America is increasingly diverse, as is its workforce, but corporate leaders still strongly resemble the cast of “Mad Men.”
In 2014, only 5 percent of Fortune 500 CEOs were women. In case you forgot, women account for roughly 50 percent of the human race.
|Whiteness and maleness
But ethnic and racial diversity is also severely lacking in the C-suite, even at companies that have greatly increased the diversity of their overall workforce. In 2014, only 4 percent of Fortune 500 chief executives were racial or ethnic minorities in a country that is now 38 percent nonwhite.
There are a variety of explanations for the stubborn whiteness and maleness of the C-suite.
For one, the older generation that dominates executive positions is not nearly as diverse as the nation as a whole.
Similarly, today's executives mostly began their careers when barriers based on gender and race were even higher than today. Women accounted for a much smaller share of the overall workforce and were still systematically excluded from many professions. Racial prejudices were also more pronounced. For instance, the percentage of Americans in support of interracial marriage increased from 43 percent in 1983 to 87 percent in 2013, according to Gallup.
|Diversity beneficial for bottom line
But things clearly aren't changing fast enough when it comes to corporate leadership, companies have determined. Employers have increasingly come to the conclusion that diversity in leadership is not only a good PR move, but beneficial for the bottom line.
A recent study by McKinsey found that companies that were in the top quartile in terms of gender diversity financially outperformed companies in the bottom quartile by 15 percent. The most ethnically diverse companies outperformed the least ethnically diverse ones by 35 percent.
“More diverse companies, we believe, are better able to win top talent and improve their customer orientation, employee satisfaction, and decision making, and all that leads to a virtuous cycle of increasing returns,” McKinsey explained in its report.
Similarly, a recent study by PricewaterhouseCoopers found that 85 percent of CEOs that implemented a designated diversity strategy say they believe it had enhanced the company's performance.
Most executives say they have sought to increase diversity by broadening their recruitment efforts by seeking employees in different geographic areas, industries, or demographic segments.
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