How the SEC Can Harness Shareholder Power to Support Racial and Gender Equity Through a DEI Index

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On its very first day, the Biden-Harris Administration made racial justice and equity, and principles of nondiscrimination and equal opportunity, top priorities on its agenda.  The first of the 17 Day One Executive Orders committed to advancing racial equity and support for underserved communities across the federal government.  The EO requires a review of federal programs and regulatory processes to incorporate equity principles – while rescinding the Trump Administration’s anti-DEI Executive Order. It also includes improvements to data collection, which is a key practice of accountability. Other actions include:

The Administration could bolster this by leveraging the SEC’s  power to regulate publicly traded companies. A Diversity, Inclusion and Equity Index could harness shareholder power to ensure our publicly-traded companies make good on their their commitments to equality. A standard set of disclosures about hiring, representation, leadership and pay would empower customers and investors to make informed choices about where to spend their money. Workers could use this information to find jobs at places that offer true opportunity for all. Companies would compete to show their progress and we could all have a clearer sense of who is living up to their stated values. Competition would be the engine behind genuine, long overdue progress.

All large publicly traded companies should disclose standard information on key measures of DEI performance.

First, demonstrate Board Accountability for DEI, by sharing Board representation, whether the Board uses key best practices to foster diverse membership, and whether the Board provides effective oversight of People and Culture programs to address workplace harassment and promote inclusive culture.

Next, provide data on Leadership Diversity, including how the top 200 highest compensated individuals identify (by gender, race, ethnicity, and if available, by disability and sexual orientation).

Third, disclose Workforce Diversity and Pay Equity metrics, including companywide EEO-1 representation data and standard pay equity benchmarks similar to those already reported in the UK, and corporate performance on its own diversity metrics over time. 

Lastly, share progress on Inclusive Workplace Practices, including whether the company has developed and implemented key best practices to address workplace harassment and promote inclusive culture.

We already recommended that the SEC impose this type of requirement, but there are plenty of other ways this could come about. Indexes could make this a listing requirement. Institutional investors could use it as a factor for their portfolio decisions and federal, state and local agencies could use it as a benchmark in awarding contracts. And companies could voluntarily commit to these disclosures as a way to demonstrate leadership. 

The biggest winners will be the companies themselves. The research we shared with the SEC supports the view that diverse teams can provide key benefits, like increasing productivity and innovation. Strengthening DEI can lead to stronger and more sustainable financial performance.

Indeed, that is exactly the reason that this information is material to shareholders. The traditional view of shareholder disclosure is only aimed at information relevant to short-term shareholder gain. But the modern view includes any matters material to other stakeholder long term interests including investing in employees and fostering diversity, inclusion, dignity and respect, an approach championed by the Business Roundtable.

Despite the benefits, too many companies have not made DEI enough of a priority. Reviewing a typical corporate annual report or 10-K will show frequent touting of corporate physical assets, new product lines, mergers and acquisitions, but see very few, if any, words touting new investments in people and culture, or new efforts to develop, retain and strengthen the workforce. Most annual reports to shareholders virtually ignore the companies’ most important asset: its workforce.

We learned that to create change in a company, someone has to own and drive the change, which means the Board should have a specific subcommittee focused on oversight of People and Culture programs, with regular reporting from management on goals and measures. Through increased transparency of key measures of leadership and workforce DEI, we can use the market to move stalled progress on glass ceilings and wage gaps for people of color as well as for women. 

We want to motivate companies to invest in diversity and inclusion, people and culture, growth and retention. It’s good business that can yield an enormous competitive advantage and allow companies to make good on their commitments to equity.

Working IDEAL provides trusted and innovative advice on inclusive workplaces, diverse talent, and fair pay. Contact us to learn more about the services we offer.

Authors: Pam Coukos and Cyrus Mehri

A Just and Inclusive Workplace is Essential to Sustain Our Democracy

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In 2017, the increased public visibility of the #MeToo movement made clear we were not doing enough to make the workplace safe from sexual harassment. In 2020, #BlackLivesMatter organizing similarly forced a broader and overdue reckoning with how deeply racial inequity runs in many institutions — including our nation’s workplaces, which need to be more inclusive.

The images of the first week of 2021 – a Confederate flag carried through the halls of Congress, people in the crowd breaking into the Capitol wearing shirts emblazoned with slogans about genocide of the Jewish people, a Black police officer against a mostly white crowd of insurrectionists – reinforce the urgency of our work to build a just and inclusive society.

As Cyrus said in December, in a recently-published interview in the Wall Street Journal, “Our democracy is not sustainable if don’t embrace equal opportunity.” 

But to do that we need truly innovative approaches. We must expand our thinking about what the barriers are and how to break through them.  As we welcome a new Administration that has committed to make racial justice and economic empowerment top priorities, and a new Congress that can move this agenda forward, we want to highlight some key innovations in government policy and workplace practices that can have the biggest impact.

1. Have the Security and Exchange Commission require transparency on diversity and inclusion. All large, publicly traded companies should make standard disclosures about hiring, representation, leadership and pay. As Cyrus explained to the Journal:

Merge SEC disclosures—annual reports, 10Ks—with advancing equal opportunity. For example, require companies to disclose race and gender data for their top 200 highest-paid employees. It’s a way to understand where the glass ceiling is. Do it by total compensation so it includes stock options. It’ll tell you who’s in the decision-making pool of the company. 

And as we explained in our 2016 proposal to the SEC, this empowers investors, workers, customers and community stakeholders  to make informed choices about where to spend their money.

2. Make your default hiring practices more inclusive, by ensuring you interview multiple women and people of color.  Cyrus explains why this disrupts default assumptions:

If you have one woman versus two women on a slate, when you go to two women, it’s 79 times more likely that a woman will be selected [than if there was only one woman in the pool]. When you go from one to two people of color, the number goes up like 190 times. If there are multiple diverse candidates, they’re multiple times more likely to be hired. Why is that? When you have isolated, coveted jobs, you need to do something to change the norms because the presumptions and stereotypes are so deeply rooted. 

Congress can lead the way by adopting the Rankin-Chisholm rule for its own hiring (a “Rooney Rule” for the Representatives), and by encouraging members to practice #CampaignEquity when they run for re-election.  

3. Make our nation’s first civil rights law a more effective tool for racial justice, so it can work to close the racial wealth gap, ensure real equal access to credit, capital, employment and economic participation. Amending Section 1981 would enable it to live up to its promise.

4. Understand how building racial justice at work includes ensuring fair pay. As Pam shared in an online presentation last fall:

Make equity a top priority when you make decisions, take actions, design programs and measure results. Gender, race, sexual orientation, disability, or any aspect of your identity should not determine your outcomes in the workplace – including pay.

The Administration can do its part by reinstating and expanding pay data collection and reinvigorating equal pay enforcement – and by ensuring that we do not just talk about the gender pay gap. We must recognize and address pay gaps based on race and ethnicity and the particular impact of both on women of color.

5. Promote an inclusive workplace culture free of harassment, bias and discrimination – starting with the people who do the people’s work in our federal and state governments.  Assessing culture, ensuring inclusive policies and practices, and acting quickly to address disrespectful behavior before it becomes toxic should be standard practice. President Biden should consider an Executive Order directing all federal agencies to adopt effective initiatives to promote equal employment opportunity and inclusive workplaces, and revoking a series of anti-DEI actions from the fall.

At the end of the day, Cyrus’ observation from December of 2020 seems even more true in January of 2021: 

There is a moral case for diversity and inclusion. And there’s a business case: long-term value is tied to diversity and diversity is tied to innovation. But the last few years have told us there is a democracy case, too.

 

Working IDEAL provides trusted and innovative advice on inclusive workplaces, diverse talent, and fair pay. Contact us to learn more about the services we offer.

Authors: Pam Coukos and Cyrus Mehri

How to Build an IDEAL Campaign Workplace – So You Can Win with Integrity

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We are just two weeks out from Election Day, and campaigns everywhere are in the final stages of getting out the vote.  It’s an intense time for campaign managers and their staff, who are working almost around the clock to bring their candidate successfully across the finish line.

How these last couple weeks play out could depend a lot on campaign equity, and how much a campaign values and supports the people they hired months ago to carry them to victory. On those campaigns where leadership has focused from the start on building a strong and inclusive culture — and aligning their workplace practices with the values they are fighting for on the trail — that final push can be a time of solidarity and dedication. But where leaders have enabled or ignored a toxic work culture, or simply neglected to establish the basic operational practices necessary to a functioning workplace, the strain of going all out to win can be a breaking point.

This is what we have learned in our work this cycle advising political campaigns and advocacy organizations: a commitment to campaign equity is a critical component of a winning strategy. Hiring and empowering a diverse staff can generate more innovative tactics and better advice on reaching all voters. Ensuring equity in your pay and practices can simplify your operation and increase staff dedication. An inclusive culture sustains the people power you will need to carry you through the constant challenges of a campaign environment.

But even more importantly, these approaches can help you win with integrity. If you are a progressive candidate, or a leader on a progressive campaign, it is not enough to fight for good policies and to champion racial and gender justice in public. You also need to make sure your own house is in order, and that you have the policies and practices that ensure the safety of your staff and volunteers and promote equity and inclusion in all your in-person and remote workspaces.

We put all of these ideas together in a #CampaignEquity Handbook. This resource for campaign professionals includes strategy checklists, sample policies and plenty of links to the research and experience that backs them up as best practices. It includes advice on building a harassment-free workplace, staffed by great hires and sustained by fair pay and a safe and inclusive culture.

Working IDEAL Campaign Equity Toolkit checklist excerpt

Checklist excerpt from the #CampaignEquity toolkit. Click on image to learn more.

When campaign leadership comes together after Election Day to understand what worked and what didn’t – the factors that carried them to victory and should inform their transition plans – we hope this can inform those conversations.  And as the next cycle begins, we believe this will be an essential resource.

Campaigns are workplaces too. Let’s put an end to the myth that overwork and toxic work environments just go with the territory and that diversity, equity and inclusion are just the extras you hope to get to at some point. Investing in #CampaignEquity can increase your chances of winning, and of doing it based on the values that brought you to this work in the first place.

DOWNLOAD THE TOOLKIT (PDF)


Working IDEAL provides trusted and innovative advice on inclusive workplaces, diverse talent, and fair pay. Contact us to learn more about the services we offer.

Authors: Pam Coukos and Peach Soltis

10 Ways to Foster an Inclusive Workplace Culture

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Many employers understand the importance of assessing their workplace culture and the need to promote inclusion. An inclusive workplace culture offers benefits to both employers and employees by fostering engagement, productivity, retention, and innovation. In an inclusive workplace, all employees are treated with respect and have an opportunity to contribute. An inclusive workplace accepts and values individual differences in race, ethnicity, religion, national origin, sex, gender identity or expression, sexual orientation, age, and disability. 

By contrast, exclusion in the workplace leaves workers feeling marginalized and devalued. Disrespectful behavior that goes unchecked can lead to a toxic environment, particularly when workers do not have sufficient options to report, address, and resolve workplace problems. This dysfunction in the workplace may cause talented employees to leave the organization. Exclusion can take many forms. Some employers fail to convey a commitment to organizational values. Employers may fail to set clear expectations about appropriate conduct. Gaps in policies, benefits, technology, and training can exacerbate internal problems. Employers may be unaware of problems with the workplace culture because they fail to seek feedback. 

To avoid these problems, employers can take concrete steps to promote inclusivity in meaningful ways. 

  1. Lead from the top. Leaders must visibly model respectful behavior and practice organizational values. Managers should promote inclusion at all levels and across all departments.
  2. Put clear expectations in writing. Employers can establish a code of conduct and recommit to organizational values. The strategic plan should promote inclusion, and the employer should periodically evaluate progress toward meeting stated goals. Job descriptions and performance evaluations can address responsibilities to promote diversity, equity, and inclusion. 
  3. Seek input and value contributions from diverse talent. The organization must go beyond simply ensuring that it employs a diverse workforce. Everyone should have a seat at the table. Seeking out diverse perspectives helps to amplify marginalized voices. Working groups and teams should include a diverse cross-section of the workforce. 
  4. Assess the culture regularly, accept critical feedback, and take action to address concerns. Anonymous surveys, focus groups, and informal discussions can help to identify concerns about the workplace climate and potential solutions. Employers should ensure that a diverse cross-section of the workforce is involved in identifying problems and implementing responses. Inclusion should be a regular focus of discussion.
  5. Ensure that employees have accessible options to report, address, and resolve workplace problems. Managers may not be aware of problems that go unreported. Employees must have trusted and effective channels to report concerns.
  6. Ensure accountability. Employers must act quickly to address problems at all levels within the workplace.
  7. Update policies to use inclusive language and make the workplace more welcoming. For example, employers should review benefits policies to ensure equity for LGBTQ+ employees and offer opportunities for employees to provide the pronouns they use. 
  8. Build a culture of accessibility for applicants and employees with disabilities. Employees with disabilities should have access to any needed technology or other accommodations, but don’t wait to be asked. Make accessibility a regular part of planning for meetings, events and activities, and standard workplace practices.  
  9. Foster inclusivity in informal situations. Workers may feel excluded when it comes to social situations at the lunch table, at happy hours, or even in casual conversations. Employers can seek to disrupt office cliques through team building opportunities.
  10. Offer training that provides tools and skills to address problematic behavior. Employers should move away from compliance-focused training to ongoing and regular education that equips workers with the knowledge and skills to take action. For example, bystander intervention training can equip workers with methods to act as an ally in support of a colleague who faces harassment or bullying.

By taking concrete steps to promote an inclusive workplace culture, employers can build a stronger workforce.

Working IDEAL provides trusted and innovative advice on inclusive workplaces, diverse talent, and fair pay. Contact us to learn more about the services we offer.

Author: Sarah Crawford

Support the Call to Dismantle Systemic Racism

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By Pamela Coukos

Here at Working IDEAL, our work is national but our home is Washington, DC. We support the thousands who are gathering in the streets of DC and across the nation to demand justice that is long overdue. The government must respect the rule of law and the right of all to freely assemble and be heard.

Our mission is to help organizations build more diverse, inclusive and equitable workplaces. That requires changing the workplace culture, by addressing the structures and practices that can enable privilege and perpetuate racism and injustice.

We support the call to dismantle systemic racism in our police departments, our workplaces, and our national culture. We recommit to the work of transforming systems and practices to ensure equity and justice for all.

COVID-19 Resources for Employers and Employees

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By Sarah Crawford

Working IDEAL has compiled a resource guide for employers and employees regarding implications of the coronavirus for the workplace. This guide provides links to resources offered by federal agencies (included resources in Spanish), state and local governments, and public interest organizations that explain legal obligations and best practices for employers and legal rights and benefits for workers. 

Recent legislation provides relief for employers and employees. The CARES Act provides enhanced unemployment benefits for workers and forgivable loans to small business owners to continue to pay employees and cover certain costs under the Paycheck Protection Program. The Families First Coronavirus Response Act expands workers’ rights to paid sick leave and paid family and medical leave. 

The Center for Disease Control released guidance for employers to prevent the spread of the virus. The guidance encourages employers to actively encourage sick employees to stay home, identify where and how workers might be exposed to COVID-19 at work, separate sick employees, educate employees about how they can reduce the spread of COVID-19, identify a workplace coordinator, implement flexible sick leave policies and practices, assess essential functions, determine how to operate if absenteeism spikes, consider establishing policies and practices for social distancing, etc.

The Department of Labor has released guidance relating to workplace safety, expanded sick leave and family and medical leave rights, unemployment benefits, etc.

The EEOC has provided updated technical assistance, including a pre-recorded webinar, that addresses the Americans with Disabilities Act and what information employers may request from employees who call in sick, when employers may take employees’ temperature, whether employers may require employees to stay home if they have symptoms, and whether employers may require doctors’ notes certifying fitness for duty upon employees’ return to work. 

In addition to reviewing these federal resources, employers and employers should review applicable state and local legislation and programs regarding unemployment benefits, paid sick leave, workers’ compensation, teleworking, identifying “essential” workers, etc.