The Power of One or Power in Numbers? Analyzing the Effect of Minority Leaders on Diversity Policy and Practice

Introduction

While existing research has found that minoritized leaders are often associated with producing reduced inequality at their institutions, the impact of these leaders on organizational policies is understudied. This paper studies the impact of Black, Indigenous people of color CEOS and Board members on equity and diversity policies in Fortune 500 firms between 2001 and 2010. Authors Cook and Glass found that minoritized CEOs acting alone have a smaller impact on equity policies compared to BIPOC Board members, who play a more significant role in improving corporate equity and diversity, regardless of the race or ethnicity of the CEO. This research indicates that while promoting individual minoritized leaders is important, Board diversity can have a more meaningful impact on corporate policies. 

Black, Indigenous and leaders of color experience a breadth of professional barriers to entry, promotion, and mentorship, as examined in existing research literature. When promoted into leadership positions, minoritized are often in less visible and in less central positions, often excluded from high status and resource-rich networks, receive less mentorship and sponsorship from top leaders , and suffer from evaluation bias, and discrimination. They are also less likely to have cover in exercising authority in organizations, experience longer and more circuitous paths to leadership roles, experience weaker and slower wage growth. Although a growing number of firms have championed diversity efforts to address these issues and avoid legal action, growth in the number of both minoritized CEOs and members of corporate Boards at America’s largest firms has been slow. 

Dr. Alison Cook is an Associate Professor of management in the Jon M. Huntsman School of Business at Utah State University. Her research focuses on gender and racial/ethnic diversity in the workplace, specifically promotion opportunities for women and racial/ethnic minoritized groups in top leadership positions. Christy Glass is an associate professor of sociology at Utah State University where she studies employer practices and social inequalities. Her current research focuses on employer recruitment, hiring, and promotion practices and their impact on women and racial/ethnic minoritized groups.

Methods and Findings

Cook and Glass studied the impact of individual minoritized leaders as well as the impact of diverse leadership groups and Boards on an organization’s diversity-relevant outcomes including promotion of diverse individuals, supplier diversity, presence of work-life or balance policies, presence of LGBT support policies, and policies that promote the hiring of people with disabilities. Their hypothesis proposed: 

• Racial/ethnic minoritized CEOs will be positively associated with equitable policies and practices. 
• Board diversity will be positively associated with equitable policies and practices. 
• Firms with diverse Boards and minoritized CEOs will be more likely than other firms to implement  equitable policies and practices. 

The authors collected biographical information (i.e., name, race, age) on the CEOs and Board of Directors at Fortune 500 companies for each year between 2001 and 2010. If a racial or ethnic minoritized CEO also served on the Board, they were not included in the calculations of Board composition to avoid double-counting. The data indicated91 percent of the firms had a white CEO and only four percent had a racial or ethnic minoritized CEO. The remaining five percent of firms with no CEO racial/ethnic information available were excluded from this study, resulting in a sample size of 474 firms. 

The authors found that when controlling for the firm and year, having a racial/ethnic minoritized CEO had a small but significant relationship with supplier diversity and other indicators of equity and inclusion. However, having a racial/ethnic minoritized member on the Board of Directors produced more significant relationships with diversity-related policies and outcomes, including  supplier diversity. Finally, firms with both racially diverse Boards and minoritized CEOs were more likely to offer work-life benefits, promote diverse individuals, and offer LGBTQ-supportive policies. Interestingly, the interconnectedness of BIPOC Directors, quantified by the number of other corporate Boards they serve on, was also a significant predictor of the likelihood for a firm to implement more equitable policies.

Conclusions

Cook and Glass found that minoritized CEOS have a minor association with successful equity and diversity policies, without simultaneous racial diversity on the Board of Directors. The lack of racially diverse Board members leaves minoritized CEOs with limited support, resources, or ability to promote equitable policies. Although the study found weak evidence in support of the “Power of One” hypothesis, its data demonstrated stronger support for the “Power in Numbers” hypothesis. More racially diverse Boards are correlated with producing equity and diversity initiatives. Further, they can reduce bias and stereotyping behavior and policies among the leadership team by reducing the relevance of race/ethnicity in the group.  The presence of multiple BIPOC directors empowers BIPOC leaders to champion diversity initiatives without fear of increased scrutiny, negative evaluation bias, or stigma within the organization.

While additional scholars have expressed cynicism regarding corporate social responsibility and diversity efforts, this paper demonstrates that minoritized leaders can influence an organization’s formal policies to bring meaningful change to promote equity and diversity, when supported by their governance body. This research is especially critical because the number of racial/ethnic minoritized leaders in the Fortune 500 companies remains low. Cook and Glass believe that future research can build on the findings from this study. Given the small number of racial/ethnic minoritized CEOs in the Fortune 500, previous research has not studied the effect of different patterns of racial/ethnic composition on Boards and in leadership roles. Future research can examine the impact of gender differences on how minoritized men and women are able to drive organizational change.