Creating More Equitable Succession Practices

What we learned from studying Fortune 500 General Counsel Appointments | June 7, 2021

The article, "Creating More Equitable Succession Practices," was written by Russell Reynolds Associates Consultants Cynthia Dow and Tina Shah Paikeday. The article is excerpted below.

CEOs and CHROs face a growing mandate to increase diversity on their executive teams, with a steady drumbeat of pressure from internal and external stakeholders, including investors, regulators, customers and employees. There is a good reason behind this pressure, as companies with thoughtful approaches to diversity, equity and inclusion (DE&I) see real payoffs. McKinsey & Company’s multiyear research shows companies with higher proportions of women and ethnically diverse executives are up to 36% more likely to financially outperform their peers. Similarly, Russell Reynolds Associates’ survey of nearly 850 global executives found those at organizations with advanced DE&I strategies are about 30% more likely than others to feel highly loyal, innovative and set up for top performance.

Yet the road to change often looks steep, given the current state of leadership. White employees comprise 78% of the total workforce, but 88% of current CEOs, and more than 80% of most managerial roles that lead to CEO, according to 2020 data from the US Bureau of Labor Statistics. This overrepresentation in top roles makes achieving equity hard for both practical and psychological reasons.

Within current C-suites, however, the general counsel role is one that shows visible progress. Women and ethnically diverse legal executives make up an increasing percentage of newly appointed GCs, based on Russell Reynolds Associates’ analysis of the Fortune 500 over the past 8 years.

Other corporate functions and business units could learn a lot from these laudable efforts. However, they are not enough to sustain progress in ensuring diversity among GCs or any other group of executives. Instead, CEOs and CHROs must look at the systemic and scalable actions their organizations can take to embed DE&I in their hiring, promotion and development practices.

In our work with clients, we recommend approaching C-suite diversity through the lens of improving succession and search processes. Key action items fall into three main categories:

1. Create strong internal development programs that begin early and emphasize equity

Forward-looking development programs are inherently beneficial to companies because they prepare the next generation of leaders well ahead of a planned succession and give the company more well-qualified candidates to consider when a leadership transition occurs. To increase the diversity of participants, however, current leaders need to take some additional steps.

Find the full article here.

Sign up for our newsletter

Get the newsletter that prepares you for what's next with valuable insights across industries and geographies.
Creating More Equitable Succession Practices