There has been a lot of talk in recent years about the level of diversity and inclusion practiced at American companies, but every company has a different idea about what D&I is and what needs to be done to achieve real results.
Corporate boards that are serious about making impactful changes that lead to a sustainable diversity and inclusion culture might want to examine what HP CEO Enrique Lores has implemented at his company. In a blog post on LinkedIn, titled “Why diverse corporate boardrooms drive equity, equality and performance,” Lores talks about diversity as a way to “champion the interests of not only our shareholders, but of all of our stakeholders in the communities and societies we serve.”
And Lores is definitely serious about his commitment to diversity. He supported Kim Rivera, HP’s President of Strategy & Business Management and Chief Legal Officer, who testified before the California Senate this month in favor of a bill mandating representation of underrepresented groups on the boards of California-based companies. In his post, he urges the bill’s passage, noting that “we shouldn’t have to rely on the Governor’s pen to make our boards more diverse. Business leaders should be doing that on our own.”
If you read carefully between the lines, Lores’ post shares lessons his company has learned about implementing diversity and inclusion practices that any corporate board can adopt and benefit from:
• Leadership must make a real commitment to diversity by re-making the board. Lores explains that when HP was established in 2015 after the breakup of Hewlett Packard Company they had the opportunity to “build a Board of Directors from scratch.” The company leaders made having a diverse board its “mission.” HP now has one of the most diverse boards in the country—Lores says HP’s 12-member board is 58 percent racial minorities and 42 percent women.
Once the board is sufficiently diverse, the commitment to diversity can come from the top and a corporate culture of diversity and inclusion can take shape. Lores reports that HP has made good progress. “Last year 40 percent of our hires globally were women. In the United States, 63 percent of our hires were from underrepresented groups,” he writes.
In a response likely tied to the racial justice movement in the U.S., HP has set a goal of doubling its number of Black and African American executives by 2025. Setting such goals strengthens the commitment to diversity, especially if there are financial rewards tied to success. This shows that progress can be made when leadership makes diversity a priority and crafts a plan to deal with it in ways that help the company grow.
• Tie diversity to business profitability. Studies have shown how gender and ethnic diversity provide business advantages. “For example, McKinsey has found that companies with more women and more ethnic diversity at the executive level are more profitable, and they’ve also found that companies with more diverse boardrooms enjoy significantly higher earnings and returns on equity,” Lores writes.
It’s up to CEOs and boards to take the data in these studies seriously and find ways to use diversity as a strategic advantage. Companies can change their business models to diversify their customer base, or they can hire ethnically diverse executives and charge them with developing new products that can appeal to different audiences. These actions and others can create new revenue streams that can boost corporate profits.
• Hold the company accountable through transparency. Lores admits that his company has a lot more work to do when it comes to diversity. To make sure HP continues on the right path, the company produces an annual Sustainable Impact Report “where we hold ourselves accountable for goals we have set and identify the areas where we simply must do better.” By publicly reporting on their progress, HP can strengthen its trust with the community, which can yield business benefits in the future.