Menendez’ Survey Highlights Corporate America’s Diversity Problem
Menendez’ Survey Highlights Corporate America’s Diversity Problem
New Corporate Diversity Survey Shows Too Few Women & Minorities in Leadership Ranks
WASHINGTON, DC – Calling it a “wakeup call for Corporate America,” U.S. Senator Bob Menendez (D-N.J.) today released the results of his 2014 Corporate Diversity Survey which found that “women and racial or ethnic minorities remain significantly underrepresented at the highest ranks of corporate leadership and among corporate supply chains.”
“Consider this a wake-up call, Corporate America. It is unacceptable that while you’re reaping record profits by marketing goods and services to communities of color, women and minorities are sorely underrepresented on your boards and executive teams, and as your suppliers,” said Sen. Menendez. “That is not just a glaring gap in equity, representation, and inclusion – it’s a shocking business oversight that will ultimately hurt a company’s bottom dollar.”
Menendez said he would be introducing a legislative package in the coming months that will pave the way for greater data sharing and transparency -- particularly increasing access to demographic data for executive/senior level officials across all companies and encouraging greater spending with minority- and women-owned businesses.
Sixty-nine Fortune 100 companies participated in the voluntary and self-administered survey. Menendez released the report during a meeting with key stakeholders, including researchers, investors, government officials, and corporate leaders of Fortune 100 companies committed to increasing corporate diversity.
“The business case for having more Latino representation is irrefutable. The Latino demographic continues to grow significantly; as an example, 1 million U.S. born Latinos will turn 18 every year for the next ten years,” said Victor Arias, Jr., Founding Board Member, Latino Corporate Directors Association. “Insights into how to harness the purchasing power of this demographic are an imperative for corporate America, and the first place is their respective board of directors. It is also an imperative for the US to have Latino leadership in every aspect of American life in order to continue to make our communities more effective in the very near future.”
Senator Menendez’s 2014 Corporate Diversity Survey focused on Fortune 100 companies to gain deeper insight into the representation of women and racial/ethnic minorities at the highest-performing companies in the United States – in leadership and in the use of minority- and women-owned businesses in the contracting and procurement process. The survey requested demographic data on each company’s board of directors, executive team members and suppliers – including professional services suppliers, which are often overlooked by traditional supplier plans and internal data collection efforts.
"Center for Talent Innovation is proud to support Senator Menendez’s corporate diversity efforts for inclusion,” said Laura Sherbin, Executive VP and Director of Research, Center for Talent Innovation. “We feel strongly that as shifting demographics in the U.S. change the face of the consumer, today more than ever before, companies need to understand how to link innovation, diversity and market growth. These findings further support the business case for diversity and provides a compelling justification for diversifying leadership."
Cynthia Marshall, Chief Diversity Officer, AT&T, congratulated Senator Menendez “for highlighting the critical role strong diversity and inclusion practices play in strengthening our nation’s economy, expanding opportunities for our citizens and promoting innovation.” She added: “Senator Menendez’s third corporate diversity survey – in recognizing those companies that are leading practitioners when it comes to diversity and inclusion – sets high standards that the entire corporate community can follow.”
"While everyone suddenly seems to be talking about diversity, we need good, clear data to turn that talk into reality," said Orson Aguilar, Executive Director of The Greenlining Institute. "We applaud Sen Menendez for not only talking the talk, but walking the walk on bringing needed transparency to this critical issue and helping to make corporate diversity real for all of America's communities."
Diversity on Boards of Directors
White men continue to represent the overwhelming majority of boards of directors, comprising 63.0% of board members among participating Fortune 100 companies. Women and racial/ethnic minorities are slightly better represented on corporate boards in 2014 than in 2011, but are still grossly underrepresented overall.
- Women represent 22.9% of directors.
- People of color represent 18.3% of directors; 4 companies do not have a single racial or ethnic minority on their board.
- Latinos represent only 4.9% of directors; 35 companies do not have a single Latino on their board.
- African Americans represent 10.0% of directors; 9 companies do not have a single Black director.
- Asians represent 3.3% of directors; 47 companies do not have a single Asian director.
- Native Americans continue to represent 0.0% of directors.
- Women of color represent only 4.2% of directors; 41 companies do not have a single woman of color director.
By industry, the media/telecommunications/IT/entertainment industry has the highest percentage of women directors (24.8%) and the food products/services industry has the highest percentage of people of color (28.8%). The energy sector has the lowest representation of women and people of color on boards (19.4% and 11.4%, respectively).
Diversity on Executive Teams
White men continue to represent the overwhelming majority of executive team members, comprising 69.7% of senior executives at participating Fortune 100 companies. The representation of women and people of color on executive teams decreased overall from 2011 to 2014 and is at even lower levels than on corporate boards.
- Women represent 20.9% of executive team members; 2 companies have zero female representation on their executive teams.
- People of color represent 12.1% of executive team members; 13 companies do not have a single person of color on their executive team, and 28 companies have only one.
- Latinos represent only 2.9% of executive team members; 45 companies do not have a single Latino senior executive.
- African Americans represent 4.7% of executive team members; 39 companies do not have a single Black senior executive.
- Asians represent 4.2% of executive team members; 41 companies do not have a single Asian senior executive.
- Native Americans continue to represent 0.2% of executive team members, with only one company reporting any Native American senior executive.
- Women of color represent only 2.7% of executive team members; 49 companies do not have a single woman of color on their executive team.
By industry, the health/medical industry has the highest representation of women executives (24.9%); the aero/defense/transportation industry has the lowest (15.5%). As with board representation, the food products/services industry has the highest percentage of people of color on executive teams (24.0%); the energy sector again has the lowest (5.1%).
The share of procurement dollars spent with minority- and women-owned firms remains disproportionately low – even less than in 2011. Spend with minority and women businesses (MWBEs) decreased across the board overall in 2014 and by nearly every specific racial or ethnic minority group. MWBEs remain underutilized across all industries, particularly in the health/medical and energy industries.
- On average, 7.9% of total procurement dollars are spent with minority- and women-owned businesses. Average expenditures with minority- and women-owned businesses amount to $1.5 billion.
- 3.0% of total procurement dollars are spent with women-owned firms.
- 4.8% of total procurement dollars are spent with minority-owned firms.
- 0.9% of total procurement dollars are spent with Latino-owned businesses.
- 1.5% of total procurement dollars are spent with Black-owned businesses.
- 1.7% of total procurement dollars are spent with Asian-owned businesses.
- 0.2% of total procurement dollars are spent with Native American-owned businesses.
Professional Services Diversity
The percentage of total procurement dollars spent on professional services with women-owned and minority-owned firms decreased across the board in 2014 compared to participating Fortune 100 companies in 2011. Women-owned firms received a greater percentage of professional service procurement dollars than any specific racial or ethnic demographic group in 2014, as in 2011.
- 1.7% of procurement dollars are spent on professional services with women-owned businesses. Average professional services spend with women-owned firms amounts to $115,283,210.
- 3.9% of procurement dollars are spent on professional services with minority-owned businesses. Average professional services spend with minority-owned firms amounts to $176,674,173.
- Professional services spend with Latino-owned businesses represents 0.6% of procurement dollars ($35,527,093 on average).
- Professional services spend with Black-owned businesses represents 0.8% of procurement dollars ($29,137,499 on average).
- Professional services spend with Asian-owned businesses represents 2.3% of procurement dollars ($78,178,109 on average).
- Professional services spend with Native American-owned businesses represents 0.2% of procurement dollars ($8,119,805 on average).
Most companies share similar practices: the vast majority have a formal written diversity strategy and implementation plan in place, reassess this plan on an annual basis, and include accountability mechanisms to meet and exceed diversity goals.
- Only 9.2% of companies include numeric targets for diversity and inclusion at the board of directors’ level.
- Approximately half of participating companies (53.8%) include numeric targets for diversity and inclusion at the executive level.
- Approximately half of companies (55.4%) tie performance on meeting diversity goals to a portion of executive compensation.
- Only 14.5% of companies with a Chief Diversity Officer indicate that this person reports directly to the CEO.
- No Supplier Diversity Officers report directly to the CEO.
- Approximately half of companies (54.5%) indicate that the highest-ranking executive responsible for diversity and inclusion reports to the CEO on a quarterly basis.
The report makes a series of recommendations that build upon the strategies for improving diversity that have come to light through Senator Menendez’ past informal working group on diversity, as well as documented examples of diversity and inclusion initiatives that are influencing best practices in Corporate America.
1. CEO Leadership: Make Diversity a Visible Priority at the Top
2. Bonuses, Annual Reviews, and Scorecards: Make Diversity a Key Deliverable
3. Executive Diversity Councils: Connect Diversity to Business Objectives
4. Management Succession Planning and the “Rooney Rule”: Intentionally Incorporate Diversity into Business Leadership Strategies
5. Mentorship and Sponsorship: Provide Targeted Support to Rising Talent
6. Employee Resource Groups: Leverage Affinity Networks as Strategic Corporate Partners Internally and Externally
7. Lasting Inroads to Inclusion: Mitigate Implicit Bias
8. Meaningful CEO and Senior Leadership Involvement: Establish a Top-Down Commitment to Supplier Diversity
9. Supplier Diversity Metrics: Set Ambitious Spend Goals, Consistently Track Progress and Outreach Efforts, and Aim to Increase Supplier Diversity at All Levels
10. Engagement and Accessibility of Supplier Diversity Programs: Share Procurement Information Online, Strengthen Relationships with Diverse Suppliers, and Partner with Minority Business Development Organizations
11. Education and Training: Develop the Capacity of Diverse Suppliers through Ongoing Mentorship and Training Opportunities
12. Second-Tier Sourcing: Include Tier II Spend in Supplier Diversity Programs
13. Capital Investments: Expand Opportunity for Minority- and Women-Owned Businesses (MWBEs) via Incremental Payments, Direct Investments, and Capital Allocations
Participating and non-participating companies:
- Cid Wilson, President and CEO, Hispanic Association on Corporate Responsibility (HACR)
- Irene Natividad, CEO of Globe Women, President of Corporate Women Directors International
- Javier Palomarez, President and CEO, United States Hispanic Chamber of Commerce (USHCC)
- Pamela Prince-Eason, President and CEO, Women’s Business Enterprise National Council (WBENC)
- Victor Arias, Jr., Senior Client Partner, Korn/Ferry International; Founding Board Member, Latino Corporate Directors Association
- Dr. Ella Edmonson Bell, Founder and President, ASCENT: Leading Multicultural Women to the Top
- Carmen Ortiz-McGhee, Board Member, New America Alliance (NAA)
- Elizabeth A. Vazquez, CEO and Co-Founder, WEConnect International
- Danielle Beavers, Economic Equity Program Manager, The Greenlining Institute
- Candice Charles, President of the National Black MBA Association’s Washington DC Chapter
- Ouraphone Willis, Executive Committee Member, National Association of Asian MBAs; Director of Diversity Recruiting, UnitedHealth Group (UHG)
- Cynthia Marshall, Chief Diversity Officer, AT&T
- John Lewis, Chief Diversity Officer, Coca-Cola
- Fernando “Nando” Gomez, Jr., VP of Government Relations, Honeywell
- Julie Slocum, SVP of Government Relations, Wells Fargo
- Lata Reddy, President of the Prudential Foundation and VP for Corporate Social Responsibility, Prudential Financial
- Robert “Bob” Greene, President and CEO, National Association of Investment Companies (NAIC)
- Martin Cabrera, Founder and CEO, Cabrera Capital Markets
- Smeeta Ramarathnam, Chief of Staff to Commissioner Luis Aguilar, U.S. Securities and Exchange Commission (SEC)
- Javier Saade, Associate Administrator of Investment and Innovation, U.S. Small Business Administration (SBA)
- Michael R. Hatcher, Attorney at Law, Jackson Lewis P.C.
- Liz Brinkerhoff, Government Affairs Associate, Catalyst
- Laura Sherbin, Executive VP and Director of Research, Center for Talent Innovation