Diversifying the Management Team 

Minorities are still under-represented in the senior ranks, but improvements are in the pipeline.

By John Rice

How many minority senior executives work at your firm? If the answer is none, you are not alone: only 3 percent of the senior management at major companies is African-American, Hispanic or Native American.

In October 2006, The New York Times ran an article and pictorial on the cover of its business section titled “It Pays to Have Pals in Silicon Valley,” focusing on PayPal’s founders and their key lieutenants since they sold the company to eBay Inc. in 2002. The article highlighted their fascinatingly broad web of influence—they spawned well-known technology start-ups such as YouTube Inc., LinkedIn Inc. and Yelp Inc. and led major venture capital firms and hedge funds that financed these startups and (I would bet) many other companies and philanthropic initiatives. There was not an African-American, Hispanic or female face in the bunch.

The PayPal story illustrates that one’s career trajectory and sphere of influence are not only a function of talent and relevant work experience, but also are driven by less tangible factors such as timely exposure to opportunities, mentoring and access to networks of high-performing peers and more experienced professionals. The story also suggests that to change the face of Silicon Valley’s leadership and that of other industries, our approach needs to be significantly more comprehensive than it has been to date.

In 2001, the Boston Consulting Group conducted an analysis of the key choke points for minorities along the pipeline to senior management, which was recently updated by management and technology consulting firm Booz Allen Hamilton. While African-Americans, Hispanics and Native Americans represent more than 25 percent of the U.S. population, the study showed that they make up only 14 percent of graduates from leading undergraduate institutions, obtain only 6 to 7 percent of the fast-track entry-level business jobs post-college, comprise only 8 percent of students at the major MBA programs and represent only a tiny percentage of senior executives at major corporations.

How do we broaden the minority leadership pipeline? While one-off initiatives such as career fairs, fellowships, conferences and event sponsorships can be helpful, they are not solutions. All have been around for many years and we are still struggling with this issue.

I founded Management Leadership for Tomorrow (MLT, www.ml4t.org) to drive toward a long-term solution. MLT has created a talent development system that prepares minorities to achieve at the highest levels at the pivotal transitions points on the road to executive positions: high school to college, college to early career, early career to MBA and ultimately mid-career to senior management.

MLT’s high-touch, high-tech programming model equips our fellows with the key ingredients for high achievement: the hard and soft skills, early exposure to opportunities, a clear roadmap for success, door opening relationships, coaching and mentoring at key junctures and access to the organizations that develop leadership talent. MLT’s partner organizations—including Citigroup Inc., The Goldman Sachs Group Inc., McKinsey & Co., PepsiCo, General Electric Co. and Google Inc., as well as all of the top graduate business schools—actively participate in the professional development of MLT’s participants. MLT develops and delivers its curriculum in conjunction with these bar-setting organizations, many of whom lead intensive “day-in-the-life boot camps” and skill development workshops.

MLT’s partners help prepare the talent pipeline, build meaningful relationships, and then recruit our fellows into fast-track positions. In fact, more than 90 percent of our undergraduate career preparation program fellows receive full-time offers, and MLT is now the number one source of minority talent at the top 10 business schools. Nearly 40 percent of Harvard and Wharton Business School students are MLT alumni.

There is still so much work to be done toward our long-term goal of doubling the number of minority senior leaders in corporations, entrepreneurial ventures and non-profit organizations. It will take 10 to 15 years to see the full impact, when this generation of leaders populates the executive suites of the nation’s top corporations. When there is a critical mass of minority leaders who have the skills, experience, relationships, capital and commitment to be change agents within their organizations and their communities, we will have reached our goal.

How can your organization accelerate solutions to these challenges?

1. Take a Strategic Approach
Approach diversity with the same level of strategic and tactical rigor with which your firm approaches the development and delivery of its core products/services. Assess what drives recruiting return on investment (ROI) for your firm, however you define it. Make a long-term commitment to those initiatives that meet the ROI bar and then eliminate those that do not. Invest in opportunities that have potential to broaden your talent pipeline rather than just give you access to the existing pool.

For example, one MLT partner in the financial services industry evaluates ROI for each of its diversity-related investments over both the short and the long term:
For the short term they evaulate:

  • Number of hires and offers
  • Reach/branding within target constituencies
  • Competitive positioning vs. peer firms
  • Perceived candidate quality among their executives

And for the long-term:

  • Impact on size and quality of candidate pool
  • Potential for impact at senior management levels

As a result of this analysis, this organization has scaled down certain investments that were not driving incremental value and has invested more resources (both financial and personnel) in those that were creating value, in order to maximize their potential return.

2. Define Success
Develop a deep understanding of what it takes to be successful in your organization and how that affects the success of your diversity recruiting and retention efforts. Many of MLT’s corporate partners understand what it takes to be “great” and how that influences recruiting and retention practices. A smaller number of our partners are now seeking candid feedback directly from our Fellows. (e.g., What can we do better to attract and retain top talent? What factors influence your decision to commit, stay or leave to pursue other opportunities?)

3. Get C-Level Buy-In
Commit at the highest levels to address those factors that make it difficult for you to attract and retain the best talent. Don’t expect it to happen just because you have staff focused on diversity, or a diversity task force in your organization. Those corporations that recognize that it takes a senior executive to champion these efforts will be the most successful. The people who are driving the talent acquisition and retention efforts must themselves understand what it takes to get to the senior level if they are to be effective in helping those professionals navigate the path to senior management.

John Rice is Founder and CEO of Management Leadership for Tomorrow (MLT), a non-profit organization that prepares minorities for success at top-tier companies and business schools.