Workforce Opportunity Network: Diversity Trends & Developments

1. Workforce Opportunity Network:Diversity Trends & Developments Elizabeth MacGillivray General Dynamics, Falls Church, Virginia April 17, 2012

2. Demographic trends: Latinos • Latino population continues to grow • In almost every US county • States with largest Hispanic populations: CA, TX, FL, NY, IL, AZ, NJ, CO, NM and GA • Latinos more dispersed in 2010 than in 2000 • Labor force: 75% of growth 2000 – 2010 from Hispanics • In 2010, comprised 16.3% of US population • 63% are Mexican, 9% Puerto Rican, 3.5% Cuban, 3.3% Salvadoran • Race • 53% white, 37% some other race, 6% two or more races • Education • 80% increase in Latinos earning bachelor’s degree between 2001 and 2011 • Med school applications up 23%

3. Race/Ethnicity • Latino identity? • Stronger identity with country of origin • Less than one quarter prefer term pan-ethnic labels Latino or Hispanic • US not yet post-racial • Greenlining Institute analysis finds evidence of persistent race gap in • Health disparities, employment, economic status • Perception that there is a lot of discrimination in the US • Whites 16% • Blacks 56% • Latinos 26%

4. Socioeconomic disparity Pew Research (Jan 2012): Public perception of growing conflict • 66% of Americans see “strong” or “very strong conflicts” between rich and poor ( up 19% since 2009) More concerns about socioeconomic division in American society than over conflicts between: • Immigrants/native born • Blacks/whites • Young/old Social mobility declining in US World Economic Forum 2012 • “Severe income inequality is the biggest global risk” • http://www.weforum.org/issues/global-risks Q: How should we factor socioeconomic differences into D&I work?

5. Discrimination trends • Unemployment and discrimination • Black and Latino families more like to have unemployed family member than white or Asian families • Discrimination against jobless • Especially the long-term unemployed • Criminal records • Post-incarceration, employment and earnings prospects reduced by 40% • In some urban areas 1/3 of adults have been in jail • By age 23, over 30% of young people have been arrested • “Ban the box” policies encouraged, remove criminal history question

6. Higher Education • Race and the applications dilemma • Growing numbers of college applicants self-identifying as multi-racial • Tension between accuracy/flexibility, and schools’ diversity efforts • LGBT • University of California system may ask students about sexual orientation on application and enrollment forms • Elmhurst College in Illinois became first school, fall 2011

7. Business case for diversity • Harvard Business Review article on global diversity – diverse teams and leadership needed to recognize needs of people in the developing world • Employee behavior embarrassing companies • Starbucks, Papa Johns incidents • McKinsey Quarterly: top team diversity linked to better return on equity (ROE) and earnings before interest and taxes (EBIT) • Top quartile had 53% higher ROE and 14% higher EBIT than sample

8. Trends • Transparency of diversity data • Goldman Sachs, MetLife pledge to release workforce demographics on gender and race • Under pressure from NYC pension funds • Resistance from advertising: Omnicom says no • Unpaid internships • Perpetuating privilege? • Give advantage to those who can work for free • Wage-hour violations • Bullying at work: disabled, LGBT, young employees • Diverse needs of older Americans recognized • Retirement more difficult for Blacks and Latinos • Centers for LGBT seniors

9. Gender • Mixed news for women • Wage gap at record-low: 82.8% in Q2 2010 (compared to 76.1% in Q2 2000) • Women outperform men in every race/ethnic/age group for wage growth • Continuing recession impacts women • Larger proportion of public sector, austerity cuts (health/retirement benefits, social services), living longer • Confidence gap • 70% of men have high confidence levels • vs. 50% of women • 20% of men would apply for stretch assignments • vs. 14% of women

10. Board diversity • Filling the pipeline, but slow progress • Alliance for Board Diversity report: white men continue to dominate, women and minorities losing ground in Fortune 500 • Gender diversity • US boards lag behind European counterparts • Only 16% in Standard & Poor’s 500 companies • European companies face pressure from quotas, mandates • Emerging pressure in US (women’s groups, shareholders, CALPERS) • Asian Americans • Missing: 80% of Fortune 500 boards lack API representation • Board seats held by APIs in Fortune 500: 2.08% • GAO report: Fed Banks lack diversity • Global quotas

11. Managing Diversity Councils: Preliminary Survey Findings Jessica Kirby Mercer WON Meeting General Dynamics

12. Diversity Council • For purposes of the survey “Diversity council” refers to a standing body of employees of the organization, at whatever level, who play a role in establishing, reviewing, and/or monitoring diversity and inclusion efforts. The term does not refer here to a council or advisory board made up of non-employees. • This survey looks at corporate wide diversity councils, non-corporate diversity councils, and other bodies (aside from councils and ERGs) that have a role in implementing D&I strategy

13. Corporate wide diversity councils • 47% of responding companies have a corporate wide diversity council • Members are typically at the management level and above • Majority of companies (83%) reported council members are at the senior executive level • A little more than half (56%) said council members are direct reports to the CEO • Slightly less than half (44%) are mid-level managers • Other includes staff level representatives and external experts

14. Corporate wide diversity councils • Majority of companies (72%) said the head of diversity was responsible for starting the diversity council • 44% reported CEO was responsible • 33% reported Head of HR • One company reported it was started by various business VPs • Companies reported a range between 7 and 26 members • Average is 15 council members • Majority of companies (53%) said their council reports to the CEO • 20% report to senior management • 13% report to the Board of Directors

15. Corporate wide diversity councils • Majority select council members with combination of the CEO, Head of HR and someone in the D&I function (typically CDO). • Some companies stated business unit leaders are responsible for selecting or nominating someone which (in some cases) is then approved by the CEO • Majority of companies reported council members serve for 2 years • Range is between 1 and 4 years • One company does not have a set timeframe, members serve as long as they are direct reports to the CEO

16. Council responsibilities

17. Role of D&I leader with council

18. Challenges • The number one challenge in managing diversity councils according to respondents is time • People in different time zones • Very busy schedules • Amount of time commitment • Other challenges: Getting council to “own” initiatives, keeping council engaged and focused, sustainability

19. Best practices for success • Strong council leadership and support/sponsorship from the CEO and/or senior leadership are the two most important drivers of success for respondents • One company noted: • It is important to have goals for the Council that support D&I goals but that are specific to outcomes the council can drive

20. Measuring success • The two most common ways to measure success for companies is through employee engagement surveys and retention/promotion rates • Most companies reported they have no formal process to measure success

21. Non corporate wide diversity councils

22. Non corporate wide diversity councils • Can consist of business unit leaders, regional heads, ERG leaders, middle managers, diversity leaders, and in some cases employee volunteers • Responsible for: • Leveraging knowledge of their demographic to better support those groups in the organization, and with customers • Help develop and implement D&I strategy for their business unit, region, etc. • Raise profile of D&I within organization • Translate corporate initiatives at the local, national, regional levels

23. Other bodies that have a role in D&I strategy and implementation • Most common are taskforces for a specific group: • Disability, LGBT, Senior Women, Flexibility (Work/Life Balance) • One company has “Diversity Change Agents” • employees who have gone through a 2-day intensive training on how to work at the grass roots level to engage their team in the company's diversity journey

24. Questions, Comments, Observations • Thank you for responding to the survey! • Report will be distributed to members by end of this week • Jessica.kirby@mercer.com

25. Roundtable Topics

26. Roundtable

27. Liz MacGillivray elizabeth.macgillivray@mercer.com (202) 331-2657