The Importance of Diversity in Leadership Teams

It’s no secret that the vast majority of company leaders in the United States are mostly homogenous in terms of race and gender. About 85 percent of Fortune 500 CEO are white males and, amazingly, that number is an improvement from a decade ago. Sociology professor G. William Domhoff of the University of California at Santa Cruz reports that white men “held 96.4% of the Fortune 500 CEO positions in 2000, and they held 85.8% in 2020.” If we zoom out, those numbers remain similar. According to the Crist | Kolder Associates Volatility Report 2022, in large companies in the U.S., 88.8% of CEOs, CFOs, and COOs are Caucasian, and 88.1% are men. The report again finds that the situation was worse a decade ago, but the numbers are still dismal.

But why does diverse leadership matter? And what steps can your organization take to make sure worthy leaders of all backgrounds are being considered for promotion? Let’s talk about it…

Why Diverse Leadership Matters

Studies have shown that diverse teams are often more effective in terms of problem-solving, innovation, and profitability. The same is true of leadership. Leaders from traditionally underrepresented backgrounds bring a wealth of experience and perspectives that are valuable for innovation and out-of-the-box thinking.

Additionally, leaders from underrepresented backgrounds add valuable perspectives that are often missing in corporate leadership. They bring a deeper understanding of employees AND customers/clients who look like them or come from similar backgrounds. Homogenous leaders may not even realize these perspectives are missing—or that there are gaps in the products and services they’re offering to customers.

So how do we increase diversity in company leadership? Here are four ideas:

Make the Interviewing Process More Equitable

Due to similarity bias and other unconscious biases, interviewers are more likely to favor candidates who are like themselves or come from similar backgrounds. So, white male leaders are more likely to advocate for and/or hire other white male leaders. The cycle continues.

To overcome these biases, you can A) educate the hiring team so they are aware these biases exist and B) make sure the interviewing team is comprised of several different individuals from a variety of backgrounds.

Utilize Sponsors or Mentors

Having a sponsor or mentor is incredibly valuable for career progression. However, people from underrepresented backgrounds traditionally have a harder time finding sponsors and mentors. Company leadership can help by creating mentoring programs or assigning mentors or sponsors to individuals from underrepresented groups to help guide their careers and advocate for their promotion.

Actively Recruit and Develop Talent from Underrepresented Groups

To increase diversity in leadership, it’s essential to be proactive in recruiting from traditionally underrepresented groups. This includes advertising job openings in places that reach diverse audiences, developing relationships with organizations and academic institutions that serve underrepresented communities, and providing opportunities for professional development and training for individuals from underrepresented groups. To aid in this work, it’s helpful to form a hiring team made up of individuals from an array of backgrounds to direct, and possibly reform, the recruitment process.

Look to Your ERGs

Employee Resource Groups (ERGs) are a great resource for improving diversity and inclusion in company leadership. ERGs are groups of employees who share common identities or experiences, and they can provide valuable insight into what it’s like to work at the company from their perspectives. In addition to serving as a support system for employees, ERGs can also help leadership identify areas for improvement and suggest solutions. Make sure ERGs are given a seat at the table and their feedback is taken seriously. By listening to and acting on the feedback of diverse employees, the company can work to create a more inclusive and diverse leadership team.

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Diverse leadership teams are crucial for effective problem-solving, innovation, and profitability. They offer valuable perspectives that are often missing in traditional leadership. However, increasing diversity in company leadership requires a concerted effort. Use the steps I’ve listed as a starting point, but don’t stop there! Working to seek out and hire diverse talent for leadership positions is an ongoing process and requires a commitment to continuous education, awareness, and action.