Friday, October 9, 2020

Why Are There Still So Few Black CEOs?

Stalled Progress

The number of CEOs of Fortune 500 companies who are minorities or women has inched up in the past 20 years, with Black CEOs making only tiny gains.









Note: Data are through August 2020 and may include CEOs who left during the year.

Source: Richard Zweigenhaft, Guilford College

The Wall Street Journal recently asked the question "Why Are There Still So Few Black CEO?"  In 2020, carefully culled statistics show that less than 1% of all Fortune 500 CEOs are African American, naming just four out of 500 of the Fortune 500 that are led by black CEOs.  Further, the WSJ continues in reporting that all U.S. companies with more than 100 employees, African American senior leadership stands at only 3%, while the black population in the United States is roughly 13%.  Why is African American senior corporate leadership in the U.S. so inexplicably lowe?  The chart above details the achingly slow progress for CEO diversity in the past 20 years.  

Why is this so?  Some reasons provided in the article include:

Opportunity for leadership and promotion is not equally distributed;

"Black professionals face greater obstacles early in their career, are viewed more critically than their colleagues and frequently lack the relationships that are pivotal to advancement";

Unadulterated racism;

Companies often emphasize diversity recruitment but fall short on retention efforts and advancement; 

Many companies tended to see diversity as “nice to have, but not a must have,” although in recent months based in large part on the Black Lives Matter movement, more corporations seeking assistance with board recruitment have specifically mentioned diversity as a priority.

On the issue of unadulterated racism, "One 2019 study of racial bias in hiring in the sciences found Black applicants for postdoctoral positions were rated as being less competent, hireable or likable than their white, Latino or Asian peers.  A 2014 study in which people were asked to evaluate identical legal writing samples found that people consistently found more errors and judged the writing as being poor when they were told the author was Black.  A 2017 study examining callback rates for Black job applicants found discrimination levels haven't improved in the past 25 years."

One common refrain from white leaders for failing to diversify corporate leadership is that the talent pool is too shallow.  This age-old adage is belied by the facts.  From the article:  "When it comes to Black advancement, one popular argument among many white executives is that there is a “short supply” of talent. . . .  In reality, . . . the pool of highly educated, experienced Black professionals has never been greater.  In 2019, 26% of Black people age 25 and older in the U.S., or seven million people, had completed at least four years of college, up from 15% in 1999, according to federal data. Among white[s] . . ., that figure was 36%, or 63 million, up from 26% in 1999.  More than 13% of master’s degrees were given to Black graduates during the 2016-17 academic year, up from 9.4% in 2000-01."

The largest takeaway from firms that successfully diversify their corporate board is commitment.  Making a commitment to add diverse talent requires affirmative effort and the research indicates that diversity grows corporate profits.

hat tip to Will McGrath, 3L Arkansas Little Rock Bowen School of Law


  1. Wells Fargo CEO just articulated a few weeks ago the "we can't find any qualified black people" trope, saying that there is a "limited pool of black talent". Diversity work can't address this kind of racism. That's why diversity efforts must be combined with antiracism efforts. Great post. Cheryl L.

  2. Agree Cheryl, the "we are searching but there are not enough qualified diverse candidates" excuse is tiring and exposes a failure in the speaker, not the pool of candidates. There are hundreds of qualified people of color for board positions and banking leadership roles, but the trope replicators are not looking in the right places or surrounding themselves with the individuals that could lead them to those places. Wells Fargo's CEO should contact me (or you) and we could send them lists of qualified people of color to fill those roles!

  3. Jerome Wilson, Jr.October 26, 2020 at 7:36 PM

    Professor cummings, this is an interesting article. The idea that companies are working to recruit diverse employees but fall short regarding retention is spot on. Several employers have recently spoken to me regarding their desire to have diverse workforces but when you look at these organizations overall they are not diverse. I had a conversation with one supervisor that told me they can hire diverse applicants, but within a year or two they leave for other opportunities. The best way to address this is not just to hire diverse but to foster an environment that encourages, supports, and thrives off diversity.

    1. Exactly! I think hiring a diverse applicant is the easy part. As already mentioned, there are plenty of equally qualified diverse applicants. The opportunity to move up the corporate ladder is important but employee morale is just as crucial. People want to work in places where their work is valued but also where they feel valued as a person. Company culture is crucial not only to complete collaborative tasks but a positive culture cultivates ideas and motivates employees to put their best effort forward.

      Unfortunately, I think some entities believe that hiring someone that "looks" diverse is enough. But it is simply the first step in a marathon towards social justice within the corporate world. Laura's comment below hits the nail on the head. We simply cannot bring a diverse employee and consider it enough to check the diversity box.

  4. great comment jerome. the question, of course, is whether these companies that are promising greater diversity hiring are going put their money where their mouths are. the culture of a firm is critical in retaining diverse leadership and workforces.

  5. Building off Jerome's comment, I have also observed that retention and advancement are significant issues. My own experience is in higher education, and I have sat in many meetings where there has been extensive (and sincere) discussion about the need for diversity in higher education. But I don't believe I have ever been in a meeting where there was an equally robust discussion about how to ensure that the department as a whole is one that welcomes and promotes diversity. It often seems that once the diversity box is checked, people can put all the responsibility on the diverse candidate to bring the benefits of diversity without contemplating their own role in creating an environment where that can happen.

  6. I think that this will continue to be a problem until boards are filled with members who see value in having a variety of backgrounds and perspectives higher levels within the company and who take personal responsibility to create retention initiatives. Pushing diversity can only do so much because, as Jerome and Laura noted, when it's a box to check off upon hiring, retention and promotion are ignored. Without support within the company that goes beyond onboarding paperwork, diversity initiatives are sure to fail. When it's a buzzword rather than a belief, only so much progress can be made.
    In addition, the fact that black people are given fewer opportunities within companies creates enormous barriers to CEO status--if a person cannot gain the necessary work experience and networking opportunities that advancement provides, it is that much more difficult to demonstrate that he or she is capable of the work of CEO. The way our institutions shut black people out at the beginning of the corporate ladder gives them an excuse to shut them out at the top. They cry there are no qualified black people for officer positions, all the while failing to foster the black talent they do have.
    -Amanda Wentz

  7. I think often firms miss the mark on why they are seeking diversity, and this leads to a lack of retention and advancement. This is mere speculation, but based on the discussion in this blog post it seems that sometimes firms think of diversity passively, knowingly they need it but not truly recognizing why they do. Besides the fact that corporate American needs to remedy racial inequality, corporate America also needs to realize the benefits that diverse leadership brings to corporation. As discussed in "Toward a Critical Corporate Law Pedagogy and Scholarship," diverse boardrooms are linked to valuation gains for the company. This, alone, should show the importance in not only recruiting, but retaining and advancing diverse applicants.

    Frances Amick

  8. Diversity on boards is crucial as it promotes innovation and creativity. The racial status quo will be continued to be reinforced if it continues how board members are chosen - people choosing those who they are familiar with and those who they trust. Even boards that have one black board director, it is not enough. It needs to be an active and conscious effort. Black employees are placed in positions where there is little to no room for advancement. While companies are spending money on diversity trainings, it is not focusing on investing in long term programs like diversity programs that are focused on advancing and retaining staff. I think it is very crucial that boards revaluate that and create and implement goals taking these measures.

    Deepali Lal

  9. Awesome post,I appreciate your knowledge I really get to know something new. To run a business we should know about corporate. What is Corporate Finance it would be a great source of knowledge for Business management.