Strategies for Increasing Diversity in CEO Succession Pools

9/14/17

Again, the 2016 results regarding the diversity of the CEO succession pool disappointed us, but we did not inquire as to the strategies companies were employing to rectify the situation.  This year we asked the CHROs to tell what innovative or effective strategies they had used to increase the diversity of this pool.  We classified the responses into a number of different themes.  Three categories tied for the most frequently mentioned with each being discussed by 17% of the CHROs and a fourth was mentioned by 12%.

Nothing.  Sadly, tied for the most popular strategy to increase the diversity of the CEO succession pool was the lack of a strategy, or as they described it, doing "nothing."  One might be tempted to think that these individuals were reporting that they were doing nothing "innovative" but were actually doing something.  However, these answers (e.g., "Not a priority," "no energy expended here," and "Does not seem to be a focus of the Board of Directors") reflected actually doing nothing.

Before condemning these respondents, it is important to note some alternative explanations for why they may have reported doing nothing.  First, it could be that they were only considering the current CEO successor pool, and were responding that, in the short term, nothing could be done to expand the diversity of that pool.  Second, their emphasis may have been on simply prioritizing qualifications over diversity.  In other words, while they may value diversity, they may be more focused on simply trying to find the most qualified individuals for the critical senior jobs that prepare one for the CEO role.  Finally, as some of the answers state, this may be more of an issue regarding the board’s lack of concern over the diversity of the pool.  The CHRO may strongly desire and be trying to get support for a more diverse pool, but if the board seemingly does not care, such efforts may go nowhere.

Make Diversity a Priority.  This category sounds like a generic description with little specific actions, but the comments that fell here described things that the organizations were doing to make diversity a priority.  For instance, at the board level, one CHRO noted that they discuss diversity at every compensation committee meeting.  Another mentioned joining the "Paradigm for Parity" initiative with its attendant focus on diversity and inclusion strategies.  One described the fact that their organization has mandated that they have at least one female CEO successor candidate.  Finally, one noted efforts in the organization to address unconscious bias.

Identify Diverse Candidates Earlier.  As mentioned before, the long time-frames necessary to develop potential CEO successors have created challenges to building a diverse CEO successor pool.  The third strategy CHROs reported was trying to identify diverse candidates earlier in their career in order to get a head start on their development.  This suggests that CHROs recognize that in the past their firms have been too passive in identifying diverse talent early, and simply relied on the normal talent processes to work.  However, given the lack of supply which challenges diversity goals today, companies increasingly recognize that they need to proactively seek out diverse talent as early in their career as possible, and then begin the process of developing them to one day ascend to the highest levels of the organization.

Accelerate Diverse Talent.  Another significant strategy for increasing the diversity of the CEO successor pool is, once identified, to begin to accelerate the development of diverse talent.  This requires identifying development opportunities, such as job assignments or educational programs, and placing talent in these programs quicker and more frequently than other high potentials.  CHROs recognize that this is still a long-term solution, which will not bear fruit for a number of years, but that it at least shortens the time before a more diverse set of candidates will be competing for the CEO role.

It certainly is not good news that almost 20% of the companies we surveyed seem to be doing nothing to increase the diversity of their CEO succession pools.  However, I'd choose to look on the bright side, that over 80% are making some kind of efforts to increase the number of women and minorities that someday will be able to compete for the top job.