The 2017 Owler Perceptions of Leadership Team Diversity Study

The Owler Community, now over 1.5 million strong, has a lot to say about the modern workplace and the world at large.

Last month, we asked our Owler Community to weigh in on how diverse they think their leadership teams are, and what they had to say is surprising.

We’ve packaged it all up as our first inaugural Owler Perceptions of Leadership Team Diversity Study. We hope you enjoy our key findings from the study, summarized below for your reading pleasure.

Perception Versus Reality

It’s important to clarify that our study rates companies on public perception of their leadership team’s diversity. We haven’t looked at how diverse these organizations’ leadership teams actually are, nor did we define the word “diversity” when we asked the Owler Community a simple question:

Do you think this company has a diverse leadership team?

Measuring people’s perceptions about diversity is arguably as important as measuring diversity itself. After all, perception is nine-tenths of reality, as they say. CEOs and HR can talk about diversity and inclusion all day long, but how both frontline workers and the general public perceive changes on the ground — particularly at the top of the company — is what this study is all about.

Top 50 Companies: Most Viewed as Having Diverse Leadership Teams 

Before we get to some of the more interesting slices and dices of this study’s data, let’s give credit where credit is due. There are a number of companies that seem to have made a lot of progress when it comes to achieving diversity on their leadership teams.

The top-rated organizations include many names you’ll recognize, but we’ve also included smaller companies, many of which you may not recognize. Regardless of size, these are companies that have likely taken positive steps to ensuring diversity is appreciated and encouraged within their workplaces. Bravo!

Top 50 Companies for Leadership Team Diversity

 

Leadership Team Diversity by Industry

As you scanned the list of top companies, one thing likely jumped out at you. There are a lot of technology companies that made it into the Top 50. In fact, five of the top ten — 50 percent — are technology companies.

That observation prompted us to take a deeper dive into our data and compare median scores at the industry level.

It turns out those five tech companies were the exception to the rule. Of the 17 industries most actively represented in the study data, tech didn’t grab any of the top three spots. Technology ranked #7, and Telecommunications was second to last, at the #16 spot.

This poor showing for tech has been echoed in the popular press. Maybe you read that only one female speaker took the stage at Apple’s big event earlier this month? Few in the tech industry would disagree that there’s work to be done when it comes to diversity and inclusion.

So, if tech companies are not perceived to have diverse leadership teams, what industries are? Who grabbed that top spot in our industry list?

Retail came in at #1. To us, this makes sense. The retail industry’s labor force is more diverse than most industries, with people of color constituting one-third of retail workers. We’d expect many of these companies, especially those that promote from within, to embrace diversity at the senior leadership team.

With respect to why the Real Estate & Construction Industry came in dead last at #17, we’ll leave that for you to discuss. From redlining to gentrification, the real estate industry has often been entangled with issues relating to diversity. Of course, our current president also hails from the real estate industry, making its poor performance in our study all the more interesting.

As for the “construction” portion of Real Estate & Construction, given the well-known catcalling construction worker stereotype, we have a few theories on why they may have finished last; But we’re here to report the numbers, not our opinions. Toward that end, here’s the full list of industry rankings, from best to worst.

Leadership Team Diversity by Ownership Type

As part of this study, we wanted to examine whether public companies were perceived to have more diverse leadership teams than private companies. The going-in hypothesis was that public companies would have a higher median score than private companies, simply because they get orders of magnitude more scrutiny.

The data proved us wrong. Based on our dataset of over 1,100 public and private companies, the average private company score of 63 beat out the average public company score of 59.

In hindsight, this makes some sense. At smaller companies — which are usually not public — employees are more likely to know their leadership teams. In contrast, public company employees may not personally know all the executives, and, in the absence of direct knowledge might assume that they are less diverse.

Top Public Companies Perceived to be the Most Diverse

Top Private Companies Perceived to be the Most Diverse

Regional Analysis of Leadership Team Diversity Perceptions

Finally, we wanted to understand whether leadership teams in certain areas of the country were considered to have greater leadership team diversity than other regions.

Before you read on, which region — the Midwest, Northeast, South or West — do you think would have a higher score for leadership team diversity? Who would you think might be in last place?

While memories of diversity-related strife in the South might come to mind, you’d do better to think through recent census statistics — specifically that Maine, Vermont and New Hampshire all have majority white populations. Those Northeast states came in last among U.S. states for diversity — in fact, at least 96 percent of the population of each state is white.

So, it’s not a surprise that the Northeast gets poor ranks for leadership team diversity. As for the South, it actually finished at top of the list.

Why Leadership Team Diversity is Important

With the continual barrage of news headlines that suggest both that the U.S.’s multicultural experiment is at risk and that intolerance is seemingly on the rise nationwide, taking a look at leadership team diversity within our country’s businesses seemed like a worthwhile topic to investigate.

Lost in the shuffle of discussions about leadership team diversity is the fact that an increase in workplace diversity is good for business. Indeed, a McKinsey & Company study on diversity evaluated 366 public companies and determined that those in the top quartile for ethnic and racial diversity in management were 35 percent more likely to have financial returns above their industry mean. There’s even academic research that suggests that non-homogeneous teams make smarter decisions.

Companies that embrace diversity from the top down no doubt have a leg up on competitors that ignore diversity issues. That’s why this data’s findings are important, regardless of your politics. If you’d prefer to live in a country that has a strong economy, you’d do well to encourage companies to increase the diversity in their leadership teams and hold them accountable.

Using the Owler Community to hold organizations accountable is part of our mission here. Those companies that made this study’s top 50 list should take pride in building a reputation that embraces diversity on the leadership team. For companies that didn’t have a good showing, it’s time to reflect on how to improve your stature. Sites like Owler give people a voice on these issues. Executives who hoped that nobody was paying attention must recognize that the new Owler-powered era of data transparency means that no vector of scrutiny and opinion can be ignored.

For better or worse, the spotlight is on you 24/7. Our advice? Do the right thing.

The Bottom Line

Diversity means many things to many people. Beyond embracing workers of different races and ethnicities, a tolerant workplace encourages diversity of religious beliefs and practices, gender, socioeconomic background, sexual orientation, political beliefs and many more characteristics that make each of us unique.

This study determined that some companies are getting it right. Has your company taken steps to embrace people’s differences? Is your leadership team diverse? If not, it may be time to reflect on steps you can take to promote diversity in your workplace. Don’t do it to manage the optics of studies like this. Do it because it’s good for your business.

What’s your take on diversity and leadership teams? We’d love to hear your thoughts.