Business and Markets

The Next Move: How Business Can Close Racial Economic Gaps in 2021 (Part 2)

February 25, 2021  • Business & Society Program

The Next Move is a series that explores the critical choices facing business leaders as they respond to the extraordinary impacts of COVID-19, bringing a diverse array of expert voices into dialogue across digital media. This is the second of a two-part blog with a follow-on webinar which was held on Thursday, March 18th at 12:00pm Eastern/9:00am Pacific, recording here.

As a wealth generator, product designer and major employer, corporate America has enormous influence on society —which is why we’ve been asking business leaders how they are using that leverage to tackle racial equity. As presented in Part 1 of this blog, some companies have stepped up since the Summer’s racial reckoning with big commitments – the kind of commitments that bring to bear many of businesses’ unique capabilities to solve difficult problems.

However, attention has also been drawn to the number of companies still on the sidelines, not having committed publicly to changing practices or behaviors. We wonder if those companies question just what, exactly, business can do on its own to affect such a complex issue. While there are few sectors of society that can move as much capital and change the future prospects of so many – doing so will require more than traditional philanthropic corporate giving. To tackle the racial wealth gap, business will have to bring to bear operational, systemic and financial choices to directly address the roots of inequality, without falling back on the need for ‘policy to come first’.

Here, we present the second part of a series of responses about what organizational leaders can – and must – be doing to drive change from within to address racial wealth gaps. These comprehensive plans must be paired with new ways of leading – to co-create, deeply listen and move their organizations forward.  Extraordinary leadership will be needed to drive these commitments to action, and to put to bed the lingering skepticism about when – and whether – opportunity will be equal for all.

Close the Financial Divide by Starting with Your Own Workplace  

Some of the most powerful next moves companies can make are within the closest reach: ensure equitable workplaces by taking care of your people with quality career paths, invest in professional development and mentoring, fair pay and comprehensive benefits, and create a lived experience at work that reflects that inclusion and diversity are a priority. Advancing progress in these areas requires training, rigorous data and metrics, and culture-building.   

As part of Prudential’s nine commitments to racial equity announced in August 2020, we undertook a data-driven audit of our talent practices with the goal of addressing sources of subjectivity that may lead to or be perceived to lead to inequitable opportunities. We also launched an in-house AI-driven self-service career site that matches employees to skills development and open roles. Layered on top is an investment in inclusion training, including allyship and cultural intelligence. And we recently conducted a survey of our associates so we can better address their unique financial wellness needs.

You’ll know you are on the right course if the size and scope of the investment sometimes feels uncomfortable. Equity is a moral and business imperative that compels stepping-up with talent and infrastructure to make it real.  

Lata Reddy, SVP of Inclusive Solutions, Prudential Financial & Chair, The Prudential Foundation

Recognize the Importance of Listening to Employees and Taking Action

At Levi Strauss & Co. we pride ourselves on taking bold stances to promote equality, justice and inclusivity — but in 2020, we had to confront the fact that we weren’t where we should be in terms of diversity and inclusion. More than anyone else, it was our employees who challenged us to do better. We listened. After the killing of George Floyd and the demonstrations that followed, employees used internal forums to speak openly about their experiences with racism. Our leadership collaborated with employees, especially members of Project Onyx, our organization’s Black employee resource group, to define a set of commitments that would shape our practices going forward.

From those conversations came the public disclosure of our workforce representation data and a renewed energy to hire, support, promote and elevate more people of color across levels and functions. To drive those efforts, we are now focused on retention of BIPOC talent, recruiting from HBCUs and other diverse campuses, as well as create a more defined pathway from retail to corporate careers – and we’re just getting started! The employees who spoke up pushed us to live up to our ideals and in so doing, are making us a better, more equitable company.

— Elizabeth A. Morrison, Chief Diversity, Inclusion & Belonging Officer, Levi Strauss & Co.

It’s Time for More Action, Not More Words

As a society, stronger action is needed to reduce inequities in America’s workforce. In the U.S., more than 75 percent of working-age Black Americans have not attained a four-year degree based on census data. This statistic is shocking.

To address this disparity, Merck has reviewed its hiring processes to identify where we can create more opportunity. Ken Frazier, Merck’s chairman and CEO, co-founded OneTen, a broad coalition of multinational CEOs and executives which have jointly committed to train, hire and advance one million Black Americans over the next 10 years into family-sustaining jobs, with opportunities for advancement. The initiative works with talent providers across the U.S., partnering with leading educational and upskilling organizations working at the regional and national level to identify and place Black American talent. It connects academic and upskilling partners with employers who hire for middle-skill jobs.

For us at Merck, it’s about building a more equitable and inclusive global workforce. Putting action behind our words. Building new talent pipelines and practices, and strengthening our diverse skills to remain competitive. As the role of the business sector grows, our duty as global corporate citizens must be to affect positive change to help shape and define a more equitable workforce for the future.

— Steven Mizell, EVP, Chief Human Resources Officer, Merck

Build the Digital Bridge to Foster Economic Inclusion for All

Over the last year it has become clear that the wellbeing of our people and our economy are all interconnected. Yet the economic consequences of COVID-19 are falling on individuals, communities and businesses least able to bear the burden. Digitization, the conversion of communication, business and information into electronic form through ubiquitous low-cost platforms, is a mechanism to enable inclusion and draw closed the racial economic and opportunity gaps – but digitization is also a vehicle for those who are left out to fall further behind by raising the barrier to entry.

The digitization that is being accelerated by the coronavirus crisis needs to be implemented carefully to not further stratify society. With a people-first mindset and responsible implementation of technology, digitization can have a positive impact. We must use all our resources to innovate and advocate for those being left behind – to support small businesses, foster resilient cities, and advance economic opportunities for all.

— Linda Kirkpatrick, President, North America, Mastercard

Create Meaningful Economic Participation

Nothing helps to close racial economic gaps like having a well-paying job or owning a business where one can have access to meaningful opportunities to do business with other companies. Corporations must turn words into actions and move away from creating an illusion of diversity in order to help close racial economic gaps. There is an ecosystem that exists between large corporations and small businesses – they need each other in order to maximize the velocity of a dollar and better ensure that underrepresented groups have economic participation. It is widely known that small businesses are the growth engine for employment in the U.S. And, minority-owned businesses outpace all businesses, large and small, in hiring other minorities.

The essence of the words from corporations are: “we want to change things;” “we are committed to racial equality.” Action looks like: hire people from underrepresented groups and do meaningful business with minority-owned businesses in areas that have been off limits like finance. Incorporate ESG/social bonds to raise capital to fund growth and/or community development. Rinse and repeat.

— Sidney Dillard, Partner & Head of Corporate Investment Banking, Loop Capital

Collaborate Across Sectors to Address Needs of Underserved Communities

At PayPal, we are committed to doing our part to address the inequitable economic factors that are contributing to the growing racial wealth gap. Last June, we made a $535 million commitment to support Black- and minority-owned businesses and communities in the U.S., especially those hit hardest by COVID-19. With values at our core, we have leveraged the strength of our platform, the passion of our employees and our trusted partnerships to support sustained engagement and progress toward racial equity and social justice.

However we aren’t stopping there – we know we must commit to a new level of partnership and collaboration to scale innovation, engagement and impact. It is more important than ever that this work be a sustained effort across sectors, and members of the business community must draw on their distinctive capabilities. As we begin this new year, it will be critical to be responsive to the evolving needs of Black-owned businesses and underserved communities, and partner in scaling collaborative solutions that help them survive and thrive through the pandemic and beyond. And, importantly, we must remain transparent about the progress of our initiatives and how we measure impact as we work to advance the urgent mission of building racial equity and social justice.

— Franz Paasche, Senior Vice President, Corporate Affairs, PayPal

Eliminate Internal Company Practices and Policies That Contribute to Racial Wealth Gaps

Recently, business luminaries have called for increased attention and commitment to closing racial, economic gaps as a business imperative. Unfortunately, the actions needed to follow through have not always materialized and subsequent behaviors have usually involved a philanthropic donation or initiative. Meanwhile, many companies reap the benefit of a stock market that has averaged a double-digit return for decades and capital markets that offer cheap debt to fuel growth. To make a difference, big business will need to fully realize their role as the bridge between Wall Street and Main Street – their employees, vendors and customers.

To internalize their commitments to racial equity, business leaders should examine their practices and policies that reinforce and perpetuate these gaps. Work to identify racialized pay gaps among your employees and rearrange your compensation structures to fix them. Determine if your procurement practices include Black, Latinx, and Indigenous-owned businesses, and shift your contracting to do business with them. It seems simple, but the start of any change is the step that is right in front of us. Philanthropic initiatives are certainly helpful, but if we want to close a systemic problem, we will need systemic solutions – those embedded in the decisions and actions that shape how institutions operate.

Mekaelia Davis, Director, Inclusive Economies, Surdna Foundation

Progress will be Determined by Intentional and Rigorous Assessment

2020 brought a necessary awakening to injustices faced by Black and Brown individuals in civic, personal, and business spheres. Rising expectations among stakeholders, backed by research linking workplace diversity with performance measures, led many organizations to adopt new or more ambitious policies and initiatives. As the commitments of 2020 approach their first anniversaries, how will we know if actions have kept pace with words, and whether policies and initiatives are working as intended?

Accountability is a prerequisite to progress. As an investor, the “say-to-do” ratio is key to our assessment of management teams. Similarly, stakeholders in 2021 will demand organizations transparently report performance against their diversity and inclusion promises of 2020. The best will modify their initiatives based on learnings, evaluations of effectiveness, and evolutions in the landscape. Ultimately, the pace of progress will depend on consumers, the media, and influencer institutions bringing critical analysis to headline announcements and rewarding organizations that are transparent and effective.

–William Heard, CEO/CIO, Heard Capital

Special Thanks: This edition of The Next Move was developed as part of the Global Inclusive Growth Partnership, a collaboration between the Aspen Institute and the Mastercard Center for Inclusive Growth.

Remember to register for the follow-on webinar on Thursday, March 18th at 12:00pm ET/9:00am PT.


Business and Markets
The Next Move: How Business Can Close Racial Economic Gaps in 2021
January 29, 2021 • Business & Society Program