Diversity in business demands action, not statements

When the Black Lives Matter movement gained mainstream attention in 2013, companies promised to ‘do better’ and asked what they could do to improve diversity. Many were accused of hypocrisy and grasping an opportunity for profile raising: “If Black lives matter to brands, where are your Black board members?” asked Marketing Week. 

In 2017, the UK introduced an amendment to its 2010 Equality Act, requiring businesses with 250 employees or more to publish information regarding the gender pay gaps within their organizations. The results, which unsurprisingly revealed women routinely earned much less than their male counterparts, received global attention, prompting yet more sheepish statements and promises to improve. 

Small steps on a long journey  

Yet despite a decade of promises, there’s still a long way to go.  

In June 2023, Deloitte and the Alliance for Board Diversity released their seventh Missing Pieces report, which assesses the gender, racial and ethnic diversity of the corporate directors of America’s largest and most prominent public companies.  

The report showed that more than half of Fortune 500 board seats are still held by white men — although women and individuals from under-represented racial and ethnic groups have recorded gradual increases.  

“The findings from this year’s report show gradual steps in the right direction, but at this pace, US top corporate boards might not represent the nation’s population until 2060,” said Carey Oven, national managing partner of the Center for Board Effectiveness at Deloitte LLP, in the press release accompanying the report.  

“Board diversity and inclusion isn’t only the right thing to do,” he continued. “It is a business imperative that builds broad stakeholder trust that ultimately can lead to better business outcomes.” 

Maintaining the status quo 

Sophie van Gool is an Esade MBA alumna and founder of Moonshot Diversity and Inclusion, which advises and trains companies on diversity and inclusivity strategy and policy. She started the Stockholm-based business after realizing she was one of only two female partners in a major global consulting group, in an office with 23 male partners. 

“I was confused about that, because the Netherlands, where I’m from and where the office was based, is quite an equal country and back in school and university there were a lot of talented women — they were the ones with the best grades and loudest voices in class,” Sophie explains.  

“I was puzzled when I started working and saw this. I asked my managers and my peers: ‘Why don’t we have more women?’ They said things such as: ‘It's very complicated, and yes we want to change it.’ So I decided to do something about it.” 

Before starting her MBA with Esade, Sophie began researching the topic and found that many companies were more concerned with meeting quotas than bringing about true change. 

“A lot of companies focus on getting a percentage of women, and a percentage of people of color into the company,” she says. “But then they forget about the inclusion parts. What usually happens is that after one or two years these people remain different to the majority, they don’t feel at home, and they leave. Then everyone says: ‘Oh, you see? It’s really difficult.’ And that only confirms their ideas and so nothing changes.” 

Create positive environments 

Eugenia Bieto is an independent director of Endesa, president of the Catalan Coordination of Foundations and treasurer of Círculo del Liceo. She was the general manager of the Esade Foundation from 2011 to 2018 and founded the Esade Entrepreneurship Center.  

Bieto agrees with van Gool that companies must proactively follow up diversity initiatives with positive environments for them to be successful. 

“Equality is something that the company’s most senior executive must believe in,” she says. “If the executive believes in it, it’s easier for equality policies to be embodied in specific actions. In companies run by women, such policies are implemented and become a reality.   

“Evolution has been positive but there’s still a long way to go until women account for 40 per cent of board members and senior management — mainly because of obstacles posed by corporate culture and unconscious bias.” 

Quotas work 

According to Bieto, boards won’t be truly diverse until they accurately represent the make-up of society. And it’s here where legislation and quotas can help, she says. 

“Great progress has happened in recent years, mainly thanks to legislation,” she says. “This legislative pressure is accompanied by social and economic pressure: society and big companies are moving in this direction. Stakeholders are starting to regard diversity as almost important as environmental criteria when championing the decisions taken by big companies. 

“Boards can help speed up this process by setting an example and broadcasting equality landmarks to let the entire firm know that equality matters to the CEO. Complexity is always a challenge for directors, but it’s entertaining and exciting too.  

 
“I think that a board should represent the same diversity found in society. Let’s not forget that the board will be testing product strategies and market strategies, deciding whether or not to go global, or to create a new business unit.” 

Diversity improves performance 

The facts back-up Bieto’s assertions that enhancing the diversity of boards and senior leadership teams isn’t just a quick-fix exercise in brand washing or meeting quotas to improve public profiles. Improving diversity does lead to better business outcomes. 

A report by Diligent and the Esade Center for Corporate Governance (in Spanish) compared the performance of 5,295 companies in 50 countries with the activity and composition of their boards of directors. The results revealed that companies with more diversity on their boards of directors performed better in terms of environmental and social sustainability.   

“This report shows that it is necessary to get as far away as possible from the traditional models that are identified with the uniformity in the composition of the 'male, pale and stale' board, “said Mario Lara, director of the Esade Center for Corporate Governance. 

"The diversity of the members on the board of directors, especially in terms of gender, age, nationality and experience, adds value and is associated with better non-financial results and environmental and social sustainability.”  

Increasing the bottom line shouldn’t be the driving force behind improving diversity. But if better policies also lead to bigger profits, the companies that are still failing to act have run out of excuses.