The future profile of CEOs will be diverse. They will be a closer reflection of the realities of our changing ethnic and gender demographics. They will represent diversity of race, industry experience, socio-economic upbringing and geography.
However, 2045, when it is projected that people of color will be the majority of the U.S. population and therefore the driving force, is only 23 years away. Setting and executing an actionable strategy to foster a culture that will attract, retain and develop diverse and inclusive leadership must be a CEO imperative now.
Specifically, African Americans are underrepresented in executive level roles and board seats, which remain overwhelmingly white.
According to a new analysis by the Institutional Shareholder Services’ ESG division, while underrepresented ethnic and racial groups make up 40% of the U.S. population, they represent only 12.5% of directors, a slight increase from 10% in 2015. Black directors represent only 4%, a 1% increase since 2015.
Implementation of actionable strategies to create change is moving at a disproportionally slower pace compared to other industries. Every client we work with is committed to be more inclusive and diverse.
Yet, much work remains to be done. The asset management industry has serious shortcomings in their diversity efforts according to a U.S. House Financial Services committee report dated December 2021.
We found that a cornerstone of fundamental change necessary to a more diverse culture includes diversity of thought and experience. We can learn from the perspectives and successes of executives who have not only charted their own successful course into the executive ranks, but are now impacting the way their organizations continue the work on a broader scale.
Entertainment and media companies exercise an ever-growing and commanding influence on consumers and investors worldwide. Because of this, we spoke with Keisha Payne, an esteemed entertainment lawyer and Senior Director, Business and Legal Affairs at Village Roadshow Entertainment Group, one of the leading independent entertainment companies in the world.
We also sought insight from Regina Curry, Chief Diversity Officer at Franklin Templeton and Member of the Board of Directors at Fiduciary Trust International, because she brought immeasurable success as Senior Director, Global Diversity and Inclusion with McCormick & Company to her current wealth management role.
Muñoz: In your experience, what is holding back the pace of change when it comes to firms embracing more cultural diversity at the C-suite and Board levels?
Curry: One major hurdle holding firms back is that while most firms have embraced the business case for diversity, they may have not completed the work to gain a deeper understanding of the “why” for their specific organization.
At Franklin Templeton, we have an overarching guiding principle that D&I is an opportunity not a problem to be solved. We rally around that notion and have a core belief that having a more diverse, inclusive and equitable firm enables us to deliver better outcomes for our employees and clients.
When D&I is linked to growth, intentional effort and investments will follow, including ensuring cultural diversity at the C-suite and Board levels.
Payne: People think hiring is an either-or proposition. Either a qualified candidate or a diverse candidate, rarely finding both. It is not mutually exclusive. Part of the problem for the C-suite level candidates is how you get to that role. These are more seasoned professionals and the push for diversity has only taken real commitment to change the past five years.
The diversity pool may be smaller, but no less qualified. There are biases that exist too. We don’t have access to the level of experience and promotions. Foster talent you do have of people of color. Help navigate their career to be seen, pushed and given opportunity especially if they do not belong to certain circles.
Don’t put it on the recruiters if the hiring executives in the firm itself are not prepared to embrace different. You have to put an action behind your aspiration. You have to seek out diversity and hire it. Ask yourself what does “best fit” mean for your firm? Especially when the majority of staff are not African American?
Muñoz: What best practices should the wealth management space adopt from other industry sectors to more effectively support African American representation among the executive ranks?
Curry: Diverse talent begets other diverse talent. In general, people want to see and work with others from shared or diverse backgrounds, and in leadership and mentoring roles.
Expand strategies to increase the attraction, recruitment and development of underrepresented employees at all levels in your pipeline. Early engagement with Historically Black Colleges and Universities (HBCUs) is a good start. We are a member of the Financial Alliance for Racial Equity (FARE) that aims to build sustainable wealth in diverse communities and increase representation of Black financial professionals through partnerships with HBCUs.
Additionally, require inclusive hiring practices and diverse candidate slates for senior levels. Partner with recruitment firms that focus on diversity.
Executive coaching, feedback and support is needed by all leaders – research has shown it does not typically happen organically for Black and African American talent. Differentiated development opportunities, like the McKinsey Black Executive Leadership Academy, are vital for current leaders.
Formal sponsorship programs are key for advancement and retention. Talented Black and African Americans are typically over-mentored and under-sponsored.
Payne: The first thing to recognize is that you will never achieve change without people of color in C-suite and board roles. Company culture is a direct reflection of who is at the very top – executive leaders. There is no trickle down.
If it is not important and seen and done at the C-suite levels, then it will never happen in HR or other departments in a meaningful way. It won’t change.
Muñoz: One of the biggest criticisms of corporate cultural diversity initiatives is the risk of tokenism – Hiring just one or two people of color to “check the box.” How can businesses avoid falling into the tokenism trap?
Curry: First, I believe a paradigm shift is occurring in how diverse talent is viewed. We often hear the phrase “qualified diverse talent” as if the opposite is the norm. High performing diverse talent exists. Diversity does not mean deficiency.
At Franklin Templeton, we practice and believe that diversity is strength and inclusion is growth. We hire diverse talent and include their voices, adding to the strength of our firm.
If your approach is based on a foundation of scarcity or less than, hiring a couple people of color will falsely feel like success.
D&I must be viewed as a business imperative with a holistic strategy that touches all parts of your business.
Payne: The entertainment industry sets trends for many other industries and heavily influences people. Technology companies are now part of this sector given the content they create. Netflix just took real action as a global company: 51.7% of their global workforce are women with the same level of parity for executive level roles.
Black executives also increased globally. You have to change the mindset of the people within the firm. It can create a higher turnover among other diversity candidates who will be disillusioned by the turnover.
I changed careers, went to law school and I am now with a firm that has invested in and nurtured my growth and is serious about learning and development.
We are very diverse. Women head all our creative departments, and women of color sit on our board. They give real value to my experience as well as my work product. There is no other way to real innovation without diversity of thought and that can only truly come from diverse people who have lived a different life.
Cecile Muñoz is President of U.S. Executive Search & Consulting, an executive talent search firm that is active across the wealth management space