The board’s role in ensuring equity within organisations 

By: Martine Ferland, President and Chief Executive Officer, Mercer
August 26, 2022

This article was originally published in NACD’s Directorship magazine.

Nearly every company strives to be diverse, inclusive and equitable and to provide opportunities for all employees to pursue fulfilling careers and build secure futures for themselves. Yet data show that gaps in pay and career progression, health and wealth adversely affect people of colour in the United States—particularly Black Americans.

The challenge, especially for boards that are not as close to the everyday operations of an organisation, is how to identify and correct the causes of workforce inequities. For our recently released study, Stepping Up for Equity, which includes input from 52 organisations representing more than 500,000 workers across the country, Mercer identified critical focus areas to help employers develop a clear, comprehensive, and impactful road map for closing gaps for Black employees in the United States. Below are five important questions boards can ask their management teams.

  1. What are the turnover rates among our Black employees?
    Typically, recruiting and hiring are the primary actions for organi­zations trying to increase representation of Black employees, especially at senior levels. However, our data show that companies can better accelerate progress by placing equal or greater effort into achieving high retention levels among this population. While US organisations are hiring Black talent at a robust pace, there is also significant turnover in this group, reducing the likelihood that Black employees advance and are promoted within the organisation. High turnover rates also reduce long-term gains in the overall representation of Black employees in the workforce. Companies should track critical race and ethnicity workforce data beyond basic workforce composition; they could track, for example, hiring, promotion, and retention rates of Black employees by level. This enables organisations to uncover predictive antecedents of turnover and develop retention strategies with an impact.
  2. How strong is our internal pipeline for Black employees?
    Although 58 percent of US organisations have a formal succession process for all employees, less than 10 percent said the efforts are very successful for driving career progression for Black employees or supplying the pipeline with Black talent. Representation at senior levels is pivotal in building the next generation of leadership. Organisations can “pivot the pipeline” by prioritising the retention and growth of internal Black talent through rigorous, bias-checked succession planning and formal sponsorship programmes.
  3. How are we tracking career and pay equity for Black employees?
    Seventy-one percent of employers said that advancing Black employees is a challenge in their organisations, but less than 50 percent said they are tracking career mobility by race and ethnicity. Few companies reported having a formal review to identify inequities in the performance management process, yet research shows that Black colleagues are significantly less likely to get high performance ratings. Because performance ratings influence everything from pay raises to promotions, eliminating disparities in the process, in addition to monitoring pay equity, is critical to improving the chances of Black employees staying and thriving in an organisation.
  4. What strategies are in place to address the disparities in health and financial wellness that afflict the Black workforce?
    Black employees have different experiences in the workplace, often due to inequities and injustices that exist in the outside world, including unequal access to health care, systemic biases, poorer health outcomes, and discriminatory lending practices. Organisations need to acknowledge the health and financial obsta­cles that exist for Black workers that can often hinder success and find ways to increase equity and opportunity in the workplace.
  5. How well do we understand the workplace experience of Black employees?
    Black employees experience the workplace differently, often reporting lower feelings of belonging and psycho­logical safety. To help, organisations should identify any gaps in the Black employee experience, which can be accomplished by aggregating and analysing employee engagement survey data by race and ethnicity, and implement programmes that will help close them. They can also ensure that both leaders and managers are equipped to participate effectively in these efforts through training and accountability—specifically to increase fairness and engender trust among their Black employees.
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