Organizational Change
Deloitte Seeking to Increase Board Diversity by Highlighting the Lack of It

Can new information incite change? Deloitte is hoping so. The firm is focusing on diversity in corporate boardrooms, with the intent of helping executives understand just how important it is to include women and minorities in the boardroom picture. As part of the Alliance for Board Diversity, one of Deloitte’s aims is to increase board diversity to 40 percent representation from women and minorities, combined, by 2020. At the current rate, it looks like that won’t happen until 2026.

Particularly among African American men, the inclusion rate has been incredibly slow. Since 2012, they’ve only seen a 1 percent increase on the boards of Fortune 500 companies. Altogether, in the Fortune 500 women have seen the greatest increase in representation, a 4.1 percent rise. African American women, in particular, have seen a big boost, up 18.4 percent. But overall, when it comes to ethnic diversity, the numbers for Fortune 100 companies remain incredibly skewed toward Caucasians.

The above numbers are clearly not representative of the US population. Census Bureau statistics from 2015 show that 61.6 percent of citizens are White, 17.6 percent are Hispanic, 13.3 percent Black, and 5.6 percent are Asian. Pew Research shows these numbers will shift “dramatically” by 2055, such that there won’t be a single ethnic or racial majority in the US. If boards don’t adapt, they’ll remain far behind the US trend toward diversification.

Deloitte’s chief inclusion officer, Deborah DeHaas, says, “The intent is to continue to track information like this and to continue to work together on diversity issues and considerations, with the objective that hopefully by publishing fact-based information and creating an opportunity for dialogue, it will create more of an opportunity to see progress in that regard.”

She points out that firms should have incentive to increase diversity because of consumer trends and demographic shifts; firms that have increased the number of women on boards have seen a higher return on investment than those that haven’t.

Sharon Allen is the chairman of Deloitte and Touche, Deloitte’s accounting division. Allen and Deloitte’s story are a prime example of diversity and success. Deloitte is one of the five fastest-growing accounting firms, and it’s the top earner in the US. According to DeHaas, “Close to 60 percent of our board is women and minorities, and we’ve been over 50 percent for a while.” The company wants to be a model of the diversity it supports.

Allen has twice graced Forbes’ list of the 100 Most Powerful Women. She came up in Deloitte at a time when women’s and minority rights began to take center stage.

“In fact, when I graduated, it was early in the days when companies were trying to diversify, and there turned out to be strong demand for qualified women,” she says.

Allen got onboard with Deloitte in 1973 and never left. But she had to face a dilemma that many career-oriented women face: the pull of family obligations against the tug of a blossoming career.

Allen would have advanced faster in the ranks if it hadn’t been for her husband’s business in Boise, ID – she says they didn’t want to leave Boise once her husband started his own company and they established themselves in the community. People saw her unwillingness to move as a mistake.

“It puzzled senior people that I, an obviously career-minded woman, kept turning down what they saw as opportunities for advancement in the shape of moves to larger offices,” she said.

Eventually her husband sold his business and Allen made a series of moves, eventually ending up in the top position for one of the top accounting firms in the world. But being a married woman, one who wanted to stay married and compromise with her spouse, kept her out of top positions for a number of years.

Many women who could potentially fill out boards of major companies likely face the same marriage-vs-career dilemma. Fortunately for Allen, Deloitte Touche recognized her innate skills as a leader and is keen on diversification, and it stuck with her for the long term.

While women are seeing modest gains, there’s still the matter of a mere 1 percent increase in African American men in boardrooms. This may be the business world we’re talking about, but the business world’s slow acknowledgement of racial equality is part of a larger picture.

Race relations remains one of the three critical social issues in the US: 61 percent of people believe that race relations in the United States have even deteriorated. While many executives may be open to and claim impartiality towards hiring a qualified person of a different color, America’s social milieu is depriving men of color from advancements they could make in a more hospitable environment.

The Census Bureau found 50.8 percent of US citizens are women, so the ratio of women to men is nearly 1:1. But in terms of availability to work and rise up economically, this doesn’t apply to the African American population. The New York Times reports 1.5 million black men are “missing” – for every 100 black women there are only 83 black men living in America’s cities. High imprisonment rates and young deaths account for this disparity: Nearly 1 in 12 black men age 25 to 54 are in prison. In contrast, 1 in 60 “nonblack” men are behind bars, 1 in 200 black women, and 1 in 500 nonblack women.

According to the University of Southern California, income inequality is also one of America’s critical issues. This is bundled up with the race relations problem. Minorities face a struggle in getting high-paying jobs with visibility in the boardroom. Improvements in education opportunities for lower-income communities, along with a concerted effort to lower incarceration rates, would give disadvantaged minorities more of a fighting chance to make it into boardrooms.

Deloitte is hoping to spark these types of conversations and work to balance the scales. As we move further into a time when race relations, women’s rights and income inequality issues are under intense scrutiny, the nation’s largest accounting firm is watching, and rooting for the underdogs.

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