Diversity Officer Hiring Is Booming in the U.S.

Chief diversity officers have become a hot item in U.S. C-suites, with hirings setting records and big-name companies such as Levi Strauss & Co. poaching peers for management talent.

After the police killing of George Floyd touched off mass protests demanding more equity for Black people last year, new hires of diversity chiefs in the Standard & Poor’s 500 Index jumped to as many as a dozen monthly — almost triple the rate of the previous 16 months, according to research from executive recruiter Russell Reynolds Associates. A separate analysis of a broader group of public companies found that at least 60 firms appointed their first-ever diversity leader since last May.

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If history is any guide, there’s no guarantee the hiring boom and unprecedented promises in response to the Black Lives Matter movement will convert into lasting change. While 85 of the nation’s top 100 corporations tracked by Bloomberg for corporate diversity have a chief diversity officer, representation of minorities within their workforce continues to lag behind. Recruiting a new leader sends a strong signal, but it takes more than one executive to make an impact in the face of institutional pushback.

Under the pressure, corporations have started to take concrete actions that can be measured. McDonald’s Corp., Microsoft Corp. and Boeing Co. have set hiring quotas. International Business Machines Corp. has dropped degree requirements that had proved barriers to recruiting minorities. Eighty-one companies in the Bloomberg tracker have expanded their recruitment pool to historically Black colleges and universities.

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Still, even after the flood of new hires, only about 53% of S&P 500 firms do have such a position or equivalent, up from 47% in 2018, Russell Reynolds research shows.

Progress has been slow, and turnover high. The average tenure is 3.2 years, compared with 5.5 years for a CEO. Apple Inc., for instance, has had three diversity executives since the position was created in 2017.

Once installed, diversity chiefs often face challenges such as lack of budget and direct reports. An oft-cited 2019 study from Boston Consulting Group found that even as 97% of workers said their company had a diversity program, only 25% said they were benefiting from it.

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Change rarely happens when a diversity leader is separated from other departments, such as human resources. One of Obed Louissaint’s signature programs when he was in talent development at IBM in 2018 was to drop four-year degrees requirement for some job openings. That opened up IBM to skilled, degreeless candidates that had previously been invisible to managers and now make up 15% of hiring. Louissaint was promoted in November to take on a broader role at the technology company, and the chief diversity officer reports to him.

Another way to bring progress is to link executive compensation with diversity targets. Only a fraction of S&P 500 companies do so, with one notable example recently: McDonald’s.

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Facebook Inc. requires recruiting managers to include at least one candidate from under-represented groups — if they don’t, they need to seek an exemption from their boss.

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