Customers vote with wallets over diversity failures
Executive coach Geraldine Gallacher spells out why it makes good sense for business leaders to align future business and workforce strategies to a changing customer profile as consumers and employees make their views clear.
Consider this, by 2040 the white population of the US will be a minority. Here in the UK ethnic minorities will make up 30% of the population by 2050. These demographic changes present companies with the opportunity to capitalise on new and emerging needs.
Diversity will be critical to the future economic success of our companies. And having a workforce that reflects the customers it serves has a key part to play. So, it makes good business sense for CEOs to align the future business and workforce strategy of their business to a changing customer profile.
But when Larry Fink, CEO of Blackrock, the world’s largest investor with $6 trillion (£4.65 trillion) under management, announced plans to advance diversity by changing the way the company hires and compensates staff, so that in five years the company isn’t just ‘a bunch of white men’, he was criticised for corporate socialism.
You’ll remember the same tired insult was flung at Sascha Romanonvitch, Grant Thornton’s former chief executive, in an attempt to disparage her pioneering work to create a firm fit to thrive in the future.
What their critics fail to understand is that social factors, including diversity, are relevant to the economic success of our companies. Romanovitch and Fink embody a new form of leadership, epitomised by Indra Nooyi, chair of Pepsi-Cola and Paul Polman, the retiring CEO of Unilever, who understood the competitive edge to be gained by addressing social issues.
I don’t think the debate currently being had on the role business can play in social issues is particularly healthy or helpful. Mud is being slung in both directions. Use of the pejorative term, ‘male, pale and stale’ to describe the stunting impact a homogenous leadership team can have, tends to create a defensive response.
On the other hand, crying ‘corporate socialism’ ignores a growing body of evidence that demonstrates that economic success is strongly determined by the way a company addresses social issues.
Time would be better spent encouraging senior leadership teams, stakeholders and employees to consider how the success of a business affects and depends on the society in which it operates.
Businesses are not democracies but increasingly, consumers and employees are making their views clear on how a business should conduct itself and the role they expect it to play in wider society. Customers are voting with their wallets, employees with their feet.
Geraldine Gallacher is founder and managing director of the Executive Coaching Consultancy.
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