The Wall Street Journal - 28.10.2019

R14| Monday, October 28, 2019 THE WALL STREET JOURNAL.

Some say one of the biggest barri-

ers to improving diversity in corpo-

rate leadership is that many compa-

nies don’t accurately measure—or

disclose—the extent of the problem.

Only 3% of companies in the S&P

500 share a full breakdown of their

boards’ ethnic diversity, and only 4%

publicly disclose how ethnically di-

verse their senior management team

is, according to the data compiled by

the Journal analysts.

Without precise data, executives

may struggle to put the right D&I

initiatives into place, they say.

“Regarding ethnicity and age,

good data is even harder to come

by,” says Travis Korte, data science

lead at Ethic, a tech-driven sustain-

able asset manager. He adds that

when companies report their racial

and ethnic makeup, there is no reli-

able way of knowing how a com-

pany’s reporting methods compare

with those of its peers.

“Until we see companies report-

ing much more deeply and thought-

fully about employee makeup in gen-

eral, any assessments of diversity we

make will have to be conditional,”

says Mr. Korte.

Ms. SardonandMr. Holgerare

reporters for The Wall Street

Journal in Barcelona. Email them

[email protected]

[email protected].

BYMAITANESARDON ANDDIETERHOLGER

Financials

Communication services

Consumer staples

Consumer discretionary

Health care

Information technology

Industrials

Real estate

Utilities

Energy

Materials

S&P 500

13 79 93 14 78 26 66 31 50 54

20 89 77 23 57 23 66 41 43 57

14 89 88 17 61 32 61 38 38 52

23 90 90 17 52 30 61 23 21 51

13 84 95 6 61 27 64 16 25 52

9 85 91 7 60 14 68 18 32 56

68593 755 562 183350

14 88 95 6 73 16 56 3 8 50

11 66 96 13 61 1 59 18 32 50

5819 3 769 760 32 252

11 73 95 9 52 1 64 20 25 52

13 83 92 11 62 16 62 21 30 52

Head of

Gender Age Gender Age Gender Ethnic diversity & Diversity Inclusion

diversity diversity Independence diversity diversity diversity diversity inclusion programs programs

50.4

40.5

40.9

44.3

40.0

40.0

49.5

48.8

45.8

41.3

44.2

44.1

Board

Overall diversity & inclusion score

Score

76–100

Weak Mid-to-weak Mid-to-strong Strong

0–25 26–50 51–75

Senior management Workforce

Industry by Industry

How sectors fared in The Wall Street Journal

diversity and inclusion ranking of companies

in the S&P 500

Note: See the rankings methodology at wsj.com/leadershipreport. Source: WSJ environment, social and governance research analysts

JOURNAL REPORTS | DIVERSITY & INCLUSION

Lily Doxy, a double M.B.A, was drawn

to American Express by its diversity.

KELLY MARSHALL FOR THE WALL STREET JOURNAL

M

uch has been said about the

importance of having a di-

verse and inclusive work-

force, yet when it comes to

promoting ethnically and

racially diverse people to

boards and senior leader-

ship positions, U.S. compa-

nies continue to struggle.

Why is that the case?

Those who study the issue cite a plethora of chal-

lenges. Some, for instance, say educational disparities

leave companies fighting over a small pool of quali-

fied candidates. Others argue that companies can’t fix

the problem without measuring the extent of it first—

something many companies don’t do. And still others

believe the problem is more basic than that: The is-

sue, they say, is that many companies simply don’t

like to talk about race and institutional bias that

makes it harder for minorities to advance through the

ranks.

“Over time we have erased race from the conversa-

tions about diversity and inclusion,’’ says Laura Mor-

gan Roberts, a professor of practice at the University

of Virginia’s Darden School of Business. “I know it

makes us uncomfortable, but we are all losing out in

creating a more sustainable world if we continue to

overlook some of the racial dynamics.”

In recent years, U.S. companies have put an empha-

sis on adding women to their boards, and they have

achieved some progress. This year, for the first time in

history, every company in the S&P 500 index has at

least one woman on its board. The milestone was

reached in July, when online ve-

hicle-auction company Copart

Inc. announced the appointment

of Diane Morefield as a director,

according to the first diversity

and inclusion ranking of companies and sec-

tors in the S&P 500 by research analysts at

The Wall Street Journal.

That said, the research also suggests

there is still a lot of room for improvement.

Only 2% of S&P 500 companies have boards

in which at least half of the members are

women, and at only seven companies in the

index are at least half of senior managers

women. In fact, at 80% of S&P 500 firms,

fewer than one-third of senior managers are

women.

Meanwhile, the percentage of open

board seats filled by people from diverse

ethnic and racial backgrounds remained unchanged last year at

23%, according to Heidrick & Struggles, a research and consult-

ing firm.

Some say disparities in higher education could be partly to

blame for the lack of progress.

Though the number of black and Hispanic students earning

college degrees is growing, white students earned 67.5% of bach-

elor’s degrees, 68.2% of master’s degrees and 70.1% of doctorates

in the 2015-16 academic year, according to the U.S. Department

of Education’s National Center for Educational Statistics.

“If there is not a pipeline of diverse applicants getting their

professional degrees, there are simply fewer diverse people to

choose from,” says Mikki Hebl, a professor of management and

psychology at Rice University in Houston.

To address that issue, companies need to actively seek out

underrepresented voices instead of waiting for the talent to

come to them, academics say.PayPal HoldingsInc., for exam-

ple, participates in the Year Up program, which trains and

places people from disadvantaged backgrounds into corporate

internships that often turn into full-time work.

Nahtifa Wright, a 30-year-old African-American woman from

Oakland, Calif., had dropped out of college and was working two re-

tail jobs when she joined the program. She interned at PayPal and

eventually got a degree from San Jose State University and a full-

time job at the company, where she has worked for the past seven

years supporting IT needs for the internal communications team.

Since 2015, PayPal has hosted 108 Year Up interns and hired more

than 50 of them full time.

PayPal, which placed above 92%

of S&P 500 companies in the Journal

diversity ranking, has also made an

effort to promote more diverse peo-

ple into senior management.

Last year, the San Jose, Calif.-

based company started requiring

that at least one diverse candidate

be considered for every open posi-

tion at the director

level and above,

with at least one di-

verse employee on

the interview panel.

Since then and

through its other di-

verse hiring policies,

the company has in-

creased the share of

diverse people at

the vice president

level by more than

5%.

The existence of biases around

gender and race is another issue

companies continue to grapple with.

From 2010 to 2017, more than one

million cases of alleged violations of

federal workplace antidiscrimination

laws were filed with the Equal Em-

ployment Opportunity Commission

or its partner agencies, according to

the Center for Public Integrity.

“Because of long-term institu-

tional bias, many women and ethnic

minorities haven’t had the opportu-

nity to get the type of experience

that many companies require,” says

Matt Moore, chief talent officer at

Alpine Investors, a private-equity

firm based in San Francisco that re-

cruits people for its CEO-in-training

program. “But that doesn’t mean

they don’t have the skills and insight

to do the job well.”

American ExpressCo., one of the

20 most diverse companies in the

S&P 500 based on the data compiled

by the Journal analysts, rolled out a

program in 2015 to train employees

on how to identify

and break uncon-

scious bias in their

decisions and build

inclusive teams. The

company also

launched a mentor-

ship program in 2018

to help women and

people from under-

represented back-

grounds develop in

their careers.

Those efforts at-

tracted Lily Doxy, a 34-year-old black

woman with an executive M.B.A. in

digital marketing from Rutgers Busi-

ness School in Newark, N.J., and an

M.B.A. in marketing and manage-

ment from St. Peter’s University in

Jersey City, N.J. Her bachelor’s de-

gree is from Howard University.

“They [American Express] encour-

age moving around the company and

making sure that you move up,’’ says

Ms. Doxy, who recently joined Ameri-

can Express as senior manager of dig-

ital experience, global commercial

services. “It is a very diverse place

and reminiscent of what America ac-

tually is, a melting pot of people.”

One issue: Not enough

diversity in the pipeline

Educational

disparities

might leave

firms fighting

over a small

pool of

candidates.

What Holds

Firms Back

3%

of S&P 500 firms

offerafull

breakdown of

their boards’

ethnic diversity.

4%

do likewise for

their senior

management.