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Want More Diversity? Some Experts Say Reward CEOs for It

Only a small number of large companies have tied executive compensation to goals for hiring and promotion of workers from underrepresented groups.


The New York Times | July 14, 2020



The New York Times article, “Want More Diversity? Some Experts Say Reward CEOs for It,” quoted Russell Reynolds Associates Consultant Charles A. Tribbett, III​ on how boards are considering to move the needle on diversity​. The article is excerpted below.

When ​Charles E. Jones, the chief executive of a large Ohio-based utility, realized that his senior executives weren’t fully behind his push to hire and promote people of color and women, he decided to do something to get their attention.

In 2018, Mr. Jones linked 10 percent of annual bonuses for himself and other top executives at his company, FirstEnergy, to diversity goals, and increased the number to 15 percent the next year. “I’ve got experience that suggests that if you tie compensation to the things you want to have accomplished,  you are much more successful at getting them accomplished,” he said.

Mr. Jones’s approach is striking because it is extremely rare in corporate America. But he and other management experts say it shouldn’t be. For  decades, companies and top business schools have preached the gospel of tying pay to all manner of business goals, like stock price performance and profits.

Charles A. Tribbett III, a consultant who advises large corporations about hiring and compensation, said many executives and board members were discussing whether to link pay to diversity goals, a change he endorsed. “I believe the time is now for that discussion to be turned into action,” said Mr. Tribbett, a managing director at Russell Reynolds.

Mr. Tribbett, the consultant, said that even though companies might disclose and meet diversity goals, it was particularly important to look at whether this meant they were succeeding in hiring and promoting Black employees in particular.

“What we’re trying to achieve right now is an increase in African-Americans into the boardroom and into the C-suite and up the ladder of the company,” he said. “So when a C.E.O. metric is positively achieved, but within that metric the Black portion of it still has not been achieved, then I think we have failed.”

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