In the past year, diversity talks have increased across American corporations with the goal of improving equity for minority populations.
This is also occurring in general for top positions at U.S. colleges and universities and within branches of the U.S. government. But these talks are not new as they are more a result of calls for action that took place around 20 years ago.
With an election year on the horizon, and with the U.S. population becoming more diverse, policymakers have been creative in coming up with legislation that would improve management policies to encourage inclusion in the private and public sectors.
An increase in representation in top positions across industry sectors is indeed still needed. For example, the U.S. House of Representatives began looking at diversity in the financial services sector in 2005.
As a result, studies of financial services companies reported that from 2007 to 2015, representation of minorities in the financial services sector increased from 17% to 21% during that period.
Senior roles held by minorities in that sector, on the other hand, continued to be underrepresented during that period.
In a statement before the 2019 meeting of the Subcommittee on Diversity and Inclusion, it was said that, “Unfortunately, the trends are clear: Management-level representation of minorities and women showed marginal to no increase from 2007 through 2015.”
But it was also reported during the same meeting that diversity leads to higher profitability for a company.
The message was clear: Improved recruitment efforts were needed.
It was especially a call to action for middle managers in the financial services industry, suggesting they should increase recruitment at colleges and universities that are more diverse.
In a recent meeting of the Committee on Financial Services, the message was still that large banks’ boards of directors were not diverse. It was reported, however, that large banks were implementing practices to recruit a diverse workforce and tie inclusion results to performance.
Out of these talks and discussions by the Committee on Financial Services, there are some innovative ideas taking place for the financial services sector with a proposed legislation titled “Promoting Diversity and Inclusion in Banking Act of 2019.”
The legislation would amend how banks are rated by adding a diversity and inclusion rating. Such rating would rate how banking institutions have management policies to encourage diversity and inclusion from hiring practices to training of employees, and rate a bank based on having a “Diversity and Inclusion Officer” who reports to the CEO.
Another piece of legislation that has made a change for increasing diversity in the boardroom has been California’s 2018 law that mandates women representation in boards of directors for public corporations with executive offices located in California.
This is California’s SB826 that was signed into law by the Governor of California in 2018. In other words, SB 826 is basically a gender diversity mandate.
The law mandated all public companies with principal executive offices located in California, regardless of where they were incorporated, to have a minimum of one woman on its board of directors by the close of 2019.
By December 31, 2021 that minimum increases to two women if the corporation has five board members, and three women directors are required if the corporation has six or more directors.
The impact of the law hasn’t just been clear in California, but across public corporations in the U.S. where there has been a rise of women boards members.
From 2018 to today, the number of companies in the S&P 500 stock index (these are 500 large companies listed on stock exchanges in the U.S.) with two or more women on their boards went from 86% to 90%.
As corporate boards get revamped, we need to honor and follow in the footsteps of minority CEOs in history like Ursula Burns, the former CEO of Xerox, who in 2009 was named the first African American female CEO of a Fortune 500 company.
Or learn from Antonio Neri, who in 2018 became the first Latino CEO of Hewlett Packard, among others.
But most importantly, we need to act beyond talks of diversity and implement business practices that recruit, promote, and educate the workforce about the value of diversity and inclusion.
