Center President and CEO Ani Huang was featured on the National Association of Corporate Directors’ blog, BoardTalk, this week on the topic of diversity and inclusion. In the post, Ms. Huang highlighted strategies companies are using to improve the diversity of their leadership, particularly looking at the use of incentive programs to drive results. Highlights of the blog include:
- Overall, existing diversity initiatives have not produced significant change for Black and Hispanic representation in management over the last 30 years. In response, companies have engaged their boards on talent strategies, specifically tasking compensation committee directors with overseeing culture, human capital, and diversity.
- Boards should take an active oversight role in talent strategy, including diversity and inclusion, regularly (multiple times per year) engaging with the CEO, the CHRO, and the full leadership on strengths and weaknesses of the plan.
- For many companies, the best way to measure whether efforts to create an inclusive culture and increase worker and management diversity are successful is to set long-term goals that apply to a broad population. These goals may be internally communicated or externally disclosed, as companies such as Accenture, BlackRock, and Google have done. The board should receive regular updates from management on progress against goals and should hear from management how it plans to measure and improve outcomes on a long-term basis.
- If diversity incentive metrics are to be considered, an important question is whether they should be tied to short-term pay (through the annual incentive plan) or long-term pay. Given that increased representation of diverse talent in senior roles is almost always years in the making by virtue of supporting diversity in the leadership pipeline, positioning this in both the annual and long-term plans may be more effective.
Ensuring that diverse talent has an equal chance to thrive is a business imperative as well as the right thing to do, but making it happen takes aggressive action. As with any business imperative, the support and leadership of the board is critical to the company’s success in achieving these vital objectives.