Corporations Want Chief Diversity Officers, But Do They Want True Change?

The shifting conversation around social justice in the US and around the world has brought workforce diversity and inclusion (D&I) into the spotlight once again. There is now real urgency for corporations to deliver on their pledges to be more inclusive in their hiring and internal job promotion practices.

In response, businesses are now actively bringing chief diversity officers (CDOs) into the fold. Over the past five years, CDO hiring has grown by 113 percent.

The extent to which diversity shortcomings influences companies’ shareholder relations remains to be seen. Ethical investing is becoming more of a market force as millennials mature, and hedge funds including Amana have been vocal about their intentions to divest from Big Tech companies that disappoint in their commitments to social justice.

Ethics aside, from a business market share standpoint, diversity efforts do make sense. A McKinsey study found that companies which feature diversity in its leadership positions are likely to outperform competitors who aren’t as diverse by 35 percent.

Stagnation in Tech and Other Sectors

Tech has been among the industries pressured to step up in their efforts to become more diverse. The industry has long been criticized for being dominated by white males who favor “bro culture,” and it continues to be. The latest diversity reports from giants Alphabet (GOOG), Apple (AAPL), Amazon (AMZN), Facebook (FB), and Microsoft (MSFT) have shown some progress but these are seen to be still falling short of expectations.

Progress has been remarkably slow for African-American workers, with tech giants only showing single-digit increases in the percentage of black workers in their employ over the past six years, according to a recent report from CNBC.

On the other hand, as CNBC’s data indicates, women have finally started to benefit from D&I efforts. More females are now part of Facebook’s technical workforce, accounting for 23 percent at the start of 2019 compared to just 15 percent in 2014. Google has also made similar strides in hiring more women.

It’s not only tech that’s being called upon to ramp up D&I, though, as corporations from other industries are facing similar scrutiny. This is why CDOs are in such high demand nowadays.

The trend does raise doubts on whether adding the role of CDO will truly improve diversity or it will just be a way for companies to signal to the general public that they are doing something, even if results are limited.

CDOs Face Challenges

Many corporate stakeholders likely hope that appointing an executive focused on the issue should help them from a PR perspective. But as recent diversity figures suggest, actually making a difference with D&I can be a serious challenge. Improving headcount figures doesn’t come overnight, and changing the cultures of organizations is even harder.

The “novelty” factor associated with the CDO role means there’s no educational degree that makes one immediately ready to take on the role. Current CDOs have diverse professional experiences with most having backgrounds in human resources (HR), though some have also held positions or have expertise in business, communications, and even legal. There is also no established playbook of standard practices that is guaranteed to work, so each officer must navigate the unique circumstances of their respective organizations.

The CDO role also needs to find stronger footing among leaders. According to Glassdoor, CDO salary is $127,239 on the average, which is less than that of other C-level positions. Turnover is also quite high, with CDOs rendering an average of just about three years in the role and many citing the difficulty of bringing about real change as a major source of frustration.

For CDOs struggling to make a meaningful difference, new D&I solutions could lead toward more inclusive practices. Emerging startups are actually innovating for the space. Hiring platform Joonko, for example, helps corporations fill their recruiting pipelines with pre-qualified applicants who hail from diverse backgrounds.

“Brands today have to understand words are not enough,” Joonko CEO Ilit Raz wrote in a recent blog post. “However, engaging in public discourse surrounding social injustice and implementing action-driven plans will leave consumers leaning in their favor. From encouraging true workplace diversity, funding initiatives to end gender and racial pay disparities, and boycotting injustice. As consumers, we won’t settle for anything less because our future and lives literally depend on their actions.”

CDOs certainly don’t have it easy. Sports apparel giant Nike (NKE) has been at the forefront of incorporating diversity in its brand after publicly supporting the Black Lives Matter movement, despite its questionable human rights record. Kellie Leonard, the company’s first CDO, left in late July to pursue other interests after just two years, prompting CEO John Donahoe to send a memo to staff in which he pledged to make “more meaningful change, focusing on equal access to opportunity for all.”

Apple’s head of diversity Christie Smith, who joined the company in 2017, exited the company last June just as the iPhone maker announced its plans for a $100 million fund for racial equity.

Commitment Requires Action

As these issues reveal, organizations have to address a variety of issues for their D&I efforts to succeed. Companies must further empower CDOs and must remove the obstacles that prevent them from delivering on their mandate. To start, the role may have to be structured in such a way that CDOs have a more direct line to the key decision maker. Intermediaries can muddy messages and lengthen the time it takes to turn recommendation into action. Tools like the aforementioned Joonko can help a great deal from a recruitment perspective.

Organizations must also find ways to develop the right culture and mindset. Scheduling diversity talks, seminars, and events can help, but influencing day-to-day work is more impactful. Companies can implement zero tolerance policies for hate and discrimination where violators actually get their due. Ensuring that workspaces have proper accommodation for workers with special needs also helps show that the company is doing something tangible toward greater inclusion.

CDOs must also find real support across the organization. Leaders from other units must believe in the effort. In this way, implementing and enacting policy changes will be met with less resistance. Leadership should change or let go of people who have deeply seated biases and thus will impede efforts.

Solving the Diversity Conundrum

It is, thankfully, getting increasingly hard for corporations to avoid the diversity conversation due to all the controversy of late. Unfortunately, pursuing true equality in their offices can get corporations stuck between a rock and a hard place. On the one hand, the absence of any effort can be construed as ignorance and negligence. On the other, any effort to improve diversity now can be dismissed as a stunt performed to avoid further scrutiny.

Appointing CDOs and launching D&I initiatives can help, but it’s the results that eventually matter. Only through real change can everyone truly benefit from equal opportunity.

Disclosure: None.