In 2019, 85.6% of Fortune 500 CEOs were White men. By 2021, their share grew to 86%, while only 0.8% of CEOs were Black. Just 2 Black men and 2 Black women served in CEO positions for these companies in 2021, and in 2020, not a single Black woman served as a CEO to a Fortune 500 company.
Beyond just Fortune 500, amongst the top 1,000 companies in the US just 25% of top executive positions were held by women in 2019, and 17% by People of Color during the same year.
Despite the staggering disparities in active female and racial minority leadership, evidence shows that companies with more diverse executive teams are more likely to outperform their less diverse counterparts. A study from McKinsey & Company in 2019 found that companies in the top 25% of gender diversity in their highest positions were 25% more likely to outperform lowest quartile companies in profit. This number grew from 21% in 2017 and just 15% in 2014, meaning that the financial incentive for diverse executive teams is expanding.
The trend for racial and ethnic minorities follows the same pattern, with the 2019 report finding companies in the top 25% of ethnic and cultural diversity outperformed those in the lowest quartile by 36%, up from 33% in 2017 and 35% in 2014.
If expanding diversity, equity, and inclusion in businesses has significant financial incentive, then why is it such a slow moving process?
Profit generating positions
C-suite executives are often appointed from within the company, and tend to be promoted from profit-generating managerial positions. While women and racial minorities may hold managerial titles within companies at similar rates to White men, they are far less likely to hold a position where their work translates into a direct profit increase for the company. This limits the likelihood of a promotion into the C-suite.
Attitudes
CEOs are commonly seen as assertive, level-headed, focused individuals. These traits have been historically associated with men, and a long battle has been waged by women to prove that they are not limited to roles related to nurturing and caring for others. Deeply problematic stereotypes regarding the roles in which certain groups are most equipped to assume contributes to the lack of diversity in top business positions.
Biases
Having a diverse staff is crucial in promoting progressive business practices and forward-thinking. A team of staff composed of just one race or gender is disadvantaged in their limited perspective, while a more diverse team has the added benefit of hearing voices from varied backgrounds. Biases against specific groups prevents the building of these teams, and the subsequent promotion of women and People of Color into higher level positions. Systemic biases that exist structurally and organizationally within a company hinder the ability of women and People of Color to advance, and individual biases within predominantly White male senior executives contribute to the same problem.
