Don’t assume diversity in the workplace has been solved because Black CEOs make more than white execs.
A curious trend has occurred in the world of executive pay in the U.S. It turns out that Black CEOs on average are paid more than their white peers. Incidentally, when companies appoint them as CEOs, their market caps enjoy a jump in value, according to a recent study.
But that doesn’t mean we’re seeing progress when it comes to ensuring we have executive leadership that reflects not only what America looks like today, but also the depth of talent we still leave untapped in this country. (Not to mention the pay gap between CEOs and what the average U.S. corporate employee makes, but that's another issue.)
To learn why this seemingly good news really isn’t all that, 3p recently caught up with Marvin Owens, chief engagement officer at Impact Shares and a former NAACP senior director. He discussed why the dearth of Black CEOs still must be addressed, shared his perspective on the challenges that Black professionals often face, and offered suggestions on how to increase the pipeline of talent for Black professionals.
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On the surface, the high rate of pay for the six Black CEOs who currently head Fortune 500 companies makes it sounds as if the business community is buying into fairness and equity when it comes to hiring
But Owens says the reality is more of a mixed bag. “What this phenomenon shows is that Black CEOs can demand higher pay due to the smaller pool of candidates,” he told us. “While higher salaries are a good thing, it also indicates that firms are choosing from smaller pools, which impacts the market. It also indicates that these firms have done a poor job of developing and maintaining internal talent.”
Further, what appears to be a bonus for leading Black executives is actually reflective of what’s been going on with diversity, equity and inclusion (DEI) across corporate America. “Most Black professionals I’ve engaged most recently point to a marked difference in how their firms are communicating a commitment to racial equity, but with little change in policies, or internal resource commitments, to develop a diverse talent pool and ensure accountabilities and remedies for inequity,” Owens explained.
One of the largest barriers to opening up more opportunities for talented employees of all backgrounds is that many organizations are still resisting calls to disclose their hiring data based on race and ethnicity.
But as is the case with any company’s decision-making processes, you can’t map out the best strategy without solid, informative data. As a result, many companies are actually missing out on hiring the best possible current and future leaders. “Solving problems like this always begins with gathering the data,” Owens told 3p, “and as we’ve seen with the general corporate resistance to racial equity audits, the ability to get to a solution is hampered by an unwillingness to gather and disclose the data. Data gathering and disclosure is viewed through the lens of risk, and not opportunity.”
As the saying goes, hiring a talented workforce and the best possible leadership is a journey. Concern over today’s lack of diversity within the workforce shouldn’t get in the way of ensuring that a company’s C-Suite of tomorrow includes people who are stellar at what they do, but who often find themselves overlooked in today’s corporate world.
The hard work begins now — or, in reality, it should have started many yesterday’s ago. Organizations that say they’re focused on just, fair and inclusive hiring can start by looking within, Owens advises. “Companies committed to closing the racial pay gap should begin with their own employees, and assessing whether inequities exist (intended or unintended),” he said.
Business leaders who believe their current methods of hiring can remain under the radar are mistaken. More stakeholders are noticing, particularly the ones who buy the equities — as well as those who write the rules. “Investors and regulators have already underscored the importance of human capital," Owens explained. "A firm enacting internal policies that not only support pay equity, but provide for accountability and remedies when inequity exists sends a message to the broader market, and ultimately impacts public policy.”
And it works both ways, as policymakers will notice that if something works well in a business setting, it can work in other spheres as well. “Corporate behavior has enormous influence on public policy,” Owens said.
While many companies have gone silent two years after they made a copious amount of promises after George Floyd’s murder, it is still not too late to follow through. Owens suggests a three-pronged approach, starting with: “Assess the current state of your firm relative to this issue. Racial equity audits that focus on human capital can be an extremely helpful tool to establish a starting point based on data.”
Then, it’s important to listen to employees — and perhaps branch out to prospective employees, too. “Engage current Black professionals and get their sense of the problem, the culture and their experiences," Owens advised.
Finally, understand there are no quick solutions — in fact, it’s best to develop a plan that will work for a long time instead of seeking quick answers. “Invest in the development of a diverse talent pool, not with expectation of short-term returns, but long term,” Owens concluded.
Image credit: Taylor Grote via Unsplash
Leon Kaye has written for 3p since 2010 and become executive editor in 2018. His previous work includes writing for the Guardian as well as other online and print publications. In addition, he's worked in sales executive roles within technology and financial research companies, as well as for a public relations firm, for which he consulted with one of the globe’s leading sustainability initiatives. Currently living in Central California, he’s traveled to 70-plus countries and has lived and worked in South Korea, the United Arab Emirates and Uruguay.
Leon’s an alum of Fresno State, the University of Maryland, Baltimore County and the University of Southern California's Marshall Business School. He enjoys traveling abroad as well as exploring California’s Central Coast and the Sierra Nevadas.