The Invisible World of Black Women at Work (The Business Case)

She's a Business, Man

In 2018, the buying power of black consumers is estimated to be $1.3 trillion. By 2044, the U.S. will be a majority people of color nation. Yet, corporate leadership opportunities for people of color form a persistent challenge.

In order to remain competitive, businesses must tap into the buying power of communities of color. Tapping into new markets by giving attention to this significant consumer base, pays off. Most business leaders seem to agree. These leaders have long recognized that an inherently diverse workforce—inclusive of women, people of color, gay individuals—confers a competitive edge in terms of selling products or services to diverse end-users. This concept is known as “matching the market.”

Research shows inherent diversity is also a source of innovation; individuals that fall under a diverse demographic are better attuned to the unmet needs of consumers or clients like themselves.

Intuitively, executive leaders know that teams of mixed gender, ethnicity, physical ability, age, and sexual orientation are more representative of customers and result in increased revenue.

“Research shows that more diverse teams are better able to solve problems and that companies with more diverse workforces have higher revenues, more customers, and greater market shares.”

Moreover, companies that can create economic value and advance racial equity by reconceiving products and markets, redefining productivity in the value chain, and strengthening the business context will achieve enormous competitive advantage over those that do not.

If My Boss Asks for "The Business Case" for Diversity One More Time . . . .

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This is, by no means, new knowledge. Exhaustive research has been done on the competitive advantage of diverse teams. A greater proportion of women and a more mixed ethnic and cultural composition in the leadership of large companies has long been connected to increased corporate financial performance. Here’s a quick digest of recent research:

  • Ethnic and gender diversity are correlated to a 35% likelihood of outperformance on EBIT margin. McKinsey.

  • Executive teams of outperforming companies have more women in line roles versus staff roles. McKinsey.

  • Companies with the most ethnically diverse executive teams—not only with respect to absolute representation but also of variety or mix of ethnicities—are 33 percent more likely to outperform their peers on profitability. McKinsey.

  • Companies in the lower fourth quartile on both gender and ethnic diversity are more likely to underperform their industry peers on profitability. McKinsey.

Note that McKinsey’s research has been criticized for finding only a correlational (not causal) relationship between diversity and fiscal performance. Causality notwithstanding, however, McKinsey reported that the relationship between diversity and performance has persisted over time and scale, and across geographies.

#CEOSoWhite

There are currently zero African-American women running Fortune 500 companies. Compare this with Fortune's 2017 findings reporting 29 women total in CEO jobs at Fortune 500 companies. These numbers are absymal.

Let’s face it, the reality that the C-suite of Fortune 500 companies are bereft of women and people of color seems statistically . . . dubious.

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The U.S. population includes over 326 million individuals and steadily attracts highly-qualified talent from around world. Certainly, from a global pool of 7,405,107,650 (as of July 2017) people, we could find talent that can run and/or ascend into leadership roles. The lack of diversity, then, defies logic, which is especially paradoxical considering that the tech ecosystem prides itself on logic.” ~ Bernard Coleman III, Uber's Head of Diversity & Inclusion

Yet, despite the global pool of talent, black women remain underrepresented in corporate leadership roles. Where black women do find themselves on executive teams, there is a bias toward being consigned to staff roles. When compared to leadership pipeline roles—known as line roles—the ceiling becomes apparent. Line roles are more likely to be incubators for future CEOs. Without placement in these key line roles, black women may face a harder path to CEO.

In a recent McKinsey sample report, black female executives were more than twice as likely to be in staff roles than in line roles. Again, none were CEOs.

Ursula Burns, former CEO of Xerox, explained in Fortune:

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“HR isn’t going to get you there . . . Communications and the arts aren’t going to get you there. The juice lies with people who are close to the product and the money. So, now look at the numbers of women we have now. Unless you’re bringing people in from Mars, it’s going to be a while [before there are more black women CEOs in the pipeline].” Fortune exploring why there are zero African-American women running Fortune 500 companies.

Beyond the Business Case

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Let's imagine for a moment that black women (and women of color, generally) run the corporate world. (cue Beyonce). Would the results be merely limited to consumer goods companies innovating new methods to peddle their products to black women consumers? Or, would there be a greater societal benefit? What if bringing black women leadership into the dialogue propelled innovation on a broader social purpose for their companies?

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A growing number of companies—such as Gap Inc., Regions Bank, and Kaiser Permanente—have found new sources of growth and profit by becoming drivers for equity for employees, customers, and communities of color. These companies—which incidentally boast women of color leadership among their ranks—have found broader social purpose resulting in not only profitability but also wider community prosperity.

“Not all profit is equal. Profits involving a social purpose represent a higher form of capitalism—one that will enable society to advance more rapidly while allowing companies to grow even more. The result is a positive cycle of company and community prosperity, which leads to profits that endure.” Professor Michael E. Porter and Mark R. Kramer, “Creating Shared Value,” Harvard Business Review 89, no. 1/2 (2011),

Joint research by PolicyLink and FSG found that social purpose drove competitive advantage at Gap Inc., Regions Bank, and Kaiser Permanente. Here are a few examples.

Regions Bank developed innovative products and services that reduce inequities and meet the needs of people of color.

Regions Bank designed the Now Banking suite of products for underbanked and unbanked consumers, many of whom are people of color, so they could cash checks with minimal fees and no minimum account balance. Twenty percent of Now Banking customers open a checking account thereby creating a new pipeline of long-term customers. The CEO of Regions Bank is an African-American woman: Carolyn H. Byrd.

Gap Inc. and Kaiser Permanente reduced cost, increased quality, and improved productivity by advancing racial equity.

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Gap Inc. created a talent pipeline with double the average retention rates by providing a skills training course and a 10-week internship program through the This Way Ahead program. Ninety-eight percent of participants are people of color. Sonia Syngal, President and CEO of Old Navy, a Gap, Inc. subsidiary, is a woman of color and has held several leadership positions at Gap, Inc.

Kaiser Permanente analyzed data and found significant disparities in hypertension rates between Whites and Blacks—it then designed a suite of culturally responsive care strategies that reduced the gap from 6.3 percent to 2.8 percent and significantly reduced operating costs. Kaiser Permanente's Board of Directors includes a black woman, Regina Benjamin.

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Competitive Advantage Plus Community Prosperity

This writing does not seek to imply that only companies with women of color in leadership can attain these results.

Rather, it is fascinating to note that companies realized a competitive advantage when they became drivers for equity for their employees, customers, and communities of color. It's worth noting that these results speak to something something far greater than merely offering black women a seat at the table. These examples hint at something far more consequential than mere profitability. The correlational relationship between diversity and positive cycles of company and community prosperity points to a higher form of capitalism. Profits involving social purpose—namely, the competitive advantage of serving communities of color—becomes the strongest business case for increasing the number of black women corporate leadership.

Stay-tuned to this 4-Part Series! (published weekly) And please share your thoughts in the comments.

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As an employment attorney and human resources consultant, I look beyond merely addressing conflicts. I uncover pathways for a more nimble dialogue between organizations and their employees. I believe that an employee’s deep commitment to her work and personal identification with her company’s mission should be aligned her employer’s efforts to encourage and promote those values. An employee’s value should be reflected by her organization’s investment in retaining, developing, and promoting her. It’s clear from the research that when an employee’s dedication to her work is cultivated and deepened, the organization wins.

My work is based on my core belief that the quality of the experiences of my aunties, cousins, and friends depends on the concerted effort of their organizations to invest in a robust and genuine dialogue with them. My work is to create and nurture those pathways. And hey, if that results in making corporations a ton of money by uncovering ways to match the billion dollar market of black women clients and consumers, so be it!

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Tracy Vroom