Diversity’s Dilemma

Fulfilling and expanding the promise of an inclusive economy

Marcy Murninghan | 11/4/2015, 1:08 p.m.

As the benefits of an inclusive economy become evident — the research shows that greater diversity generates better thinking, innovation and competitive performance — you’d think there would be greater levels of participation by women and people of color in business.

But you’d be wrong.

Despite the fact that most people who enter the workforce are people of color — a number expected to grow — workplace and board diversity continue to lag. Despite the evidence and the fact that diversity proponents have made their case for decades, the demographics remain stubbornly the same: Across the business landscape — at every level, and throughout every industry — the numbers are flat. In Massachusetts, overall levels of diversity remain constant — from 2007 to 2011 they oscillated between 27 percent and 24.4 percent — among those filing reports with the Commonwealth Compact.

There is some progress, thanks to changes in the regulatory and operating environment. In 2009, the Securities and Exchange Commission issued a diversity disclosure ruling that went into effect in 2010. Many large pension funds (such as California’s and New York City’s) and money managers (such as Domini Social Investments) include diversity as a key criterion for competitiveness and financial performance. They also use their role as shareholders to push diversity laggards into doing more. In 2015, they filed 46 proxy resolutions on diversity issues, which represent 9 percent of all environmental, social and governance (ESG) proposals.

There also is a host of global, national, regional and local frameworks that include diversity as a core metric of a vibrant, sustainable economy. There are even organized efforts to get men involved to promote women’s advancement.

Yet white males continue to dominate business ranks, particularly at the higher echelons. They also get paid more. On average, women earn 79 cents to every dollar men earn, and the pay gap gets bigger with age; it’s even worse for women of color. (The difference is narrower between younger workers.)

Since the SEC’s ruling, five years’ worth of data now are available, which show that the levels of women and people of color occupying managerial, executive and board ranks still have not changed much. Einstein said the definition of insanity is doing the same thing over and over again and expecting different results. It’s time for other strategies to be added to the mix.

So much for so little: The immoral bet

Why is it that diversity’s promise has yet to be filled, even as definitions of diversity continue to expand — including not just gender or race, but sexual orientation, gender identity, disability and even age?

Why so little progress, despite more than four decades of corporate commitments and ongoing efforts of activists, policymakers, regulators, researchers, lawmakers and shareholders?

By the Numbers: Diversity in Business

46: The total number of diversity resolutions filed by shareowners of publicly-traded companies in 2015, addressing board and workplace inclusion of women and people of color. Source: Sustainable Investments Institute, 2015.

26: The number of companies (except for Urban Outfitters) that received first-time board-level diversity resolutions. Source: Sustainable Investments Institute, 2015.

20: The total number of workplace diversity shareholder resolutions filed in 2015, affecting LGBT rights (17 proxy proposals) and EEO (3 proposals). Source: Sustainable Investments Institute, 2015.

79 cents: The average amount women working full time make, compared to every dollar men earn. In Massachusetts, women make 82 cents for every dollar men make. According to recent forecasts, women will not reach pay parity until 2058. Source: Bureau of Labor Statistics; American Association of University Women, 2015.

63 cents: The average amount African American women working full time make, compared to every dollar white men earn. Source: AAUW, 2015.

54 cents: The average amount Latina women working full time make, compared to every dollar white men earn.

Source: AAUW, 2015.