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Race and DEI: The path forward

National

Finish Line

Axios Finish Line

The last two years have brought scores of new hires, new ideas and new funding to corporate diversity, equity and inclusion — but not all of them are making a difference.

Why it matters: Racism and exclusion persist in the workplace, with higher turnover rates and lower promotion rates among people of color.

And there’s a clear business case for prioritizing DEI at work beyond lip service. Workforces with a variety of experiences and perspectives can make better-informed decisions and generate more creative strategies, experts say.

A McKinsey study found that the most diverse companies were a whopping 36% more profitable in 2019 than their least diverse counterparts.

1) Transparency. A number of companies are recruiting diversely and are willing to share their data.

Microsoft topped the list of Fortune 500 companies on DEI metrics, with a board composed of 40% racial and ethnic minorities and a workforce with 50% racial and ethnic minorities. Also on the list are Centene, Target and Gap.

Yes, but: Other companies don't share their data or explain what metrics they'll use to achieve their DEI goals.

In addition, many companies hire people of color and then can't retain them because they haven't addressed issues of workplace racism, so employees face microaggressions or hurdles to advancement and end up quitting, according to Dee C. Marshall, CEO of Diverse & Engaged, a consulting and talent recruitment firm.

2) Going bigger. The best DEI strategies target all parts of companies, says Mita Mallick, chief diversity officer at Carta.

She points to Sephora, which responded after reports that customers of color had bad in-store experiences. The company held anti-bias training for employees, commissioned a study on racial bias in retail to share industry-wide and changed shelves to include more brands by and for people of color.

3) Going beyond recruiting. Recruiting a diverse workforce is one part of DEI, but companies often make the largest impacts when they change something within their spheres of influence, says Lola Bakare, an inclusive marketing strategist who consults for large companies. 

For example, Google added Real Tone to its Pixel camera to solve the problem of darker skin tones getting lost or poorly captured in mobile photos.

Pop star Rihanna's beauty brand Fenty Beauty launched by offering more makeup skin tone ranges than any other brand — and other makeup companies followed suit.

The other side: When companies come forward after a cultural moment with big commitments to diversity, "the intention sometimes is good, but the impact falls short every time," Marshall says.

After George Floyd's death in 2020, company after company promised to recruit and retain more diverse talent and pledged to put cash toward DEI.

But there was little accountability, because companies don't have to — and often don't — report their demographics or where their money goes.

In many cases, the DEI budget is the first to go in an economic downturn, Marshall says. And if companies make commitments to change for one year, some drop those obligations the following year.

Another problem is that "DEI" as a term is too broad, Bakare says. Companies can't make progress until they get specific about what exactly they want to address. “We’re seeing a continued churn of activity, but not a lot of real change," she says.

That's also a hurdle for DEI officers, she notes, so their jobs are frustrating, and their purview is often too broad to be able to make changes that stick.

The number of DEI officers hired grew 107% from 2015 to 2020, but the turnover rate for those positions is averaging just three years, per LinkedIn data.

The bottom line: The biggest hurdle in corporate DEI is the closed doors, experts say. As long as companies aren't willing to commit to specifics and share data on their progress, change will stall.

1. What’s working in DEI

New hires, new ideas and new funding abound, but not all of the changes are making a difference.

Illustration of a person's hands typing on a laptop surrounded by various shapes and check marks

Deep Dive: Hard Truths - DEI

The last two years have brought scores of new hires, new ideas and new funding to corporate diversity, equity and inclusion — but not all of them are making a difference.Why it matters: Racism and exclusion persist in the workplace, with <a class="gtmContentClick" data-vars-link-text="higher turnover rates" data-vars-click-url="https://www.axios.com/2020/11/17/corporate-america-black-employee-turnover-rate" data-vars-content-id="c909043a-77bc-41d7-8123-74721795dcac" data-vars-headline="What’s working in DEI" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2020/11/17/corporate-america-black-employee-turnover-rate" target="_self">higher turnover rates</a> and lower promotion rates among people of color.

Top stories & latest news on the Federal Reserve, real-time data, plus the biggest shifts happening in the U.S. and global economy.

Economy

After a record economic expansion, the coronavirus pandemic sent the U.S. economy into a recession as unemployment soared to staggering heights. The country now faces urgent questions about how much stimulus is needed for reeling consumers and businesses, and what a recovery might look like.

Economy & Business

Latino

Axios Latino

Corporate recruiters who preached diversity for years are getting their chance to make their mark as companies promise sweeping changes to diversify workforces.

The big picture: They're now showcasing programs and plans that have worked — and where everyone needs to improve. 

State of play: DiversityInc, a company that promotes gender and ethnic diversity among corporates, said some companies have adopted policies and strategies since George Floyd's death in 2020 that may yield massive transformations soon.

All of 2022 DiversityInc's "Hall of Fame" companies for diversity now have formal recruiting relationships with a historic Black college or university.

Around 76% of those companies from DiversityInc's 2022 list of top 50 companies have CEOs who chair or co-chair their executive diversity councils.

Flashback: Racial justice protests put a spotlight on racist corporate imagery and pressured companies to retire images that came out of racial inequality.

Quaker Oats announced in June 2020 that it would rebrand and rename its Aunt Jemima products, saying it recognized that the brand's "origins are based on a racial stereotype."

Mars Food followed in September, announcing it would change the name of Uncle Ben's Rice to Ben's Original following decades of criticism that the image was based on a racist trope.

Then the Washington Redskins became the Commanders, and the Cleveland Indians transformed into the Guardians. 

Between the lines: The changes of names and brands also prompted companies to reevaluate their workforce demographics amid a growing, diverse nation.

Some companies concluded that a diverse workforce was not just a moral obligation but was needed for financial survival. 

The intrigue: The number of Black CFOs nearly doubled from 2020 to 2021, a 2021 report from executive recruiting firm Crist|Kolder Associates found, while the number of Black CEOs remained stagnant. 

Within the 682 companies in the study, people of color held 73 CFO positions —an all-time high representation of 11%.

The 2021 S&P 500 Board Diversity Snapshot from Spencer Stuart, a leadership consulting firm based in Chicago, found that 47% of new directors from 2020 to 2021 were from underrepresented racial and ethnic groups.

Yes, but: People of color remain severely underrepresented among the ranks of CEOs and on boards of major corporations compared with their population.

For example, a report by the Latino Corporate Directors Association found that Latinos held only 4% of Fortune 1000 board seats in 2022.

If companies continue at their 2021 glacial pace, it'll take nearly a century for Black and Latino professionals to get to proportional representation at the manager level.

What they're saying: "There are no excuses now," DiversityInc CEO Carolynn Johnson tells Axios. 

Johnson said companies like Accenture and BASF focus on talent development, mentoring and sponsorship, and haven't turned their back on promises from 2020.

"These companies also are focusing on retention. You don't want to create a revolving door."

Companies struggle to become antiracist, preventing them from succeeding within initiatives of diversity, equity and inclusion as biases get in the way, Robert Naylor, a former journalist at the Associated Press and now a DEI leadership consultant, tells Axios.

Most companies have "intrinsic cultures" as people feel threatened by change, Naylor said. 

Don't forget: Unconscious bias gets in through the recruitment process as managers often look for versions of themselves, creating challenges for candidates to prove they're worthy of being there, Naylor said.

The bottom line: Johnson said companies will now be under scrutiny around workforce diversity, and no backlash against "wokeness" will reverse it when their financial futures are at stake in a diverse nation.

Go to: No. 12 | BASF

2. Recruiters' challenges: promises, reality, commitment

They're showcasing programs that have worked — and where everyone needs to improve.

Corporate recruiters who preached diversity for years are getting their chance to make their mark as companies promise sweeping changes to diversify workforces.The big picture: They&#x27;re now showcasing programs and plans that have worked — and where everyone needs to improve.

Nonprofits are working to prepare young people of color, those formerly incarcerated and tribal college students for career growth, especially in fields where they remain underrepresented.

Why it matters: Despite years of promises by companies, people of color are still not proportionally represented in a number of industries, including tech, media and venture capital firms. 

By the numbers: Black and Latino workers make up 12.8% and 17.4% of the total workforce, respectively, but only 10% and 9.8% of the professional workforce, according to the Economic Policy Institute and the Department for Professional Employees, AFL-CIO.

Black workers have only 9% of all STEM jobs, and Latino workers have 8%, the Pew Research Center found in a study published last year. 

A Washington Post review of the country’s leading businesses that pledged to address racial inequality in 2020 found that only 8% of “C-suite” executives were Black last year. 

Yes, but: Several companies are trying to buck those trends by offering training programs and by collaborating with companies to ensure that people of color are hired and thrive. 

America on Tech gives young students of color access to the technology sector by teaching them web design and development skills. The bicoastal organization says it has helped around 4,000 students since 2014.

Homeboy Industries, a Los Angeles nonprofit that says it's the world's largest gang intervention, rehab and reentry program, has trained thousands of Latino and Black workers in culinary and small-business skills. The group also helps with job placement.

US First Lady Jill Biden next to Homeboy Industries founder Father Gregory Boyle, helps make pastries during a visit to the Homeboy Bakery and Homegirl Cafe in Los Angeles.

First lady Jill Biden with Homeboy Industries founder Father Gregory Boyle during a visit to the Homeboy Bakery and Homegirl Cafe in Los Angeles. Photo: Robyn Beck/AFP via Getty Images

Justice Through Code, a Columbia University program founded by Aedan Macdonald — who spent four years in federal prison for selling marijuana — teaches coding to formerly incarcerated Black and Latino Americans. 

Center for Employment Opportunities (CEO) provides employment services for people released from incarceration, focusing on jobs including in construction and warehouses in parts of the U.S.

The St. Louis-based Cortex Innovation Community and Per Scholas train people of color and women in cybersecurity. Applicants learn how to set up computer networks and firewalls and defend against cyber threats, St. Louis Public Radio reports.

What they're saying: Nonprofits are filling a void left by companies for years in training people of color to succeed in a variety of fields, DiversityInc CEO Carolynn Johnson tells Axios. 

"An employer, a decision-maker absolutely needs to make sure that no stone goes unturned in giving people an opportunity to fairly compete. And yes, that also includes people who were incarcerated," Johnson says. 

Some companies, including Target, are taking advantage of the programs, she adds. The retailer places formerly incarcerated people who have been through certain programs in entry-level positions. 

Plus, many former participants in nonprofit programs return as mentors or help shape policy work to help with DEI initiatives. 

The bottom line: "You need an all-together approach on DEI where we look and interrogate our privilege, where we look at those who are not in the room and make sure that they are in the room," CEO's Christopher Watler tells Axios.

Editor's note: This piece was corrected to show the acronym for the Center for Employment Opportunities is CEO (not CEOWorks).

3. Nonprofits fill void in training people of color

Despite years of promises by companies, people of color are still not proportionally represented in a number of industries.

Illustration of a construction worker, programmer and chef.

Nonprofits are working to prepare young people of color, those formerly incarcerated and tribal college students for career growth, especially in fields where they remain underrepresented.Why it matters: Despite years of promises by companies, people of color are still not proportionally represented in a number of industries, including <a class="gtmContentClick" data-vars-link-text="tech" data-vars-click-url="https://www.pewresearch.org/science/2021/04/01/stem-jobs-see-uneven-progress-in-increasing-gender-racial-and-ethnic-diversity/" data-vars-content-id="4ff0ef9f-5368-41a1-8765-7abf1908208b" data-vars-headline="Nonprofits fill void in training people of color" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.pewresearch.org/science/2021/04/01/stem-jobs-see-uneven-progress-in-increasing-gender-racial-and-ethnic-diversity/" target="_blank">tech</a>, <a class="gtmContentClick" data-vars-link-text="media " data-vars-click-url="https://www.axios.com/2022/09/27/latino-representation-media-film-tv-study" data-vars-content-id="4ff0ef9f-5368-41a1-8765-7abf1908208b" data-vars-headline="Nonprofits fill void in training people of color" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2022/09/27/latino-representation-media-film-tv-study" target="_self">media </a>and <a class="gtmContentClick" data-vars-link-text="venture capital firms" data-vars-click-url="https://www.axios.com/2017/12/15/the-slowly-changing-face-of-vcs-next-generation-1513306334" data-vars-content-id="4ff0ef9f-5368-41a1-8765-7abf1908208b" data-vars-headline="Nonprofits fill void in training people of color" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2017/12/15/the-slowly-changing-face-of-vcs-next-generation-1513306334" target="_self">venture capital firms</a>.

Communicators

Axios Communicators

Share who say their employer's commitment to DEI isn't authentic

Data: Ernst & Young LLP; Note: Categories were chosen from the U.S. Census, which defines race and Hispanic origin as separate data. Chart: Tory Lysik / Axios Visuals

There are stark contrasts in the ways different generations and groups of employees view diversity and inclusion efforts at work, according to a new survey, Axios' Eleanor Hawkins reports. 

Why it matters: The corporate leaders grappling with how best to execute, measure and share their progress on DEI are often Gen X and baby boomers — but it's younger workers who are leading the charge for better efforts.

By the numbers: 76% of millennials would leave their company if it didn't offer DEI initiatives, according to the survey of 3,000 individuals conducted in September by Ernst & Young.

Nearly half of Gen Z, millennials and LGBT+ workers said their companies' public positions on social issues affect their decision to stay in their job "a great deal" or "a lot."

57% of baby boomers said this has little to no impact on their intent to stay.

Catch up quick: In response to the outrage following the murder of George Floyd in 2020, more than 2,300 CEOs publicly pledged to do their part to create more inclusive and equitable workplaces.

Yes, but: The E&Y survey shows those efforts are complicated by the lack of consensus among employees about what DEI means.

Zoom in: Gen Z workers specifically look to corporate social responsibility efforts, volunteering and employee resource groups as signs of commitment to DEI. 

Black employees prioritize opportunities for career growth.

LGBTQ+ employees want to see a demonstrated culture of belonging.

What they’re saying: "Gen Z and Millennials are demanding that the companies they work for value DEI, not with commitment but with actions," Yemi Akisanya, Groupon’s global head of DEI, told Axios. "Companies who are not positioning themselves strongly on DEI will struggle to find top talent."

State of play: Companies with clear strategies are eager to share their progress, because it’s a way to stay accountable internally and also makes for good PR and employer branding. 

Sephora has doubled the number of Black and Hispanic employees in leadership roles over the past year; Uber's diversity in leadership roles has tripled since DEI goals were introduced in 2017; and Accenture is close to reaching its goal of a gender-balanced workforce by 2025. 

"Everyone in our company is required to set at least one DEI objective — no matter how minute it might be — and commit to it," Akisanya says.

Between the lines: Leaders need to worry less about what they are saying to employees, and worry more about what they are doing.

When it comes to DEI, "communicators can cultivate a common vision and explain: This is where we are, this is where we want to go, and this is how we will get there," Aniela Unguresan, economist and co-founder of the EDGE certification board — which measures corporate representation, pay equity and policies — told Axios. 

But corporate communicators are not DEI wizards, and even the best PR pro cannot successfully spin a superficial or empty diversity plan. 

"Organizations have to continue to place DEI and talent as a business imperative," Leslie Patterson, EY's diversity, equity and inclusiveness leader, told Axios. "DEI progress is not something you can quickly check off a list. You've got to stick with it and continue to evolve it."

The bottom line: "There are real benefits to embracing DEI efforts and then communicating widely," Patterson says. "When employees feel there's racial equity in the workplace, they are more loyal to their employer, more committed to the work and more likely to recommend their employer to friends and family."

4. The DEI communications divide

A recent survey found that 76% of millennials would leave their company if it didn't offer DEI initiatives.

There are stark contrasts in the ways different generations and groups of employees view diversity and inclusion efforts at work, according to a new survey, Axios&#x27; Eleanor Hawkins reports. Why it matters: The corporate leaders grappling with how best to execute, measure and share their progress on DEI are often Gen X and baby boomers — but it&#x27;s younger workers who are leading the charge for better efforts.