In an age of social advocacy on the part of corporations, many have begun to practice what they preach. As they decry social injustice, some of the world’s biggest brands are elevating minorities and underrepresented groups to C-suite positions, giving them not only a well-deserved seat at the table, but a powerful voice for driving future social change.
To understand the shift to a more diverse C-suite, it’s important to look at some of the facts and data surrounding this diversification movement. It goes beyond Black and white or the inclusion of ethnicities. Today, diversity in the C-suite means embracing all races, sexualities, creeds, cultures and religions.
A look at the diversity movement
While many companies have gone out of their way to embrace C-suite diversity unprompted, there’s a growing push to mandate a certain level of inclusion among all public companies.
On August 6, 2021, the United States Securities and Exchange Commission (SEC) voted to approve new rules for board of director diversity standards, designed to create opportunities for inclusion among the governing bodies of global organizations. The rules dictate three diversity criteria:
- Boards must include one of two self-identified diverse directors: one director must self-identify as female and at least one director must self-identify as an underrepresented minority and/or LGBTQIA+.
- Boards must disclose statistical information about members’ self-identified gender, racial characteristics and LGBTQIA+ status.
- Boards must also disclose information about their board of directors, including information about diversity or why the board does not include a certain proportion of diverse directors.
While these new standards benefit minority leaders and underrepresented groups, they’re still a far cry from enabling opportunities for leadership throughout the organizational structure. They do, however, set a good precedent for evolving standards in the C-suite from a data representation standpoint.
Breaking down the C-suite by representation
It likely doesn’t come as a shock to learn that approximately ~80% of all C-suite officers in the United States are white. Somewhat surprising, however, is the racial breakdown of the remaining ~20% of executive leadership. According to industry data:
- Hispanic or Latino, 6.8%
- Asian, 6.8%
- Black or African American, 3.3%
- Unknown, 1.5%
Despite these low figures, there’s good news for minority groups. Even before the SEC mandate issued earlier in 2021, representation statistics have been climbing since 2010. For example, Asian executives have increased more than 1.25% over the past decade, while Hispanic or Latino leadership has ticked up a full percent. The winds of change may blow gently, but they’re certainly blowing—and they’re likely to gain force as companies continue to look inward to foster social advocacy.
A look at the LGBTQIA+ movement
While minority leadership takes its first timid steps towards rolling change in the C-suite, LGBTQIA+ leadership is firmly entrenching itself in the C-suite. As of 2018, approximately 19% of all chief executive officers identify as LGBTQIA+.
Openly gay executives head some of the biggest companies in the world—including Tim Cook at Apple, Jim Fitterling of DOW Chemical Company and Beth Ford of Land O’Lakes. Even transgender representation in executive leadership is prevalent today, with individuals like SiriusXM Radio and United Therapeutics founder Martine Rothblatt, a trans woman, blazing trails into the board room.
LGBTQIA+ is quickly going from underrepresented minority to a well-respected segment of the C-suite, at companies both public and private.
Inequalities still persist among diverse groups
Representation is only the first step in normalizing diverse executive leadership. Barriers and obstacles still persist even after these individuals embrace their executive titles.
For example, industry statistics show that the average CEO pay for white executives was $198,000 in 2018. Comparatively, minority groups fall well-short of this figure:
- Hispanic or Latino, $185,500
- Asian, $186,600
- Black or African American, $180,900
- Unknown, $177,600
As more and more minority individuals are appointed to positions of executive leadership, these appointments need to come with a narrowing pay gap. Title alone isn’t enough to foster positive representation—it needs to be backed by equality in more than title, across pay, benefits and authority.
There is one edge that underrepresented groups have as they seek to normalize diversity in the C-suite: age. On average, minority executives are between four and six years younger than their white counterparts when welcomed to the executive level. Skewing younger—even by a few years—brings vigor and intensity to minority representation, which equates to disruption of traditional norms in favor of progressive policies.
The C-suite is growing more diverse
As more companies diversify their leadership, they’re finding it has a positive effect on governance—both internal and external. More diverse voices bring new perspective to the conversation, which helps companies explore previously-overlooked opportunities for growth and make inroads with new groups who care not only what the company is, but who it represents. In fact, firms with strong diversity are 36% more likely to have above-average profitability. How diverse is your company?
Do you have the excel sheet to this data?