Today more than ever – exacerbated but not caused by the COVID-19 pandemic and our national reckoning with racial inequity – Americans are loudly asking, how do we create a more fair, equitable union? Since the Occupy Wall Street movement 10 years ago, the wealth gap has been a centerpiece of our moral conversation.
In response to pressure from both consumers and employees, as well as the simple fact that inequality hurts profitability, companies are making commitments to help, with charitable donations and more diverse hiring and vendor sourcing initiatives. But to achieve meaningful progress, we must confront an elephant in the room: Today’s corporate business culture is misaligned with equality.
We all know that achieving any major goal requires sacrifice, a willingness to change and a long-term commitment to the true objective. Equality is no different. High-minded pronouncements about “injecting a moral compass” into the current ways of doing things does not address the actual work that needs to be done. One doesn’t start jogging today and expect to complete a marathon tomorrow. That said, there are obvious roadblocks that must be overcome for us get us to where we need to go.
Think Beyond the Short Term
First, short-termism – whether in our hiring, planning or execution – is antithetical to the long–term nature of how to build equity. Corporate leaders trying their best to figure out how to respond to this current moment in time often overlook the most obvious, effective long-term solutions simply because of the short-term sacrifice they may require or short-term discomfort they may cause key stakeholders.
Centering a social purpose, raising the minimum wage and increasing supplier diversity are all actions proven to drive long-term growth and productivity, yet they are almost immediately dismissed as infeasible or financially irresponsible.
Second, prioritizing profits over people is still considered smart business, but only from a short-term perspective. If the majority of your consumer & employee base is sick, undereducated and in financial distress, how do you future–proof your profitability? According to recent studies, increasing the minimum wage increases productivity.
Forward–thinking visionaries occupying C-suite roles and positions of leadership have the power to set and manage long-term expectations that will deliver superior outcomes, both for shareholders and our society at large. Just look at Nike’s decision to double down on Colin Kapernick. The controversial choice paid off: Nike claims $163 million in earned media, a 31 percent boost in sales and a $6 billion increase in brand value.
Third, we need to challenge the facile belief that meritocracy – rather than who we know – is really what determines who we hire and promote.
The cliche of the “good ol’ boy” network is an honest observation of how an elite class reinforced generational success through business relationships and opportunities. The “right” school, dinner club or fraternity can mean more than position competence. This lack of meritocracy lowers competition and continues to consolidate wealth and power to those who have been systematically included.
Of course, this fiction bears no connection to reality. For example, Black women are the most educated demographic in the country and women of color the most entrepreneurial, opening 89 percent of the new businesses in 2019. Yet they are under-represented in the management ranks of many financial institutions.
Follow Others’ Example
It is time to take a long hard look at how we recruit, who we hire, how we hire, how we promote and what our true definition of success looks like. The meritocracy equation at a company may be flawed, but there are proven models to change this. Key Bank is an example of actualizing change with close to 60 percent of its hires being female and minority a goal reached with the help of a board and management team all above the norm for diversity (50 percent and 30 percent respectively).
So here we sit at the beginning of 2021, on the corner of good intentions and action. We know to future–proof our companies, brands, profits and society, we need more equity and diversity. But instead of pushing it off on trainings, siloed departments or charity, let’s do what the best companies in the world know how to do: Create visionary strategy based on data and market understanding, following a well proven roadmaps. Then we must apply the necessary resources and budgets, while holding key stakeholders responsible, to ensure success on the ground, in our companies and communities.
Responding to this moment in our history is more than pledges and platitudes, it’s redefining how we operate, acknowledging that investments and hard work in the short-term will yield massive results and by making the commitment that building equity into culture will benefit us all. For the companies that get it right, the upside is massive.
Malia Lazu is a lecturer at the MIT Sloan School of Management and the former Eastern Massachusetts market president and chief experience and culture officer at Berkshire Bank.