🔒As CT companies respond to calls for racial diversity, Black people still underrepresented in C-suite

Fred McKinney has been on a number of nonprofit boards, and been asked to sit on many others.

It’s not surprising given his credentials. The current innovation and entrepreneurship chair at Quinnipiac University, McKinney previously taught economics at Brandeis University and UConn, and has a Ph.D. in economics from Yale.

He also started a successful wholesale New Haven gourmet coffee company and headed and helped grow over 14 years the Connecticut Minority Supplier Development Council, which advocates for increased procurement opportunities between corporations and certified minority businesses.

That experience has made McKinney, who is Black, in-demand for board seats at organizations that include the Gateway Community College Foundation, Bridgeport Hospital, Habitat for Humanity and The Community’s Bank.

Given his resume and accomplishments, McKinney said he’s surprised he has never been asked to join the board of a for-profit, publicly traded company. Academics with business experience are attractive for those positions, he said.

“I’ve enjoyed my nonprofit board work, but I think I’m ready for corporate board work,” McKinney said. “But I know I can’t control that. Someone has to be looking. If they aren’t looking, they aren’t going to find me.”

McKinney says he knows many Black business leaders even more qualified than himself who would make good public company board members. His broader point is that businesses haven’t done enough to search out and groom Black people for top leadership positions, whether at larger companies or small businesses.

And data nationally and in Connecticut backs that up.

Despite U.S. companies spending much time, money and attention on diversity and inclusion efforts in recent years, only 3.2% of senior leadership positions at large corporations are held by Black people, according to a 2019 report by the Center for Talent Innovation, a New York City-based workplace think tank.

Black people, who make up about 12% of the state’s population, are also disproportionately underrepresented in power positions at Connecticut public companies.

In fact, according to a Hartford Business Journal analysis of C-suites at the 31-largest publicly traded companies in the state, Black people hold only about 3% of senior leadership roles and 7% of board seats.

“I think those numbers are insufficient,” said Connecticut State Treasurer Shawn Wooden, who as a fiduciary to the state pension fund has pushed large companies to diversify their top ranks. “The corporations in America and Connecticut need to do better.”

With a renewed focus on racial equality following the murder of George Floyd in Minneapolis earlier this year and the rise of Black Lives Matter protests, advocates are also shining a light on the lack of racial diversity in corporate C-suites, including some based in Connecticut.

McKinney, Wooden and others say companies must do more to not only hire African Americans, but prepare them for top leadership roles. It’s not only a moral imperative, they say, but a smart business strategy.

Numerous studies have shown that companies with more diverse workforces perform better financially.

Corporate America hasn’t been deaf to those hails. Myriad Connecticut companies in recent months have issued rare public statements supporting efforts to address systemic racism and equality, and outlined initiatives — as well as financial support — to further diversify their workforces.

For example, Hartford health insurer Aetna’s parent company — CVS Health — recently pledged nearly $600 million over five years to advance employee, community and public policy initiatives that address inequality faced by the Black community.

“While we know that CVS Health alone cannot erase the toll that 400 years of institutionalized racism and discrimination has taken on the Black community, we recognize that we have a role to play in living up to the potential the future holds,” said David Casey, CVS Health’s chief diversity officer.

The data and problem

HBJ’s analysis of local public companies included businesses that are either headquartered or maintain a large presence in the state.

HBJ examined the senior leadership and board members of each company, including executives named in proxy statements filed with the U.S. Securities and Exchange Commission, as well as top leaders identified on official company websites.

The number of executives named as senior leaders varied from company to company.

Some, like Oxford-based manufacturer RBC Bearings Inc. listed only seven top leaders, while others like Greenwich insurance provider W.R. Berkley Corp. listed more than 20.

Overall, of the approximately 426 senior executives at Connecticut publicly traded companies examined by HBJ, only 13, or 3.1%, were Black.

Twenty of the 31 companies examined had no named African Americans in top senior-level positions.

Black people, however, had better representation on boards of directors: Of the 320 board members identified by HBJ, 23, or 7.2%, were Black. HBJ verified its findings with individual companies.

Those numbers tend to be in line with national trends, which show representation of Black professionals in leadership roles still lags far behind college graduation rates. According to the Center for Innovation report, 10% of Black people in the U.S. hold college degrees, 8% are in professional occupations, but only 3.2% hold executive or senior-level positions.

Reaching the rank of CEO is even harder. There are only about five Black Fortune 500 CEOS in the country, McKinney said, and of the 31 Connecticut companies examined by HBJ, none are led by an African American.

“We are still in the early stages of the integration of the C-suite,” McKinney said.

Black people who do hold senior-level roles tend to be in chief diversity officer or human resources positions, HBJ’s analysis found.

Meantime, Connecticut companies have made better strides in recent years in gender diversity. Nearly 21% of the 426 senior leaders identified by HBJ were women.

Wooden said the underrepresentation of Black people in the C-suite is a result of a “lack of intentionality on the part of corporate America to treat diversity and racial diversity in particular as a business imperative.”

He points to various studies that show racial diversity actually boosts business performance and shareholder value, something he looks at closely as an investor of the state’s $37 billion pension fund.

For example, a 2015 McKinsey & Co. study found that gender-diverse and ethnically diverse companies were 15% and 35%, respectively, more likely to outperform competitors.

“More diverse companies, we believe, are better able to win top talent and improve their customer orientation, employee satisfaction, and decision-making, and all that leads to a virtuous cycle of increasing returns,” said the report entitled “Why Diversity Matters.”

What can be done?

Despite the ground that needs to be made up, Wooden said the current renewed focus on racial equality can spur needed change.

He’s also trying to play an active role in moving the needle. He published a “corporate call to action” in a May op-ed, urging companies, including those in Connecticut, to play a constructive role in advancing social change.

He also helped launch last year the Northeast Investors’ Diversity Initiative, a coalition of about a dozen institutional investors who are committed to racial and gender diversity in Northeast-based corporations.

That group — whose membership includes most New England state treasurers and other investors — published a diversity toolkit, which recommends ways companies can make more diverse senior-leadership hires.

Suggestions include making sure women and minorities are interviewed for open board seats, expanding criteria for qualified board members and disclosing board diversity to investors.

More broadly, Wooden says companies of all sizes need to step up talent pipeline development and support of minority workers, including offering training and internship programs as well as mentoring.

He credits those types of supports, including having a mentor, with helping him become one of the few partners of color at Day Pitney, where he led the Harford law firm’s public pension plan investment practice before being elected as state treasurer.

“I believe corporate America is ready and corporate leadership is ready to dive in and make the significant changes that the moment calls for and that should have been made a long time ago,” Wooden said.

Nicole Jones Young, an assistant professor of organizational behavior at Franklin & Marshall College in Pennsylvania, said corporate board members tend to be mainly CEOs and top executives of other publicly traded companies, who bring with them broad connections and additional resources that could benefit a company.

That results in a relatively small pool of potential candidates, and given that Black people are underrepresented in C-suite positions, it’s harder for them to get noticed, said Jones.

“You tend to see the same group of people revolving in these positions,” said Young, who earned her Ph.D. in management at UConn. “If you aren’t in the room, or in the conversation it’s hard to get noticed.”

McKinney said companies must cast a wider net for talent to diversify their top ranks. He uses Major League Baseball as an analogy. It was primarily an all-white league until the 1940s, when Jackie Robinson came around and opened up Americans’ eyes to the talents of African Americans.

Now MLB teams scout the world for new players.

“[Major League Baseball] doesn’t care where the person has come from, or what their parents did or do,” he said. “Talent is distributed pretty evenly among racial groups. The companies that are seeking to maximize shareholder value will see that there is talent at the senior-most level from communities that have not been well represented in the C-suite.”

CT companies on diversity forefront

For their part, Connecticut companies acknowledge they can and will do more to increase diversity. But they haven’t been totally sitting on the sidelines. In fact, many companies have invested significant resources to develop diversity and inclusion programs.

For example, Bloomfield health insurer Cigna and Aetna parent CVS Health both made DiversityInc’s 2020 top 50 most diverse companies list, ranking 42nd and 24th, respectively.

Since Floyd’s death in May, Cigna’s top executives have conducted dozens of listening tours and talked to thousands of employees to hear their concerns and desires for change, said Susan Stith, the health insurer’s vice president of diversity and inclusion.

Of Cigna’s 11 top senior executives, two are Black (holding the positions of general counsel and president) and two are women, HBJ’s analysis found. It also has two Black people on its board, making it one of the most diverse public companies in Connecticut in terms of African Americans in key leadership roles.

No Connecticut company reviewed by HBJ had more than two Black people in their C-suite. Eversource had the most diverse board with three Black members.

In recent years, Stith said Cigna has refreshed its diversity playbook around four pillars — leadership accountability, inclusive culture, organizational commitment and mission alignment — and added new programs like cultural sensitivity and unconscious bias training.

The insurer recently launched a new initiative that requires mandatory diverse candidate slates for certain open positions, to ensure women and minorities get a fair shot at key jobs.

It’s similar to the Rooney rule in the National Football League, which requires teams to interview ethnic-minorities for head coaching and senior football operation jobs.

“If there are open jobs, we’ll make sure there is diversity on that slate,” Stith said.

To benchmark progress, Cigna tracks its hires, retention rates and engagement scores, Stith said.

It also publishes an annual corporate responsibility report that highlights certain data like gender diversity among its workforce, although it doesn’t break down racial diversity.

Craig Pintoff, chief administrative and legal officer at Stamford-based United Rentals, said each month his company’s senior leaders hold an operations meeting where the first topic discussed is employee safety, followed by a review of diversity hire and promotion metrics, which are tracked closely and published in an annual corporate social responsibility report.

For example, the 18,500-employee equipment rental company hired 1,549 diverse employees in 2018, up from 694 in 2015, and promoted 600 diverse employees, who include women and minorities.

The company also reported nearly 2,000 diverse employees in sales and management roles in 2018.

“From the board to the senior execs all the way down to our employees, diversity is a key focus for us that will make us a better company and a better partner with customers,” Pintoff said. “You measure what you want to accomplish so this shows how important diversity is to us.”

United Rentals currently doesn’t have any Black people among its top 13 named executives, but it does have two African Americans on its 11-member board.

Other Connecticut companies have made new diversity hires in recent months, including Stamford technology company Pitney Bowes, which just named a Black woman (Sheila A. Stamps) to its board of directors. Meantime, Bridgeport-based People’s United Bank has had a job listing on LinkedIn that seeks a new chief diversity officer.

Young, the Franklin & Marshall College professor, said it’s a positive step that many companies are putting a focus on racial diversity right now, but efforts must go beyond simply making public declarations.

And that won’t be easy. Many companies that have focused on the issue for years have struggled to make real change.

For example, according to a 2019 report by Stamford global research firm Gartner Inc., only 36% of diversity and inclusion leaders reported that their organization had been effective at building a diverse workforce, while 80% of organizations rated themselves as ineffective at developing a diverse and inclusive leadership bench.

Young and others worry companies will throw money at the issue short term, without making a long-term commitment to the issue.

“I’m hopeful that when companies decide to make any kind of change they are thinking about this long term and not going to sit back in three to six months and say this isn’t going to work,” she said.