“Being a great place to work is the difference between being a good company and a great company.” Brian Kristofek, president and CEO of Upshot, made this claim, and it rings true today more than ever. S&P 500 firms are increasingly concerned with creating a safe, motivational, and creative workspace that attracts and retains diverse entry level and executive talent year after year. With such a competitive landscape, these are the biggest challenges that big firms noted in their recent SEC filings.
“Our company remains predominantly white and male.” This statement was made in 2020 by Alphabet, Google’s parent company, to shareholders in response to a growing tech diversity crisis evident in their 2019 diversity report: Black and Latinx employees made up a mere 6.6% of leadership but 58% of lower wage ($19,900 annual) positions. In their 2021 diversity report, Google identified attrition as a key metric to identify pitfalls in retention rate and set out several strategies to increase retention.
Most companies in the S&P500 have some sort of formal or informal policy indicating their annual, five-year, and 10-year goals for diversity and inclusion, but a challenge comes in making these meaningful and central to business operations. For example, General Motors indicates a lack of formal policy for encouraging diversity in the appointment of directors but still writes in a 2020 filing that they “seek directors who bring diverse viewpoints and perspectives [and] possess a variety of skills, professional experiences, and backgrounds.” While the intent is there, creating a formal policy is necessary.
When companies are successful, as firms in the S&P 500 are, that success is often contributed to the employees at the firm at the time – and these employees are retained, rightfully so, in the hope of continued success. However, sometimes the right thing to do is to bring in fresh perspectives at these critical points and finding the balance between company experience and fresh perspectives is often difficult. Further, creating an environment where these newer employees feel comfortable speaking their mind is a challenge that Salesforce, Inc noted in a 2020 filing.
While attrition is a key concern of HR and management, the underutilization of women and minorities in the company's existing workforce must also be addressed. Home Depot identified several areas where this talent is underutilized in the company, as well as the challenge of promoting these employees to the right positions. This will increase the company’s operational capacity as well as feelings of belonging and fulfillment for those workers, leading to higher rates of occupational satisfaction and retention and better performance for shareholders.
The right executive for your company is difficult to find, and a number of firms have identified this as a key challenge. Everyone wants diversity in gender, race, ethnicity, background, professional experience, etc. on their boards and in their top positions, but this is not always easy to come by. Prudential Financial Inc and Electronic Arts Inc have both cited this challenge in recent SEC filings.
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