Corporate Governance Alex Gorsky: Diversity and Inclusion Drives Innovation and Opportunity

At Business Roundtable, our mission is to shape and advance policies that promote a thriving U.S. economy and greater opportunity for all Americans. Increasing diversity and inclusion at all levels in corporate America is crucial to accomplishing this goal. Not only does diversity and inclusion create a better American society — it creates better business results and better opportunities for U.S. employees, families, communities and companies.

Business Roundtable CEOs, who collectively employ more than 15 million people, are dedicated to creating an inclusive culture of respect and equal opportunity for people of all backgrounds, beliefs and experiences. We recognize that diversity and inclusion should be more than a simple promise; it must be a consistent business priority. And, as I wrote last year in a joint op-ed with Congressman Cedric Richmond (D-LA), then-chair of the Congressional Black Caucus, increasing diversity and inclusion at all levels is not just good corporate citizenship — it’s smart business.

Extensive research shows that companies that prioritize diversity and inclusion are more successful, profitable and innovative. For example:

In a 2017 study of more than 1,000 companies across 12 countries, McKinsey analyzed the composition of companies’ executive teams and found:

• Companies in the top quartile for ethnic and cultural diversity are 33 percent more likely to outperform companies in the bottom quartile; and
• Companies in the top quartile for gender diversity are 21 percent more profitable than companies in the bottom quartile.

Research by Deloitte finds that organizations with inclusive cultures are:

• Six times as likely to be innovative and agile;
• Eight times as likely to achieve better business results; and
• Twice as likely to meet or exceed financial targets.

Although significant progress has been made to advance diversity and inclusion in corporate America, there is more progress to be made. But as we continue to move forward, the question about exactly what to do can be difficult to answer.

Each company or organization has a unique culture that requires a tailored approach to build a diverse workforce and leadership team, foster an inclusive environment where all employees feel they belong and execute strategies that leverage diversity and inclusion to create long-term economic value. One-size-fits-all prescriptions can miss the mark and even be counterproductive. There are, however, successful approaches and best practices that companies can leverage and build upon to advance diversity and inclusion in their own cultures.

Last September, Business Roundtable released “Advancing Diversity and Inclusion.” This comprehensive report details how America’s largest employers are making diversity and inclusion a top priority. Informed by the input of more than 120 CEOs of top U.S. companies, the report outlines 10 areas of focus and details successful business practices companies are using to expand opportunities for people of all backgrounds — taking action within their organizations, through their supply chains and in the communities where they operate. These 10 areas are:

• Leading from the Top;
• Supporting Employee Resource Groups;
• Partnering with Communities;
• Providing Professional Development;
• Engaging Employees;
• Conducting Focused Recruiting;
• Driving Conscious Inclusion;
• Training Managers and Employees;
• Working with Suppliers; and
• Highlighting Business Results.

Here are a few examples from the Business Roundtable report of how companies, including Johnson & Johnson, are making diversity and inclusion a priority in practice:

• Duke Energy’s attracting, engaging and retaining a diverse workforce:“Our workforce needs to reflect the customers and communities we serve. That means advancing diversity within our talent pipeline. We partner with the military, community colleges, historically black colleges, universities and organizations to attract diverse talent pools.”
• Guardian Life Insurance Company increasing supplier diversity: “Our Supplier Diversity program has grown our diverse supplier base by 30 percent since 2012 and our total diverse spend to more than $43.5 million.”
• Motorola Solutions supporting employee research groups: “We have tripled our investment in our seven employee resource groups (ERGs) and promoting activities such as our annual “shark tank” style competition, where ERGs present ideas to company leaders on ways to drive Inclusion & Diversity companywide.”
• Johnson & Johnson’s diversity and inclusion strategy: “Bringing together people from diverse backgrounds, who understand the needs, preferences and values of different communities, helps us solve some of today’s complex health challenges and differentiates us in the market. That is why we strategically approach diversity and inclusion as we would any other business imperative. To build our strategy, we connected with thousands of employees in 33 countries and six languages for insights and to co-create our strategic pillars: advance our culture of inclusion and innovation; build a diverse workforce for the future; and enhance our business performance and reputation.”

As Chairman and CEO of Johnson & Johnson and Chair of the Business Roundtable Corporate Governance Committee, I’ve witnessed how a commitment to diversity and inclusion has the power to positively transform a company and the lives of its employees. But this commitment and this transformation does not happen by accident, nor does it occur overnight. It takes a sustained focus by all of a company’s employees — especially its leadership. It requires setting the tone at the top that diversity and inclusion is a strategic business imperative. It calls for a conscious dedication to identify the potential for biases or barriers to opportunities within a company’s internal processes. It demands continuous attention to improving those processes, removing barriers, developing a system of accountability and metrics and reinforcing a culture of belonging where people of all backgrounds, beliefs and experiences feel valued for their contributions.

Advancing diversity and inclusion in corporate America depends on leadership at all levels. The companies that invest in diversity and inclusion today will be the most innovative, sustainable and prosperous tomorrow. By accepting this shared responsibility, together we can seize a tremendous shared opportunity to create a more vibrant U.S. economy where all Americans can realize their potential.