5 reasons why racial equity requires a review of company culture

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5 reasons why racial equity requires a review of company culture

Find out why it's important for business leaders to review company culture and help resolve the issue of racial inequity in the U.S. workforce.

Linda Leung

November 19, 2021 | 9 min read

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At your next virtual meeting, look at the faces on the screen. Do all the participants identify with the same gender? Do the attendees share the same ethnicity? Is the person who’s leading the call giving everyone an equal chance to give their opinion? 

In the age of Zoom and Microsoft Teams meetings, it has become a stark reality that the workforce in U.S. organizations in 2021 is still not as diverse as it should be. But people want to work for a company that values diversity, equity, and inclusion (DEI) — a full 80% of them in fact, according to the April 2021 edition of the CNBC/SurveyMonkey Workforce Happiness Index. It also makes sense for a company’s success. 

Businesses with ethnic and cultural diversity outperform by 36% in profitability, according to McKinsey & Company’s 2019 data on diversity in executive teams. Companies with more than 30% women executives were more likely to outperform companies where this percentage ranged from 10% to 30%, according to McKinsey. Yet the representation of ethnic minorities among executive teams around the globe stood at only 14% in 2019, while gender diversity in executive teams was just slightly better at 15%, according to McKinsey. 

A separate 2021 Women in the Workplace research study conducted by LeanIn.Org and McKinsey, found that women of color account for only 4% of C-suite leaders.

Amid a backdrop of an ongoing pandemic, The Great Resignation, and low morale among workers, the fireside chat session at the recent Equity at Work event presented by LeanIn.Org in partnership with Momentive, sparked a lively and transformative discussion about why businesses must now move beyond just talking about DEI to taking bold steps to fix racial inequity in the workplace. The speakers, Mellody Hobson, co-CEO and president of Ariel Investments, Sheryl Sandberg, co-founder of LeanIn.Org and COO of Meta, and Zander Lurie, CEO of Momentive, also discussed why it’s time for business leaders to lead the transformation to a better society — and be held accountable for its success. 

“Talent and genius do not discriminate among ethnicity or gender. You want to make sure that you’re not closing off the ranks in any way to having access to great thinking.”

Mellody Hobson

Co-CEO & president, Ariel Investments

The fight for diversity, equity, and inclusion starts with senior leadership

“Diversity is not philanthropy,” said Mellody Hobson, co-CEO & president of Ariel Investments, who spoke at the fireside chat session, alongside Sheryl Sandberg, co-founder of LeanIn.Org and COO of Meta, and Zander Lurie, CEO of Momentive. “To the extent that you don’t have everyone in the room and all their voices aren’t heard, you can’t be your best self as an organization,” said Hobson, who is also chair of the board of directors at Starbucks. 

Hobson believes that today we’re living in a time that Hobson describes as "civil rights 3.0." Hobson explained that the civil rights movement began with the emancipation proclamation in 1863 and was followed by the Voting Rights Act of 1965, aimed at overcoming legal barriers at the state and local levels that prevented Black Americans from exercising their right to vote. The difference now is that "civil rights 3.0" is not led by governments, but instead needs to be led by business leaders, because equity is the will of the people.

“People are asking corporate America to really stand behind their words. And because of the viral nature of our society, everyone is holding you accountable,” said Hobson. “People have no problem voting with their feet. The workers in society today have an enormous amount of power, and they’re using it.”

As Hobson told attendees, math has no opinion. Below are five key takeaways from the fireside chat session, with statistics from the Lean In Women in the Workplace study and the October 2021 edition of the CNBC/Momentive Workforce Happiness Index to illustrate the racial inequity that’s still plaguing the business world today. We also describe the tools that leaders can use to begin to fix the problem. 

1. Empower allyship across the workforce

Compared to men at their level, women leaders are up to twice as likely¹ to spend substantial time on DEI work that falls outside their formal job responsibilities.

According to the Women in the Workplace report, women are more likely than men to take allyship actions, such as mentoring women of color, advocating for new opportunities for them, and actively confronting discrimination.

When managers support employee wellbeing, employees are happier, less burned out, and less likely to consider leaving. The same is true of employees who have strong allies and believe DEI is a high priority for their company. But this critical work that women are doing is going overlooked, according to Lean In. The study found that while almost 70% of companies say the work employees do to promote DEI outside of their formal job responsibilities is very or extremely critical, less than a quarter of companies are recognizing this effort to a substantial extent in employee evaluations. 

2. Recognize ambition in Black women

More than a quarter of Black women¹ say their race has led to them missing out on an opportunity to advance.

Black women face disproportionately high barriers in the workplace and are promoted at a lower rate than white women at the first step up to manager, according to the Women in the Workplace report. 

A separate State of Black Women in Corporate America report by Lean In found that Black women are substantially more likely than white women — and just as likely as white men — to say that they are interested in becoming top executives.

“If we give [Black women] the fair opportunity they should have, we can change those leadership numbers,” Sheryl Sandberg said at the Equity at Work event.

Sandberg and Hobson spoke about immediate ways to fix this issue. According to Sandberg, leaders should be cognizant of managers and performance reviews using the words “too ambitious” or “too aggressive” as labels for women, and especially Black women. “No one ever tells a man they’re too ambitious. But we tell women and we particularly tell Black women they are aggressive, even if they’re doing nothing too aggressive,” said Sandberg. “ You’ve got to look for these words and look for the systematic biases we have against women and women of color so that we can change this.”

Hobson recalled a time when she first joined Ariel Investments as a young executive, and being told by John Rogers, Ariel Investments’s chairman and co-CEO, that she’d be meeting with "lots of people with very senior titles and a lot of money." But that didn’t mean they had better ideas. Hobson added: “John said, ‘I want your ideas.’ That’s the definition of inclusion. If we could look at everyone in the world that way and see the potential in them, I think it would be fundamentally different.” Hobson said she lives by Rogers’s advice, which is to never leave a room without having changed it. 

3. Broaden beyond gender diversity and focus on ethnic diversity

Only 65% of companies track promotion rates by gender, and only 35% track promotions specifically for women of color.¹

Tracking the representation of women in leadership positions is a great start, but businesses must also track that against promotions of women of color, too. The results might be eye opening to see that even though women are being promoted — albeit at a lower rate than men, according to Lean In — women of color continue to lose ground at every step in the pipeline, between the entry level and the C-suite. Its research found that the representation of women of color drops off by more than 75% between entry level and the C-suite.

One way businesses can monitor this is by using Momentive solution Workplace Equity IQ, which goes beyond merely tracking the representation of diverse groups to truly understand the beliefs and experiences of employees across intersectional identities.

And with those insights, businesses can design a DEI roadmap and HR strategy that will address the inequity problem.

“Diversity has a gender bias,” said Hobson. “Companies get really enthusiastic about their gender numbers, which largely favors white women. And then everything else falls to the wayside because they feel like they’re making progress there as opposed to looking at the totality of the issue.” 

4. Call out biases at work and make it safe for people to do so

More than three-quarters of white employees think of themselves as allies to women of color. But less than 40% say they speak out against discrimination

Just as businesses make it everyone’s responsibility to keep business data safe and secure, calling out biases and discrimination should be part of everyone’s role. And it’s important that everyone understands the potential of not just hiring a diverse workforce, but really leveraging it. 

“You can confront discrimination when you see it,” said Sandberg. “We want to make it very concrete what people can do to not just think of themselves as an ally, but be an ally.” She pointed to Lean In’s Allyship at Work program as a free training program for enterprises that empowers employees to take meaningful action as allies. 

5. Invite more diverse voices to your next virtual meeting

47% of adults2 say they expect in-person employees to have better career opportunities at their workplace a year from now.

With the trend toward hybrid working or fully remote working, employees may feel that remote workers are less likely to have better career opportunities. In fact, 47% of adults2 say they expect in-person employees to have better career opportunities at their workplace a year from now. Remote workers may lose out on the benefits of in-person interactions and the ability to build relationships outside of virtual meetings and instant messaging. But businesses should use virtual meetings as a way to bring in more diverse opinions and ideas. Hobson said it could be an especially valuable way to hear ideas from fresh talent, such as newly graduated Black or Latinx MBA graduates, who may not have been given the chance to fly in for meetings, pre-pandemic. 

Hobson said: “Young people are listening in. They’re observing and learning and being groomed to be future leaders. I think we can offset further marginalizing communities with this intentionality.” 

You can relive this discussion and the other Equity at Work sessions, including a panel discussion between diversity leaders from the NBA, Sony Music Group, and Momentive, by accessing the on-demand recordings.

1Research by McKinsey & Company and LeanIn.Org conducted between May and August, 2021. The report is based on research from 423 companies in the U.S. and Canada, as well as research from McKinsey & Company in 2012. In addition, more than 65,000 employees from 88 companies were surveyed on their workplace experiences.

2This CNBC|Momentive Workforce study was conducted from October 18-25, 2021. We surveyed 11,227 adults, 18 and older, who live in the U.S. The sample was balanced by age, race, among other demographic variables, according to the U.S. Census.

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