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."
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.
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).
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.
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.
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.
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.
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