If CEOs want to promote diversity, they have to ‘lead by example’

Eddy ng, Queen’s University, Ontario

In the business world, the adage is often true: the ball stops at the CEO’s desk. That’s the way accountability should work.

But does the proverbial money start there too? If CEOs set the course for corporate priorities, values, and intentions, will the rest of the organization follow?

CEOs have a powerful influence to drive organizational change, if they choose to use it. On the issue of diversity and inclusion in the workplace, business leadership has so far been mixed. Despite the right words and intentions, progress has been slow.

Many CEOs seem genuinely concerned about diversifying the composition of their workforce, particularly those with daughters who, according to A studyThey tend to motivate their parents to act in a socially responsible manner.

But even for those at the forefront, it is challenging to turn good intentions into new realities in offices and workshops. Too often, responses are short-term and reactive to explosive events rather than long-term and systemic.

What explains this disconnect between the words coming out of top management and the actions within organizations?

Managers, not CEOs, oversee diversity

In organizations, the people in charge of implementing diversity, or any human resource policy, are managers, not top executives.

Managers have a lot on their plates and considerable discretion over how to implement organizational policies and practices.

They may hear their CEO say something positive about diversity and conclude that the CEO takes it seriously and they should take it seriously too. Or they may think that the CEO is simply reading a script prepared by public relations teams and following motions to please shareholders.

How managers assess the true intentions of their CEO is crucial to understanding whether an organization’s diversity agenda will be followed.

That is a key idea that came out of a study I conducted with Greg Sears from Carleton University. We analyze what CEOs say versus what they do. We surveyed their direct reports (vice presidents and directors) and asked them to rate their CEOs’ commitment to diversity.

We were interested not only in what they heard, but in what they observed in the actions of the CEOs. And then we look at the results: the amount of diversity policies and practices that are being implemented.

CEOs must show they are serious

We found that when HR managers perceived that the CEO was committed to diversity through visible actions, the organization reported more diversity initiatives. What the CEO says is important, but HR managers need to perceive that the CEO is serious before implementing any of those policies. And CEOs need to sustain that effort so HR managers remain committed to diversity.

CEOs don’t have to buy the business value of diversity in the workplace to be effective leaders on this issue. Some are true believers and some are not. Or the organizations they lead may lack economic reasons or public mandates.

But for CEOs who don’t believe in the business case for diversity, our study found that if they have strong moral values – which may come from their religion, family or elsewhere – are much more likely to display pro-diversity behavior.

If this is so, the question is: How do CEOs clearly indicate that they are serious about diversity and inclusion in a way that forces managers to move on?

The most compelling way to get people’s attention is hold them accountable linking your job performance and compensation to diversity goals. Otherwise, advancing the diversity agenda is in a best effort basis.

An example of a so-called best-effort attempt is contained in the common argument we hear that “there are no qualified candidates in the pipeline.” Managers are quick to acquit themselves by insisting that they advertised for various candidates or hired consulting firms to help, but couldn’t find anyone. But when your year-end merit bonus is tied to diversity goals, managers go to great lengths to make sure those goals are met.

Linking diversity to compensation

If it’s so effective to tie managers’ compensation to diversity-related goals, one wonders why corporate boards don’t do the same with CEO compensation. Some are starting to do just that, but not many.

One reason may be the prevalence of interlocking board membership, in which the members of the board are executive directors or senior executives of other corporations. It is a community of clubs, mostly made up of white men. They avoid tying compensation to diversity-related goals, because guess what? – are hard to come by.

Fortunately, there are investors and legislative pressures for greater diversity in the boards of directors. As we gain a critical mass of racialized minorities, women, and other underrepresented groups in high-level governing bodies, there is hope that the situation will improve.

That critical mass is not just one or two lonely voices, it requires at least three board members of underrepresented groups to see real and lasting change.

Let’s be clear, though: even if a board ties CEO compensation in part to diversity goals, the CEO’s role in achieving those goals is as an initiator and supporter, not as an implementer. The CEO’s priority is to preach, to do what he can to convince those running diversity programs that they are serious, both today and tomorrow.

It shouldn’t be too much to ask. CEOs get their executive position in part thanks to their persuasion skills. They should spread some of that pixie dust to enrich their organization’s workforce and the community in which it operates.

Eddy ng, Smith Professor of Equity and Inclusion in Business, Queen’s University, Ontario

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