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The killing of George Floyd in the US and the consequent protests around the world have brought to the surface a long-felt sense of injustice that has found an echo so deep that it has forced media, businesses and politics into a frenzy of self-justification and defensive posturing.

The reaction has some things in common with the viral spread of the MeToo movement three years ago following the revelations of harassment and sexual abuse by Harvey Weinstein.

Mary Barra, CEO of GM, Ken Frazier of Merck, Arvind Krishna, boss of IBM, are just some of the Fortune 500 names who have recently spoken out in support of Black Lives Matter, in complete contrast to the deafening silence we have grown used to on these controversial issues. From the department store side, Michelle Gass, CEO of Kohl’s, has been outspoken against racism and referred to her company’s CSR report. John Lewis who recently appointed a new chairman who is a woman and black, published its first diversity report just before her arrival. Although John Lewis’s overall diversity numbers are good, there is still a strong imbalance between higher and lower levels in the company.

Is the situation and these pronouncements different now? Are these bosses to be taken seriously this time, or are we witnessing another episode of “race washing” which defuses a short-term crisis without yielding any substantive changes?

“Give the lady what she wants”

Marshall Field, founder of Marshall Field’s department store in Chicago

Underrepresentation is everywhere

There is clear underrepresentation in business of most non-white straight male groups in top roles. For example, according to The Economist (13/06/20), although black people make up over 13% of the US population, only 4 of the current Fortune 500 CEOs are black, and 6-7% are female (including Best Buy, Kohl’s and JC Penney) . The same goes for other top positions in business. Even among those companies which claim good practice on diversity, there is sometimes an element of bad faith: look closely at the makeup of company boards and it appears that many of those which claim to have a diverse board are counting non-executive directors equally. Very few indeed will have a woman at the executive helm who is not an owner’s family member (which is not to diminish those people’s competence). Similarly, in whatever country, ethnic minority groups get fewer in number as you move up the hierarchy.

What is the excuse?

The main argument put forward by businesses has been that racial and gender inequality are problems for society to solve. Only society as a whole through government can tackle poverty, inadequate schools, a flawed justice system, and dominant domestic arrangements.

After an incident at Nordstrom Rack where the police was called to deal with three black youths wrongly suspected of shoplifting, it was commented that “Nordstrom cannot fix society on its own as it relates to stereotypes”.

There is of course a moral imperative which recognises that businesses exist in society with employers and employees, customers, suppliers and stakeholders. It has been pointed out that business is where races mix in a world which is often sharply divided into separate communities. As the multinational 3M has put it, “businesses have a responsibility to help lead”.

The business imperative for diversity

What is the impact of low diversity on business? Any imbalance in employment of different social groups represents potential waste of talent as employees at all levels may be excluded in spite of their high ability. A number of reports have considered this angle and by and large link lack of diversity to underperformance. A paper published by the World Economic Forum argues that “diversity brings many advantages to an organization: increased profitability and creativity, stronger governance and better problem-solving abilities”.  It continues, “companies with more women in the C-Suite are more profitable”. BCG claim that “diverse leadership teams boost innovation”; and for McKinsey, “many successful companies regard I&D (inclusion and diversity) as a source of competitive advantage. For some, it’s a matter of social justice, corporate social responsibility, or even regulatory compliance. For others, it’s essential to their growth strategy”. It is no accident that JC Penney, long recognised for its efforts in promoting diversity, has a specially designed training programme called “winning through inclusion”.

What is to be done?

Most under-represented groups appear to reject quotas and affirmative action which they claim have not worked. Having the scales tipped in their favour, reduces their voice when they do get to the table. Furthermore, it should not be what some have called a “box-ticking exercise” (ok, we’ve got a woman, so we are not un-diverse). Rather, what is needed is a) focus: diversity is a difficult topic which needs a strategy. Also, the situations of different under-represented groups are not the same. Race, gender etc. cannot all be solved together; b) the problem should not be ghettoised for example through a “diversity committee”. It should be the concern of the whole business and led by the CEO; c) metrics and measurement. Goals and targets need to be set, (not quotas) including follow-up, for example, of executives who leave; d) management practices need to change. Managing diverse teams is a new skill which needs to dispense with “affinity bias”, the tendency to assume we are working with people from a similar background.

In terms of merchandise, the list of faux pas is a long one: Macy’s got publicly shamed and had to apologise for a set of plates on the theme of weight reduction which were insensitive. The well-known racist sweater design by Gucci wich raised a storm of protest prompted the comment from film-maker Spike Lee: “we’ve got to be in the room”. In other words, if there is no diversity in the company, there will be costly and offensive mistakes made (whether you have a “diversity officer” or not, apparently).

Are there any best practices?

A four-part series appeared in Women’s Wear Daily at the end of June as part of the panic following the realisation that the George Floyd killing and its aftermath was perhaps more significant than first supposed. It attempted to paint a picture of fashion, brands and retailers in terms of their diversity employment and policies but ended up as another example of evasion and prevarication on the part of many of the companies approached. Many claimed they had no data to share. Macy’s CEO was quoted as saying that diversity and inclusion has been in the retailer’s DNA for years, but it needs to and plans to do more, in light of the recent protests over the killing of George Floyd. Many followed his line that diversity “requires long-term action” as though the problem had only just been identified. Even Nordstrom which came off relatively well for a department store, confessed that they “must do more”. In the Forbes “Best Employers for Diversity” ranking of 2020, Nordstrom occupies position 273, Macy’s 293, and Bloomingdale’s 339.

Although not noted for diversity in management positions, John Lewis in the UK as mentioned above, recently appointed its new chairman: a black woman who came from outside the retail industry. The management board of the John Lewis Partnership now consists of 8 people mixing ethnicity, gender, continuity and expertise in a convincing cocktail.

Are we really listening to our customer?

An Accenture study has found that “42% of ethnic minority shoppers would switch to a retailer committed to inclusion and diversity” and 41% of LGBT shoppers would do the same. It is never one element that shapes how people perceive a retail brand. Many points of interaction including marketing and advertising, store environment, front line employees, products and services, and public statements contribute to brand reputation. We are beginning to hear the faint rumbling also of black influencers being short changed by brands, of fashion students at Central St Martins or Parsons demanding more mixed teaching.

As the report on retail by DLA Piper surveying businesses in the US, the UK and Europe concludes: “the most senior people driving strategy in the largest listed retail firms in the US, UK and mainland Europe are not representative of the customer groups they serve or the type of diverse leadership which can give them a proven competitive edge”.

Conclusions

Undoubtedly, the US is a special case in terms of ethnic numbers. Few other countries have a comparable racial/ethnic mix, and indeed few other countries collect census details like the US. Nevertheless, the lessons are broader: diversity is the opposite of sameness, uniformity, and the “affinity bias” mentioned above which smothers innovation and creativity. At the present moment, racial diversity is under the spotlight. It is a perfect moment to learn that our customers are diverse beyond simply age, and if we are to keep them, we will need to cater to that diversity, whether ethnic, gender, sexual, disability or other. We will not have the means to do so successfully if we rely on a traditional uniform leadership. “To start building diverse senior teams for the future, retailers need to take deliberate and proactive action” …. Only this “will ensure the pipeline is filled with leaders of the future” (DLA Piper).

For companies, this means:

• Having a real strategy for diversity
• Recognising that diversity concerns the whole company; a “diversity officer” may have the effect of absolving everyone else from responsibility
• Pushing for diversity where it is needed: at the top and particularly in senior executive and operational roles

Want to go further or exchange your ideas? Share your thoughts with us at [questions@iads.org](mailto:questions@iads.org)

Credits: IADS (Christopher Knee,)