Chief Diversity Officers Today: Paving the Way for Diversity & Inclusion Success

1. Chief Diversity Officers Today: Paving the Way for Diversity & Inclusion Success

2. Introduction As evidence mounts of the positive contributions to company success from having diverse workforces, there is also a growing need for a leader to spearhead the diversity and inclusion (D&I) function and align that function with overall business strategy. Upon finding relatively scant publicly available information about this increasing corporate role and, in particular, the position of the senior-most D&I officer in a company, often titled Chief Diversity Officer (CDO), we decided to conduct our own research among D&I professionals to fill this void. The result is the following report, Chief Diversity Officers Today: Paving the Way for Diversity & Inclusion Success, which focuses on two significant areas of learning: 1. The roles and responsibilities of CDOs and the challenges facing them today 2. The best practices of D&I functions that are well-aligned with the business strategy of the firm As our study shows, the consequences of “alignment” present the potential for high reward to company reputation, employee retention and even financial performance. It is rapidly becoming imperative that this opportunity be leveraged in order for companies to realize the returns on their growing D&I investments, which are sizable: McKinsey reports that about $8 billion a year is spent on diversity trainings in the United States alone. Perhaps this leads D&I professionals in our study to report widespread optimism for the future of D&I.

3. It has long been understood that strategic D&I alignment requires organizational commitment from the top. While our study shows a strong correlation between alignment to overall business strategy and positive business results, the fact is that companies are not making the required investments to maximize the benefits of their D&I initiatives. Our study should be a call to action to companies to bring the D&I function in line with the organization's overall business goals and genuinely infuse commitment throughout the enterprise. Gail Heimann, President & CEO Weber Shandwick

4. What we did Weber Shandwick and United Minds commissioned KRC Research to conduct a survey of 500 individuals in the U.S. who are senior level professionals responsible for diversity and inclusion at their organizations. Respondents were screened to qualify for the study as follows: • Work full-time for organizations with annual revenue of at least $500 million • Are 18 years of age or older • Spend at least some of their time on the job dedicated to diversity and inclusion • Are the senior-most D&I professional, share the senior-most D&I responsibilities or report to the senior-most D&I professional in the company The 20-minute online survey was fielded March 4 – 27, 2019.

5. The Role of the CDO Today & Outlook For Tomorrow

6. The Future of D&I and CDO Role The vast majority of CDOs (81%) are optimistic about the future of D&I in corporate America and half (51%) expect most U.S. companies will have a CDO in the next five years. “Most companies in the U.S. will have a Chief Diversity and Inclusion Officer in the next 5 years.” (Total CDOs) Generally, how do you feel about the future of D&I in corporate America? (Total CDOs)

7. Who are CDOs? Demographically, CDOs in our study skew male, Millennial and Gen X, college-educated or higher, and white. Demographics (Total CDOs) Percentages do not add to 100 when respondent chose “Prefer not to respond” or “Other”

8. Who are CDOs? (cont’d) CDOs have been in their current position for an average of nearly eight years. Most were responsible for D&I in their previous job (77%) and were typically internal hires, transfers or promotions (74%). Professional Background (Total CDOs) Number of years in current position (average) 7.8 years Percentages do not add to 100 when respondent chose “Prefer not to respond” or “Other”

9. CDO Reporting Lines CDOs have multiple reporting lines, with an average of 2.1 people they report to. They most typically report to a chief officer of the company (69%). Four in 10 report to the CEO (39%), followed by the Board of Directors (29%). 2.1 Average number of titles report to directly Percentages add to more than 100 because 36% of CDOs report to more than one person

10. CDO Leadership Interactions 12.5 Average number of total CDO interactions with CEO 9.6 CDOs interact with the CEO once per month on average (12½ times per year). Interactions with the Board are slightly less at nearly 10 per year. Average number of total CDO interactions with Board of Directors Among CDOs with one year or more of tenure

11. CDO Regional Scope Most CDOs are global. 55% have responsibilities that extend beyond the U.S. 52% 45% 20% 23% 13% 7% 15% North America U.S. only Latin America Caribbean Europe Middle East Africa Asia Pacific

12. CDO Responsibilities CDOs most commonly anticipate their next 12-18 month job priorities to be equally recruitment and retention of diverse talent; D&I training, learning and development; and fostering a diverse and inclusive culture (33% each).

13. CDO Performance Measures CDOs report that the top three most important measurements of their success are employee engagement (73%), retention rates (62%) and recruitment (61%). Accountability to the company’s overall financial performance comes in at a strong fourth place (58%).

14. The Challenges Faced byChief Diversity Officers

15. CDOs’ Top Job Challenges CDOs say that their top personal job challenge in achieving their D&I goals is making the business case for D&I (27%) followed closely by externally communicating D&I values and outcomes (26%).

16. Company Challenges that Hinder D&I Goals CDOs say that organizational culture is the number one challenge standing in the way of achieving the company’s D&I goals (32%), followed by events external to the company (30%). Notably, “fatigue” over D&I is a top three challenge (29%).

17. Internal Support Needed for Success “Internal support for diversity and inclusion efforts is integral to the success of diversity and inclusion at my company.” 54% of CDOs strongly agree with the statement, “Internal support for diversity and inclusion efforts is integral to the success of diversity and inclusion at my company.” Only 10% disagree with the sentiment.

18. …Yet Commitment is Often Lacking Our survey identified several factors that point to deficiency when it comes to ensuring D&I activities are embedded in business goals. 3 glaring issues to be remedied: Not all D&I functions have a dedicated leader D&I is a part-time job for many Alignment is not a top priority Only Only 34% 40% 18% • of surveyed D&I professionals hold the CDO/senior-most D&I position in their organization • of D&I professionals report that just some of their time on the job is dedicated to D&I. Only 28% are fully dedicated to D&I • of D&I professionals choose “better alignment with the company’s overall business strategy” among their top 3 D&I priorities for the next 12–18 months

19. D&I Alignment with Company Strategy: Making the Business Case

20. The D&I Alignment Continuum • Diversity and inclusion departments fall along a continuum of strategic alignment with their companies’ overall business objectives. • D&I professionals were asked about their agreement with a statement on their alignment and divided accordingly. This analysis sets the basis for understanding where the D&I function needs to head to be successful. • 39% of D&I professionals strongly agree that their functions are well-aligned with their companies’ overall business strategies. These functions are referred to as “Well-Aligned” in our study and serve as the model for today’s best in class D&I functions. • 46% are in somewhat agreement with the statement. This “Aligned” level of D&I function has room to improve upon its alignment with business strategy. • 14% have great lengths to go to achieve alignment. They are the “Misaligned” segment. “The diversity and inclusion function at my company is well-aligned with the overall business strategy of the company.” (Total D&I Professionals) Well-Aligned D&I functions (Best in Class) Aligned D&I functions (Have room to improve) Misaligned D&I functions (Have far to go)

21. Well-Aligned D&I Functions Realize 3 Business Advantages -2- -3- -1- • Alignment has a tangible outcome on new hires and resignations • Alignment positively impacts company reputation and financial performance • Alignment creates a competitive advantage

22. Alignment has a tangible outcome on new hires and resignations -1- Impact of D&I Efforts on Resignations vs. New Hires (Average %) D&I professionals estimate that their D&I activities have an impact on 30% of new hires and 13% of resignations, on average. Compared to less aligned D&I functions, Well-Aligned have a significantly higher rate of acceptances (33%). 33% Indicates significant difference ◼ Total ◼Well-Aligned ◼Aligned ◼Misaligned

23. Alignment positively impacts company reputation and financial performance -2- Strongly Agree that… 79% of D&I professionals in Well-Aligned D&I functions strongly agree that D&I is an important driver of company reputation and 66% strongly agree that D&I is an important driver of company financial performance. These rates are both significantly higher than those in Aligned and Misaligned D&I functions. 79% 66% Indicates significant difference ◼ Total ◼Well-Aligned ◼Aligned ◼Misaligned

24. Alignment creates a competitive advantage -3- D&I professionals in Well-Aligned D&I functions are significantly more likely to identify their D&I efforts as above average at levels significantly higher than those in Aligned and Misaligned functions. Department’s D&I efforts compared to those of other companies in industry 70% 52% 51% 17% Indicates significant difference ◼ Total ◼Well-Aligned ◼Aligned ◼Misaligned

25. Companies with the most successful D&I functions commit the resources to D&I and ensure it is integrated into the culture and larger business strategy of the organization including Human Resources. Alignment doesn’t happen by accident, it is fostered deliberately through leadership, CEO support, financial accountability and strategic communications. Tai Wingfield, SVP and Weber Shandwick’s DEI offering leadUnited Minds

26. Guidelines For Aligning D&I to Business Strategy

27. Best Practices Best practices for alignment and success are gleaned by comparing the behaviors of Well-Aligned D&I functions to Aligned and Misaligned functions and identifying where Well-Aligned differ most dramatically. Below are 6 research-based guidelines. • Appoint a D&I leader • Establish a line of sight to the CEO • Be diverse from the top -1- -2- -3- • Make D&I part of the culture • Connect D&I to company’s overall business success • Integrate D&I with Marketing and Communications -6- -4- -5-

28. Thank you For more information about Chief Diversity Officers Today: Paving the Way for Diversity & Inclusion Success, please contact: Gail Heimann President & CEO Weber Shandwick gheimann@webershandwick.com Andy Polansky Executive Chairman Weber Shandwick apolansky@webershandwick.com Jack Leslie Chairman Weber Shandwick jleslie@webershandwick.com Sara Gavin President, North America Weber Shandwick sgavin@webershandwick.com Micho Spring Chair, Global Corporate Practice Weber Shandwick mspring@webershandwick.com Kate Bullinger President United Minds kbullinger@webershandwick.com Tai Wingfield Senior Vice President, United Minds DEI Lead, Weber Shandwick twingfield@webershandwick.com Judith Harrison Senior Vice President, Diversity & Inclusion Weber Shandwick jaharrison@webershandwick.com Emil Hill Executive Vice President, Client Experience Powell Tate ehill@webershandwick.com Jill Tannenbaum Chief Communications & Marketing Officer Weber Shandwick jtannenbaum@webershandwick.com Leslie Gaines-Ross Chief Reputation Strategist Weber Shandwick lgaines-ross@webershandwick.com Mark Richards SVP/Management Supervisor KRC Research mrichards@krcresearch.com