How many women and people of color work for your company? How many of them are in management roles?
The answers to those questions could soon be more significant than you think.
Personnel issues, including workforce demographics, are generally treated as internal matters. Companies are required to report them to the Equal Employment Opportunity Commission, but those reports are kept confidential.
However, a recent regulation from the Securities and Exchange Commission might start prying open some of those statistics. It requires public companies to furnish information about “human capital resources” – a broad area that includes diversity. There is no specific mandate for diversity reporting, but, as one labor attorney told the Wall Street Journal, “I can’t say that we have a client that hasn’t talked about it in the boardroom.”
Of course, some companies have been voluntarily breaking down the demographics of their workforces for years, as part of general corporate relations. PepsiCo, for instance, has breakdowns by race and gender on its website. But there are limits to how much companies will disclose on their own. The Journal looked at 182 companies in the S&P 500 and found that, while 61% gave diversity information in their SEC filings, only 23% reported it for managers, and 15% for the board of directors.
Companies may take the attitude that their demographic makeup is no one’s business. But that would be a mistake. Fairness may be an abstract notion, but diversity has practical benefits. McKinsey’s research, cited in the Journal article, shows that the 25% of companies with the least diversity are more liable to do worse than the average for their industries.
In addition, a diverse workforce may come, in more and more situations, to be something desired by consumers, trade customers and others whose opinions can’t safely be ignored.
The general counsel of Coca-Cola sent stern letters earlier this year to several dozen law firms, telling them they will need to diversify if they want Coca-Cola’s business. If their staff of attorneys isn’t at least 30% diverse, with half of that number being Black, they can expect consequences up to and including the loss of Coca-Cola’s business.
“We will no longer celebrate good intentions or highly unproductive efforts that haven’t and aren’t likely to produce better diverse staffing,” the letter states. “Quite simply, we are no longer interested in discussing motivations, programs, or excuses for little to no progress – it’s the results that we are demanding and will measure going forward.”
Bradley Gayton, the general counsel who sent the letters, is a Black man, which points to a simple truth of diversity: It snowballs. As previously marginalized groups enter the workforce, especially its upper ranks, they want and expect to be able to deal, at least occasionally, with someone who looks a little like them.
