Diversity, inclusion & equity have become headline issues, putting pressure on organizations and leaders to respond in a meaningful way.Investors are also expressing their displeasure with discrimination allegations. Russell Reynolds Associates’ review of 2017 and 2018 incidents involving bad executive behavior showed that companies experienced an average 7 percent decline in market capitalization, or $4 billion, in the days and weeks following the news.
The upside associated with fostering diversity, inclusion & equity has also become more tangible.A 2018 McKinsey study found organizations with diverse boards and executive teams were up to 35 percent more likely to outperform than their less-diverse competitors.1 Our Diversity and Inclusion Pulse survey, which includes responses from more than 1800 leaders around the world, confirms that focusing on diversity has a positive effect on performance. In organizations where diversity and inclusion (D&I) is treated as a business priority, 75 percent of respondents said their employer set them up for their highest level of performance; that figure drops to 43 percent for those working at organizations that take a reactive approach to D&I or consider it to be merely a compliance issue.
There are not new topics.Yet as a result of current social movements, many organizations are pouring fresh energy into them. At the same time, many are appointing new leaders to oversee D&I as an organizational-level business issue. New Russell Reynolds Associates research finds 47 percent of companies included on the S&P 500 index currently have a chief diversity officer (CDO) or equivalent. Nearly twothirds - 63 percent - of those CDOs have been appointed or promoted to their roles in the past three years.
The reality is that simply appointing a new CDO is not enough. Our survey data, which includes insights from 97 diversity leaders, shows that many D&I initiatives are disconnected from business priorities, and that CDOs often lack the necessary resources or organizational support to make lasting changes.
In this paper, we take a data-driven approach to analyze the CDO role and what makes it successful.We examine the career paths and competencies of today’s CDOs, based on the 234 CDOs currently at S&P 500 companies. We then uncover the barriers many CDOs face within their organizations. Finally, we look at the actions leaders and organizations can take to make CDOs more successful.
1. Vivian Hunt, Sara Prince, Sundiatu Dixon-Fyle and Lareina Yee. Delivering through diversity, McKinsey & Co. January 2018
Anatomy of a chief diversity officer
We recently analyzed S&P 500 companies to understand how prevalent the CDO role is and the career paths that commonly lead to it. Our data shows that 234 of these 500 companies have a CDO (or someone with an equivalent executive-level title) who is responsible for D&I. Of these 234 executives, approximately half have a joint title, often related to human resources or corporate social responsibility.
Our analysis reveals that CDOs come from a variety of career paths before taking their roles. In our experience, no single profile is right for all companies, but rather, the best fit will depend on an organization’s goals and current stage in its D&I journey.
Chief Diversity Officer Archetypes
Note: Numbers do not add up to 100 because chief diversity officers may have more than one area of expertise Source: RRA analysis of 234 top diversity executives among the companies in the S&P 500 index as of December 10, 2018
Chief Diversity Officer Experience
The majority of CDOs have D&I or HR experience, but a number of them have also held other roles
What good looks like: Chief Diversity Officer Competencies
CDOs who are successful have a common set of competencies that allow them to collaborate and influence across functions. Leading CDOs are ambidextrous leaders who can simultaneously play the following five roles:
Lessons from chief diversity officers
Our research shows that CDOs have the potential to significantly affect D&I success, particularly when they have the authority and skills to set D&I strategy.2 However, too often, this potential is diminished due to poor executive fit or a lack of organizational support. Without adequate commitment from the CEO and other top leaders, nearly any D&I strategy is destined to be viewed as a “nice-to-have” option rather than a necessity.
To learn more about how the CDO role is currently structured and what friction may exist between CDOs and the organizations they serve, we surveyed 97 CDOs from our network. Our data suggests that executives charged with leading D&I efforts are not well-equipped to spearhead the necessary organizational changes. They face three major pain points:
1. Structure and Resourcing: CDOs Have Many Responsibilities, yet more than half are not resourced to to fulfill them.
The CDO is an exceptionally multi-faceted role, with responsibilities ranging from organizational development to strategy-setting to legal concerns depending on the organization. We find that about half have additional roles unrelated to D&I which may hamper their ability to maximize results. Historically, organizations may have selected influential business leaders to champion internal D&I strategy on top of their existing responsibilities. Over time, however, it has become clear that D&I warrants its own resourcing, expertise and full-time leadership.2. Russell Reynolds Associates Diversity and Inclusion Pulse 2017
2. Data and analytics: Chief diversity officers seem to be missing – or underutilizing – key D&I data.
Understanding the demographics of the workforce and their dynamics at different levels of the organization is a core component of a CDO’s role. However, only 35 percent of CDOs say they have employee demographic data, leaving the majority without hard numbers to support their work. In some cases, this may be due to frequent turnover in the role or the lack of a consistent corporate D&I mandate that calls for regular data collection or analysis.In addition , while the vast majority of CDOs measure engagement survey results, relatively few are relying on survey findings to drive D&I strategy. This may imply a lack of analytics expertise or resourcing, such as people analytics specialists.
3. Integrating D&I into the business: D&I strategy remains disconnected from business strategy
Most business leaders will voice support for D&I initiatives – but their actions do not always follow. Among all leaders surveyed, D&I came in last on a list of eight potential business priorities. At the same time, CDOs believe that business strategy is one of the weakest drivers of D&I strategy. If executing D&I strategy does not also contribute to business goals, CDOs understandably face an uphill battle in convincing business leaders to fully engage.
Implications for organizations
For organizations: How to set your next chief diversity officer up for success
Choosing executives who possess the right competencies for the role and the right experiences for the organization will go part of the way to making the CDO effective. However, the existing leadership team that is scoping and hiring for the role also has a part to play.After appointing a chief diversity officer, organizational leaders continue to play a big part in the Executive’s success or failure.
The CDO can only be successful in driving a D&I mandate when executive leadership team members are aligned with that mandate and exhibit the inclusive leadership behaviors that show true commitment to D&I. It is also important for organizations to hold leaders accountable for fostering D&I initiatives in their respective spheres of influence. In the most successful cases, the CDO is galvanizing the leadership team around a shared change mandate that leads to defined outcomes.
What leaders can do to make their CDO successful:
...FOR THE CHIEF DIVERSITY OFFICER
...FOR THEMSELVES AND THE ORGANIZATION
Checklist for finding – and keeping – your next chief diversity officer
Rebecca Glasman co-leads Russell Reynolds Associates’ Diversity & Inclusion practice and is a senior member of the firm’s Financial Services sector. She is based in New York.
Tina Shah Paikeday leads Diversity & Inclusion advisory services as a member of Russell Reynolds Associates’ global Leadership & Succession practice. She is based in San Francisco.
Harsonal Sachar leads knowledge for Russell Reynolds Associates’ Diversity & Inclusion practice. She is based in Toronto.
Alix Stuart is a writer with Russell Reynolds Associates’ Center for Leadership Insight. She is based in Boston.
Cissy Young co-leads Russell Reynolds Associates’ Diversity & Inclusion practice and is a senior member of its Global Biotech & Pharmaceuticals practice. She is based in Boston.