Speaker 1: Hi, I'm Carol Masser and I've Jason Kelly. It's time
Speaker 1: for this week's cover story. Well, Carol, the whiteness of
Speaker 1: America's C suites has always been glaring. That's right, Jason.
Speaker 1: There have been just seventeen black CEOs in the Fortune
Speaker 1: five hundred over the last two decades. Right now there
Speaker 1: are just four. And as for boards, while they are
Speaker 1: just about as white as they are male, as of
Speaker 1: thirty seven percent don't have a single black director. The
Speaker 1: word quote is well, it immediately raises eyebrows and some hackles.
Speaker 1: But is it finally time for corporate America to consider
Speaker 1: a more coercive power? After all, a recent law in
Speaker 1: California that mandates female representation on boards of public companies
Speaker 1: has resulted in meaningful gains, and as Rebecca Greenfield rights
Speaker 1: in remarks, quota as well, they won't solve racism, and
Speaker 1: they definitely invite lawsuits, as they have in California. But maybe,
Speaker 1: as she writes, this is a debate worth having if
Speaker 1: it helps force corporate diversity programs to shape up. The
Speaker 1: case for quote is they've helped women. Can quotas help
Speaker 1: change the racial makeup of C suites? And management by
Speaker 1: Rebecca Greenfield. At a virtual panel moderated by Goldman Sachs
Speaker 1: Chief executive officer David Solomon on the evening of June nine,
Speaker 1: g Day's Island made a simple but pointed comment. We
Speaker 1: better have more than four black CEOs of Fortune five companies,
Speaker 1: said the boss of Tapestry, which owns coach Kate Spade
Speaker 1: and Stuart Weitzman. And not in ten years, not in
Speaker 1: fifteen years, but in the next year or two or three.
Speaker 1: The whiteness of America's C suites has always been glaring,
Speaker 1: but this call by Zeitland, one of the four current
Speaker 1: African American corporate leaders and just seventeen over the last
Speaker 1: two decades, is even more urgent against the backdrop of
Speaker 1: massive protests over police brutality and entrenched racism. His plea
Speaker 1: isn't likely to be heated, however, unless companies decide to
Speaker 1: radically revamp their diversity playbooks. Over the past decade, organizations
Speaker 1: of all stripes have spent billions of dollars trying to
Speaker 1: get more members of underrepresented groups to the top highest
Speaker 1: paying jobs. They have poured resources into hiring, retaining, and
Speaker 1: promoting minorities and women, but for African Americans in particular,
Speaker 1: these efforts have been feudal. There are fewer black CEOs
Speaker 1: than five years ago, fewer black executives at some of
Speaker 1: the biggest banks, and even fewer black coaches in the NFL.
Speaker 1: The racial disparities are starkest at the top, but it
Speaker 1: doesn't get much better further down the hierarchy. The organizational
Speaker 1: chart at most mainstream organizations looks very similar to the
Speaker 1: organizational charts of plantations, says Victor Ray, a sociologist of
Speaker 1: race theory at the University of Iowa. Black folks are
Speaker 1: at the bottom. It takes an almost utopian commitment to
Speaker 1: achieve fair representation. The c suite and top management must
Speaker 1: be dedicated to the issue, and it helps if many
Speaker 1: of those people are already non white. Most companies are
Speaker 1: nowhere near that. What's the next best thing? How about coercion, or,
Speaker 1: to be more specific, quotas. The word immediately raises eyebrows
Speaker 1: and hackles for some. It evokes a time when quotas
Speaker 1: were used to limit non white and Jewish employment. Business
Speaker 1: leaders who thrive on metrics to measure success become allergic
Speaker 1: to them once they involve race. But it's worth bringing up.
Speaker 1: As the Black Lives Matter protests get companies to reframe
Speaker 1: their thinking. Almost every major company has put out a
Speaker 1: statement condemning racism or racial inequality. Some have even made
Speaker 1: policy changes. Cephoras signed a pledge to dedicate fifteen percent
Speaker 1: of its shelf space to products from black owned businesses.
Speaker 1: On June ninth, Adidas announced at least thirty percent of
Speaker 1: new hires would be black or Latino. A good faith target,
Speaker 1: not a quota, but that thinking needs to permeate entire
Speaker 1: organizations to result in more black c e os or
Speaker 1: even more black managers, says Robert Lieberman, a professor of
Speaker 1: political science at Johns Hopkins University. Right now, companies have
Speaker 1: these pretty deeply embedded structures that are geared toward diversity,
Speaker 1: says Lieberman, who studies race based discrimination and policy. If
Speaker 1: a diversity program is to become an instrument of racial
Speaker 1: equity rather than an instrument of creating and sustaining diversity,
Speaker 1: they're going to have to do something different. So why
Speaker 1: not consider the coercive powers of quotas and perhaps the
Speaker 1: most successful diversity push in recent years, California, passed a
Speaker 1: law in twenty eighteen, requiring all public companies based in
Speaker 1: the state to have at least one female director by
Speaker 1: the end of At the close of one boards with
Speaker 1: five directors must have at least two women, and those
Speaker 1: with six or more have at least three. Failure to
Speaker 1: comply costs a hundred thousand dollars the first year and
Speaker 1: three times as much after that. The move was unpopular,
Speaker 1: even with women, because it suggested hiring committees would have
Speaker 1: to lower their standards a year after compliance began. That's
Speaker 1: not what happened. Instead, opportunities opened for overlooked executives. There
Speaker 1: was a perception when the law passed that there was
Speaker 1: a limited pool of qualified candidates. Ane Lisa Barrett, a
Speaker 1: governance expert at KPMG's Board Leadership Center, told Bloomberg News
Speaker 1: in March it doesn't seem to have been the case.
Speaker 1: Women accounted for almost half of new board seats in
Speaker 1: the state last year, outpacing female hires for similar positions
Speaker 1: in the rest of the country. There are judicial roadblocks,
Speaker 1: of course, Since the Supreme Court weighed in on its
Speaker 1: first affirmative action case in nineteen seventy eight, its limited
Speaker 1: government use of numerical targets. In the ruling a university
Speaker 1: admissions case, the court said an institution could use race
Speaker 1: as a factor in its decisions, but that quotas went
Speaker 1: too far. Meanwhile, California's law has faced multiple legal challenges.
Speaker 1: Judicial Watch, a conservative activist group, called the requirement unconstitutional
Speaker 1: in a lawsuit filed on behalf of taxpayers and a
Speaker 1: shareholder of a California based company with an all male
Speaker 1: board argued in a federal complaint that it's discriminatory. The
Speaker 1: first case is ongoing, the second was dismissed in April.
Speaker 1: While lawyers duke it out, California companies are moving ahead
Speaker 1: with meeting their quotas. Even if the law is struck down,
Speaker 1: the gains women have made will be in place. Boards
Speaker 1: are just about as white as they are male. As
Speaker 1: of twenty nineteen, thirty seven percent don't have a single
Speaker 1: black director. Still, a law similar to Californias that would
Speaker 1: address racial inequities is highly unlikely and would face much
Speaker 1: stronger opposition than the gender quota law, says Michael Hyder,
Speaker 1: chief diversity officer at Corn Ferry. There is an apprehension
Speaker 1: among companies that if they are perceived as setting a
Speaker 1: target for hiring for people of color, that the focus
Speaker 1: will mean hiring less qualified candidates. Hyder says it's a familiar,
Speaker 1: yet unfounded fear that is hilarious on so many levels,
Speaker 1: says Kimberly Reyes, who spent years working as one of
Speaker 1: a few black copywriters at various companies. Even without quotas,
Speaker 1: people assume you were hired because you were black, and
Speaker 1: once again see Reverence, California. If legislators won't act, shareholders
Speaker 1: could State Street, Black rock and activist investors already pressure
Speaker 1: companies to disclose the gender diversity of their boards. Those
Speaker 1: campaigns have resulted largely in gains for white women. They
Speaker 1: could shift their focus to black representations, says Natasha Lamb,
Speaker 1: a managing partner at our Juna Capital, which pushes banks
Speaker 1: and tech companies to disclose gender and racial pay gaps.
Speaker 1: People bristle at the idea of racial quotas, Lamb says,
Speaker 1: but they work. There need to be interventions, She says.
Speaker 1: The protests are an intervention. Shareholders exercising their voice is
Speaker 1: an intervention. Without intervention, nothing is going to change. Vanguard
Speaker 1: says it had already planned a twenty twenty emphasis on
Speaker 1: getting boards to disclose their racial and ethnic data. Black
Speaker 1: Rock says it continues to be committed to pushing for
Speaker 1: board diversity. State Street says it's committed to being part
Speaker 1: of the solution. The boardroom is just one of many
Speaker 1: white corners of the business world up and down the
Speaker 1: corporate ladder. Strictly enforced targets could legally be used to
Speaker 1: fix racial imbalances, says David Obenheimer, director of the Berkeley
Speaker 1: Center on Comparative Equality and Anti Discrimination Law. Quotas can't
Speaker 1: be used in perpetuity, he says, but they can be
Speaker 1: put in place for a short period to correct a
Speaker 1: manifest imbalance in workforce makeup. It's sort of like dieting,
Speaker 1: says Oppenheimer. Sometimes you have to go on a severe
Speaker 1: diet to lose some weight, and then hopefully you can
Speaker 1: go on a maintenance diet where you can eat a
Speaker 1: little bit more. That's the theory. One hopes it works
Speaker 1: better than dieting. Why aren't more companies wielding the powers
Speaker 1: of this blunt but useful tool in their commitment to diversity.
Speaker 1: Quotas are always a bit of an issue, says Pam Jeffords,
Speaker 1: A diversity and Inclusion consultant with p WC. Our goal
Speaker 1: is to inspire people versus shame them. The consulting firm
Speaker 1: for is to look at hiring rates instead. The idea,
Speaker 1: she says, is to make sure companies aren't hiring any
Speaker 1: specific demographic at a greater rate than another. Jeffords concedes
Speaker 1: that alone won't change overall representation over time. What are
Speaker 1: we really looking for. We don't want the numbers to
Speaker 1: go down. There's been some decreasing in hiring rates for
Speaker 1: black employees. Half measures rarely move anyone forward. Take the
Speaker 1: Rooney Rule, named for Dan Rooney, former chairman of the
Speaker 1: Diversity Committee of the NFL, which pioneered it. The two
Speaker 1: thousand and three rule, widely adopted by Corporate America, requires
Speaker 1: hiring managers include a diverse slate of candidates for a
Speaker 1: given role. Since two thousand three, non whites have been
Speaker 1: considered for open slots in head coaching positions at professional
Speaker 1: football teams. There are just as few black coaches now
Speaker 1: as there were then. In May, the league's owners all
Speaker 1: but admitted the failure of the program when they met
Speaker 1: to consider additional incentives for teams that hire non white coaches.
Speaker 1: To be sure, quotas are limited in what they can achieve.
Speaker 1: In Norway, where public companies must set aside forty percent
Speaker 1: of board seats for women, they hold forty two percent
Speaker 1: of those positions. But even with all those women in charge,
Speaker 1: men still hold most of the executive power. Only seven
Speaker 1: point seven percent of those companies have female chief executives.
Speaker 1: In Malaysia, government policies giving preferential treatment to the ethnic
Speaker 1: Malay majority have helped them move up the social and
Speaker 1: economic ladder at the expense critics say of ethnic Chinese
Speaker 1: and Indians. Quotas won't solve racism, As u S Supreme
Speaker 1: Court Justice John Roberts said in a two thousand seven ruling,
Speaker 1: the way to stop discrimination on the basis of race
Speaker 1: is to stop discriminating on the basis of race. Sending
Speaker 1: black people into a hostile environment isn't much better than
Speaker 1: not hiring them at all. If you hire a lot
Speaker 1: of black people and the culture is such that their
Speaker 1: jobs are at risk, they will be undermined, says Nadia Owusu,
Speaker 1: who does diversity and inclusion work at Living Cities, and
Speaker 1: earlier this year, wrote a column for the online magazine
Speaker 1: Catapult called hiring a chief diversity officer won't fix your
Speaker 1: racist company culture. Indeed, the internal dynamics of corporations often
Speaker 1: end up undermining the executives in charge of diversity, many
Speaker 1: of whom are women of color. OWUSU says. Quotas also
Speaker 1: invite lawsuits, as they have in California. Harvard's use of
Speaker 1: race as a factor in deciding on admissions has been
Speaker 1: called an evil of private prejudice and discriminatory by Edward Blum,
Speaker 1: a legal activist who's brought multiple suits against universities, including Harvard,
Speaker 1: for what he sees as biased admissions policies. The Supreme
Speaker 1: Court has allowed institutions to consider race in hiring and
Speaker 1: admissions as long as it's in an organization's interest. Affirmative
Speaker 1: action was originally meant to counteract deeply ingrained prejudices. It
Speaker 1: has traveled somewhat of a distance from that idea, says
Speaker 1: Johns Hopkins Lieberman. It used to be a form of
Speaker 1: reparations and compensatory justice, a form of payback for inequalities
Speaker 1: that exist because of the u S history of slavery.
Speaker 1: It also counteracts programs like legacy admissions that work as
Speaker 1: affirmative action for white people. Through the decades, However, it's
Speaker 1: become part of a mushier push for diversity. Racial justice
Speaker 1: has been dropped in favor of a business case for
Speaker 1: diversity of thought and experiences, says Lieberman. Indeed, while research
Speaker 1: has confirmed the financial benefits of diverse teams, the profit
Speaker 1: motive hasn't changed the face of corporate America. Many companies
Speaker 1: still look for credentials Ivy League, Fortune Five internships, for example,
Speaker 1: that perpetuate the status quo. A debate about quotas may
Speaker 1: just force corporate diversity programs to shape up. Maybe thinking
Speaker 1: about the issue as a matter of justice, not just money,
Speaker 1: will make a difference. Diversity as the reason for affirmative
Speaker 1: action is incredibly ah historical, says Reyes, a Fulbright scholar
Speaker 1: who's written about Affirmative act and for The Atlantic. It
Speaker 1: was initially supposed to be about writing wrongs or trying
Speaker 1: to balance something lopsided without quotas. How exactly do you
Speaker 1: change that? With Jeff Green, Donald Moore, Kim Boston, and
Speaker 1: Michael Holter. And that's this week's remarks and the cover story.
Speaker 1: Check out more stories in the magazine this week. It
Speaker 1: is now on newsstands. It's on the Bloomberg and online
Speaker 1: at Bloomberg dot com. I'm Carol Masser and I'm Jason Kelly.
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