In some respects, America’s most influential companies are placing a greater emphasis on racial equity than ever before. However, executives from underrepresented groups remain remarkably hard to find when it comes to who's actually running prominent organizations. Too often, experts say, companies fail to either find young talent or help team members advance through the management pipeline.
- Six S&P 500 and Fortune 500 companies had Black CEOs in 2021; 40 had Asian American CEOs, and Latinx/Hispanic executives led 20.
- While boardrooms are only slightly more diverse than top management, the number of Black directors increased after the death of George Floyd.
- Research suggests that diversity in the workplace drives employee productivity, fosters creativity, improves problem-solving, and increases profitability.
Consumer brands are often accused of sidestepping controversy. But several assumed an advocacy role in the wake of George Floyd’s killing in 2020. Nike ran a video on social media in which the apparel giant asked the audience not to “pretend there’s not a problem in America.”
Amazon, meanwhile, pledged $10 million to nonprofits focusing on “justice and equity.” Employee donations—and the company's 100% match—raised an additional $17 million. In total, the Amazon community gave $27 million to 12 organizations that the Black Employee Network (BEN) helped choose.
Internally, many organizations are making a concerted effort to diversify their ranks. For example, a 2021 report from executive recruiting firm Crist Kolder Associates, which examined 682 S&P 500 and Fortune 500 companies, found that:
- The percentage of women CEOs and CFOs is at its highest level ever.
- In 2021, 6.9% of companies were led by female CEOs, and 15.1% had female CFOs.
- The number of Black CFOs nearly doubled between 2020 to 2021 (the number of Black CEOs remained stagnant).
- Within the 682 companies in the study, people of color held 73 CFO positions—an all-time high representation of 11%.
Race and Power in the Fortune 500
According to the latest U.S. Census Bureau data, Latinx and Hispanic people represent the largest racial or ethnic minority group in the U.S., comprising 18.5% of the total population. Yet, the report from Crist Kolder Associates found that only 20 Latinx/Hispanic people served as chief executive officers (CEOs) in 2021—down from 23 the year before.
And while Black people make up about 13.4% of the country, only six were CEOs in 2021, up from five in 2020. Of the racial and ethnic minority groups, Asian Americans, who comprise 5.9% of the U.S. population, had the most representation at the CEO level—40 during 2021 and 41 the year before.
While the needle didn't move much for these groups from 2020 to 2021, the overall trend has been positive for Latinx/Hispanic and Asian American CEOs since 2004 (the first year the study examined). The number of Latinx/Hispanic CEOs during the period more than doubled, from nine in 2004 to 20 in 2021. And it more than tripled for Asian Americans, increasing from 12 to 40 over the same period. However, the number of Black CEOs remained virtually the same, oscillating between four and seven CEOs for the past 18 years.
This chart shows the number of companies with ethnically and racially diverse CEOs between 2004 and 2021.
And what about the boardrooms that help steer these enormously influential companies? Racial and ethnic minority populations are somewhat better represented, although in most cases, they still bear little resemblance to the customers these companies serve. Of course, the addition of new directors from underrepresented groups is hampered by persistently low boardroom turnover.
The 2021 S&P 500 Board Diversity Snapshot from Spencer Stuart, a leadership consulting firm based in Chicago, looked at proxy statements from 493 S&P 500 companies filed between May 28, 2020, and May 13, 2021. According to the report:
- 21% of all S&P 500 directors in 2021 were from underrepresented racial and ethnic groups (Black, Asian American, Latinx/Hispanic, Native American, Alaska Native, or multiracial).
- 30% of all S&P 500 directors in 2021 were women.
- 47% of new directors were from underrepresented racial and ethnic groups.
- 33% of new independent directors were Black, three times more than the previous year and the most since Spencer Stuart began tracking this data in 2008.
- 43% of new directors were women.
Here's a rundown of some of the report's key findings:
|Boardroom Diversity at S&P 500 Firms|
|Diversity Group||New Independent Directors||All S&P 500 Directors|
|All racial/ethnic minority groups||47%||21%|
|Native American/Alaska Native||<1%||<1%|
|Two or more races||<1%||<1%|
At smaller companies, members of racial and ethnic minority groups are more likely to be in key leadership positions. Still, the data here again suggests a long way to go before America reaches something resembling racial equity.
For example, the U.S. Bureau of Labor Statistics, which collects data across the entire economy, reported that in 2021 Latinx/Hispanic individuals comprised only 7.4% of all chief executives. Black executives, meanwhile, held 5.9% of these jobs. Among racial and ethnic minority groups, only Asian American executives came close to their relative share of the U.S. population, with 6.8% of top leadership roles.
The Elusive Quest for Diversity
For diversity advocates, there are some recent signs of progress at the boardroom level, in no small part due to the national discussion of racial disparities in the wake of George Floyd's murder in 2020 and the rise of the Black Lives Matter movement.
For example, a group of Silicon Valley leaders launched The Board Challenge, which calls for companies to appoint a Black director within the next year.And Institutional Shareholder Services, an influential advisory firm, announced that its research reports would start calling out large companies “that lack racial and ethnic diversity.”
Efforts like these seem to be bearing fruit. The recruiting platform BoardProspects reported that companies in the Russell 3000 index named 130 Black directors in the five months following Floyd’s death. In the five-month period prior, they only hired 38.
The question is whether such progress will be sustained over time. And while changing the look of boardrooms is important and challenging in itself, tackling the lack of minority leadership in the C-suite is an even bigger hurdle. Experts say most companies simply lack a strong pipeline that delivers Black, Latinx/Hispanic, and Asian American executives to top leadership positions.
Or perhaps companies just don’t look hard enough. “There is no shortage of minority candidates who can compete for these jobs,” Dick Parsons, former CEO of Time Warner and chairman of Citigroup, told USA Today. “It’s not that they get overlooked. They don’t get looked period.”
Minority group members who find employment at top firms report facing pervasive biases that hinder their advancement. For example, a recent survey by McKinsey & Company found minority employees were more likely to report being excluded from social activities with co-workers or having to correct false assumptions that colleagues made about their personal lives.
Business Benefits of Diverse Leadership
Greater equity does more than keep stakeholders happy—it can also improve the bottom line, according to a body of research on the subject. For example, a separate analysis by McKinsey found that companies that ranked highest in ethnic and cultural diversity were 33% more likely to lead their industries in profitability.
Additionally, a study by Boston Consulting Group concluded that greater minority representation at the top also leads to more innovation. Companies with above-average diversity in their management teams generated significantly more income from products launched within the past three years than less diversified companies. “People with different backgrounds and experiences often see the same problem in different ways and come up with different solutions, increasing the odds that one of those solutions will be a hit,” the authors noted.
How Many Women Are Fortune 500 CEOs?
The number of women running businesses on the Fortune 500 list hit 41 in 2021, an all-time high. Two Black women were among the group. Some view the 67-year-old Fortune 500 list as a barometer for leadership diversity in the country's largest companies. While 41 is a record, it still means that just over 8% of Fortune 500 companies have women at the helm.
Does Diversity Help Companies?
Yes. A diverse workforce allows companies to benefit from a variety of perspectives. It also drives employee productivity, encourages innovation and creativity, improves problem-solving and decision making, decreases employee turnover, and increases company profits.
What Is Diversity, Equity, and Inclusion?
Diversity, Equity, and Inclusion (abbreviated as DE&I or DEI) refers to programs and policies that encourage participation and representation from diverse groups. The goal of DEI is to hire a diverse workforce, give workers a voice, and include workers in business happenings.
Specifically, diversity refers to the numerous ways people differ, such as race, ethnicity, nationality, age, gender identity, physical ability, mental ability, socioeconomic status, experience, and education (among others). Equity means creating a level playing field through fair access and opportunities. Inclusion is the extent to which team members feel a sense of belonging and value within an organization.
The Bottom Line
While the number of Latinx/Hispanic and Asian American CEOs at S&P 500 and Fortune 500 companies has grown over the past decade, Black representation remains stagnant. In addition to being a moral imperative, research suggests that increased diversity helps companies succeed financially.
Crist Kolder Associates. "Crist|Kolder Associates Volatility Report 2021."
HR Policy Association. "Survey Reveals Top Concerns of HR Executives in America," Page 1.
Nike. “For Once, Don’t Do It.”
United States Census Bureau. "Quick Facts."
Spencer Stuart. "2021 S&P 500 Board Diversity Snapshot."
U.S. Bureau of Labor Statistics. “Employed Persons by Detailed Occupation, Sex, Race, and Hispanic or Latino Ethnicity,” Page 1.
The Board Challenge. “Take the Pledge. It’s Time for Action. Let’s Close the Gap on Board Diversity.”
Compliance Week. “ISS 2021 Proxy Voting Updates Address Racial, Ethnic, Gender Diversity.”
McKinsey & Company. “Understanding Organizational Barriers to a More Inclusive Workplace.”
McKinsey & Company. “Delivering Through Diversity,” Page 1.
Boston Consulting Group. “How Diverse Leadership Teams Boost Innovation.”
Shift HR Compliance Training. "What Is DEI and Why Is it Important for Your Company Culture?"
Ford Foundation. "Diversity, Equity, and Inclusion."
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