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Women not advancing to c-suite, study says

Friday, November 12, 2010  
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While large companies are committing themselves to workplace diversity programs, a large gap between strategies and performance remains, according to a new study by Calvert, an investment management company.

The number of women and minority board members and executives at Standard & Poor’s 100 Index Companies has remained essentially flat over the past several years, according to Calvert’s "Examining the Cracks in the Ceiling,” which evaluates S&P 100 companies commitment to diversity and inclusion. More than half of these companies -- 56 percent -- have no women or minorities in their five highest-paid executive positions.

"As these positions are often the gateway to future board appointment, the importance of having strong diversity in these roles cannot be underestimated or overlooked,” the study noted.

For the second time since 2008, Calvert considered 10 factors when evaluating the S&P 100: Equal Employment Opportunity policy, internal diversity initiatives, external diversity initiatives, scope of diversity initiatives, family-friendly benefits, EEO-1 demographic data disclosure, highest-paid executives, board diversity, director selection criteria and overall corporate commitment.

A majority of the S&P 100 scored in the top half  of Calvert’s spectrum, with 65 organizations scoring at least 70 of a possible 100 points. Five companies scored 95 or more. These diversity leaders include NEW Title sponsors Chevron, the first major integrated energy company to offer employees domestic partner benefits, and Coca-Cola Co., plus NEW Platinum sponsor Sara Lee Corp. 

The three firms demonstrate broad-based corporate commitment to gender and other diversity. Chevron, for example, ties managers’ performance ratings to their hiring of diverse candidates and operates diversity councils throughout the company. Coca-Cola has a Public Issues and Diversity Review committee  tasked with "reviewing the company’s progress toward its diversity goals.” Sara Lee’s board of directors and senior management team "ensure the integration of diversity and inclusion into business vision sessions and planning by setting policy, monitoring strategy and holding leadership accountable.”

Looking at companies’ most highly compensated executives, Chevron, Coca-Cola and Sara Lee are joined by NEW Foundation sponsor Kraft Foods Inc., Title sponsor Johnson & Johnson and Platinum sponsor Campbell Soup Co. in the small group of 14 companies scoring a perfect "10” on this indicator, meaning each has two or more women and/or minorities within their five highest-paid officer positions.

While these and other companies recognize diversity in the boardroom as a business imperative, Calvert called the pace at which women and minorities are reaching the upper echelons of power "glacial,” as the pipeline for corporate directors continues to be dominated by white males. Ninety-two out of 100 CEOs are white males. While white women make up approximately 18 percent of director positions within the S&P 100, only 8.4 percent of the highest-paid positions, which provide the opportunities to develop the expertise and networks needed for future board-level appointment.

Still, more large companies are moving to fully integrate their diversity commitments throughout their organizations. Thirty percent of the S&P 100 include some oversight of diversity issues at the board level; 34 percent include diversity measures in their compensation plans. "A number of companies have also expanded employee resource groups beyond focusing solely  on one traditionally underrepresented group to being inclusive of boarder demographics thereby reaching new markets for both recruitment and business opportunities,” the study noted.

NEW sponsors, diversity standouts

S&P 100 companies with standout internal initiatives include NEW Platinum sponsor Colgate-Palmolive Co., which Calvert spotlighted for its strategic leveraging of employee resource groups for recruitment and retention, talent development and multicultural marketing strategies support. Procter & Gamble, a NEW Title sponsor, was noted for its strong management involvement in robust mentoring programs.

External diversity initiatives, critical to a company’s success in building and sustaining a fair and equitable working environment, are especially strong at NEW Title sponsor Johnson & Johnson, which supports business development for diverse suppliers, by providing scholarships and collaborating with business schools and executive leadership programs. Calvert also highlighted NEW Title sponsor PepsiCo Inc.’s  dedicated female talent development division in the Middle East and Africa, which increases recruitment of women in those regions.

Foundation sponsor Wal-Mart and Silver sponsor Costco were among just eight S&P100 companies cited for full EEO-1 data disclosure, which provides a comprehensive breakdown of a company’s workforce by race and gender across employment categories. "[This] enables investors to get a snapshot of minority and female representation throughout a company’s ranks and to measure a company’s progress on hiring, retaining and promoting minority and female employees over time,” the study noted.

While the federal government requires private companies with more than 100 employees to submit EEO-1 information, these firms are not required to release the data to investors or the public.  "Overall disclosure of diversity policies and programs is strong, as most companies openly discuss the existence of policies and programs to advance women and minorities,” according to the report. "Unfortunately, the majority of companies are not transparent about the effectiveness of instituted policies and programs. In fact, 37 percent of companies still disclose no EEO-1 data  [which is] critical to demonstrating how successfully women and minorities are advancing throughout a company’s ranks and evaluating the effectiveness of diversity initiatives.”

This inconsistent disclosure left Calvert was unable to evaluate key factors in companies’ diversity initiatives and performance, such as percentage of women in management training programs, the proportion of total supplier spending dedicated to women and minority-owned businesses and the extent to which diversity training is required.

While the Calvert study recognized the challenges of U.S.-based corporations that are expanding globally to provide the racial demographics of employees, it encouraged the companies to disclose U.S. employee demographics and encouraged them to measurer and disclose data each year,  to better identify areas of strength and opportunity and to demonstrate the effectiveness of their diversity initiatives.

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