up nearly 75% of the workforce by 2025. As a result, millennials largely consider a diverse workforce a given and though they may witness inequities, believe that cognitive diversity or unique backgrounds and perspectives create a more dynamic work environment that fosters teamwork and innovation.
However, our research suggests otherwise. It is vital to ensure the representation of African Americans to stoke corporate America’s competitive metabolism. Moreover, it is essential for African American suppliers, senior executives, and corporate directors to push corporations to fully understand and value a truly diverse and inclusive environment.
That’s why, Black Enterprise has once again unveiled our “40 Best Companies for Diversity—our 10th since 2005.
In compiling this year’s roster, Black Enterprise sent surveys to the 1,000 largest publicly traded companies and global companies with significant U.S. operations. This year, be gained support from the Executive Leadership Council, the pre-eminent organization of current and former CEOs, board members, senior executives and leading entrepreneurs in producing our list. Expanding black global leadership is core to ELC’s mission.
To make this year’s roster, survey respondents were evaluated based on weighted criteria of diversity best practices in the following order: representation of African Americans in senior management (all companies must have African Americans on their executive leadership teams) and on their board of directors—the highest levels of corporate power and greatest influencers total spend with African American suppliers; and percentage of African Americans within the employee base (see detailed criteria).
There’s still much work to do in terms of major corporations fully embracing diversity; hundreds of companies were either unresponsive or declined to participate in our survey process. Moreover, while some companies scored high marks in senior management and corporate governance, most were found unsatisfactory when it came to procurement dollars spent with firms owned by African Americans and ethnic minorities—demonstrating a critical need to diversify this area.
Ultimately, diversity and inclusion is driven from the C-suite and cultivated throughout the company. Recently, ELC interviewed 18 C-suite executives of Fortune 500 companies, across a wide range of industries, and found that those interviewed focused on terms such as “culturally sensitive” and “empathetic” to describe today’s successful global leader. Those interviewed define a leader who will solicit others’ views and virtually demand input. Kenneth J. Barrett, chief diversity officer for General Motors, one of the companies on this year’s list, confirms the automaker’s top-down commitment to an inclusive workforce and supplier pool that serve and reflect its diverse customer base. “At GM, we focus on talent and markets. We want to represent the customers we hope to sell to, not just in the U.S. but globally. Our CEO, Mary Barra, is a champion of diversity, and General Motors has been a leader in diversity. We were the first automotive company to have a supplier diversity program; the first to have a minority dealer program; the first to have an African American on the board of directors. We take it very seriously.”
HOW WE COMPILED THE 40 BEST COMPANIES FOR DIVERSITY
Black Enterprise’s editorial research team, along with the Executive Leadership Council, sent surveys to the nation’s top 1,000 publicly traded companies to get an in-depth look at the ethnic and gender composition of these corporations, as well as understand various programs designed to foster and maintain an inclusive working environment. The annual survey is centered around efforts focused on African Americans, but also includes other ethnic minority groups as defined by the U.S. Census Bureau. Any information provided by companies on diversity efforts targeted toward women, LGBT, the disabled, and veterans was used as secondary, supporting data for inclusion on the list.
BE performed a quantitative and editorial assessment of all corporate respondents and measured each company’s diversity efforts using the following criteria:
BE measured companies against each other using data from four key categories: employee base, senior management, board of directors, and procurement. Based on a quantitative and editorial analysis, each company received a score. Senior management and board of directors’ categories were given a higher weighting based on company impact across the board. Procurement was also a major factor while employee base was given a lower weighting.
We also reviewed the status of companies across all be diversity and corporate leadership lists, including The Top 35 Companies for Supplier Diversity, The 100 Most Powerful Executives, Top Diversity Executives, as well as companies who have chief diversity officers and/or designated diversity departments.
We also considered those companies in which the CEO takes an active role in diversity practices.
Our survey measures companies against four key categories
The percentage of African Americans and members of other ethnic minority groups represented in a given company’s workforce.
The percentage of senior management positions held by
African Americans and members of other ethnic groups.
Board of Directors:
The percentage of African Americans
and other ethnic
minorities represented on corporate boards.
The percentage of total procurement dollars spent with companies owned by African Americans and members of other ethnic minority groups.