5 Reasons Your CEO Should Chair Your Diversity Council

May 30, 2014 8:10 pm
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Best Practices From AT&T, EY, Kellogg Company, Wyndham Worldwide and KeyCorp

By Barbara Frankel

We’ve heard it many times: Our CEO is just too busy to personally chair the executive diversity council. He or she is deeply committed to diversity but heads a major corporation and just doesn’t have time.

Randall Stephenson, AT&T

Stephenson

And yet Randall Stephenson—Chairman and CEO of one of the largest DiversityInc Top 50 companies, AT&T, with 232,286 U.S. employees—started his company’s council in 2008 when he created AT&T’s chief diversity officer position and has chaired it since. So do 54 percent of the Top 50 CEOs, up from 32 percent in 2005.

Why do certain CEOs feel this is so important? We asked five companies—EY, AT&T, Kellogg Company, Wyndham Worldwide and KeyCorp, Nos. 3, 10, 31, 39 and 47, respectively, on the Top 50. Here are their five main reasons they feel strongly the CEO should be at the helm.

For sample council models, click here.

1. This was a personal decision for the CEO, who saw the diversity council as vital to the core business.

Steve Howe, EY

Howe

Stephen R. Howe Jr., EY Americas Managing Partner, never thought about not chairing the council. “I set the tone in our organization as the leader in the U.S. and the Americas. People are watching the message I’m sending. My job is to run the business. This is fundamental to our business,” he says.

He notes how increasingly important diversity and inclusion has become to EY’s business as a professional-services firm. “I tell my partners that it is not at all uncommon for me in a meeting with a client CEO to turn to this topic. That wasn’t true five years ago.”

At AT&T, Stephenson has been a prominent diversity leader. “When he looks at D&I, he says ‘This is my job, to make sure I have a company that has the best and brightest,’” notes Belinda Grant-Anderson, Vice President, Workforce Development & Diversity. “It didn’t feel to him that he could have someone else do it. He’s the chair and his direct reports are the members. … His being the leader lends a great deal of credibility. For example, when Randall says ERGs [employee resource groups] are very critical to me, everyone listens and that’s a factor in our huge growth.” AT&T’s employee-resource-group membership was up by 39 percent last year.

At Kellogg, Chairman, President and CEO John Bryant wanted to chair his company’s Executive Diversity & Inclusion Council (EDIC) when he became President and CEO in 2011. Before that, he was the executive sponsor of the Multicultural Employee Resource Group.

“His engagement and leadership help get things done. By his leadership of EDIC meetings and our ERG involvement in the EDIC meetings, he can hear first-hand our opportunities and provide coaching, support and direction where needed, which makes the decision-making progress much more efficient,” says Mark King, Global Head, Diversity & Inclusion.

Beth Mooney, KeyCorp

Mooney

At KeyCorp, Chairman and CEO Beth Mooney “wanted to have her personal brand on this. To he a visible leader in this space certainly motivates other senior leaders to align with intent,” says Bruce Murphy, Executive Vice President and Head of Corporate Responsibility.

When Wyndham Worldwide was formed in 2006, the first executive diversity council was started. Chairman and CEO Stephen Holmes wanted to be the chair and selected all the members personally. “The need to be the chair really came out of his thinking of our core values—talent management, diversity, sustainability and wellness,” says Patricia Lee, Senior Vice President, Human Resources and Chief Diversity Officer.

As the company was starting, Holmes kept a flip chart in his office in which he kept writing essential words—“customer,” “community,” “integrity,” “respect,” “diversity,” Lee recalls.

2. The CEO sets the tone for other executives—and the whole company—to follow.

Karyn Twaronite, Partner at Ernst & Young LLP and Americas Inclusiveness Officer at EY, notes that Howe’s visibility as the council leader is “very authentic because he leads by example.” He often shares stories of what he heard at the council and what he’s learned. “People stand up and pay attention. He’s the boss so everybody hangs on his intention and his words,” she says.

Howe cites an example. During the financial crisis of 2007–2008, the firm had to cut its budget yet it increased spending on diversity and inclusion and created programs to help executives lead inclusively. “I got pushback from partners but I explained what I’d learned from the council of the importance to the business. … When my light bulb goes off, I make sure other people know that,” he says.

At Wyndham, the involvement of Holmes is also emphasized in every way—town halls, small-group meetings, during earnings announcements. “Steve will say, ‘I was meeting with the diversity council and someone said something that made me think differently,’” Lee says.

Stephen Holmes, Wyndham Worldwide

Holmes

An example she cites is that Holmes didn’t understand why generational issues, particularly the emphasis on Millennials, were part of diversity. During a council session, he learned how different attitudes on work, careers, community and social responsibility impact a company. “Two hours later, he was talking about it [and talking to his own kids] and he was incorporating it in his work,” Lee says.

The CEO’s leadership, Grant-Anderson says, gives the council and the diversity work credibility throughout AT&T. She cites the company’s recent emphasis on women’s leadership and the WOW [World of Women] Portal built to address what women need to succeed. “The front page was Randall saying this was important and that we need to pay attention to it,” she says.

3. Council members are more senior—and diverse in every way—when the CEO chairs.

EY’s Howe publicly recognizes council members who are showing leadership. Most of the 32 council members (all of whom are partners) have two-year rotations, but if someone “is too busy or this isn’t a priority,” they rotate off sooner, Twaronite says. And some partners are asked to extend their stay if they are having major impact.

The council members represent different areas of technical expertise and different markets. “The real value is between the meetings. If this group really shares best practices, we want them to then have an impact back on their business,” Howe says.

Wyndham’s Global Diversity Council meets quarterly, and several of the council members also sit on business unit diversity councils. The  approximately 28-member council is diverse by gender, nationality, ethnicity, veteran status and business role, Lee says, and members are rotated off every two or three years.

KeyCorp launched its council two years ago with the initial emphasis on educating leaders about the importance of diversity and inclusion. This year, Murphy says, the focus has shifted to results with line-of-business champions and employee-resource-group leaders on the council. “We wanted to have that voice to talk about best practices, to guide the work of the council,” he says.

4. The CEO’s presence makes council members more accountable for diversity goals.

AT&T’s council adheres to four pillars: monitor and continually improve the state of diversity and inclusion, lawfully achieve diversity results, ensure we are attracting and retaining and developing the right people, and ensure pipeline leadership-development programs are diverse, Grant-Anderson says.

Goals are set at the corporate level across business units with each unit setting its own specific goals. Each quarter, the council receives a scorecard with the business units’ reports on progress. Compensation is impacted, with 5 percent of the bonus dependent on meeting the goals.

John Bryant, Kellogg Company

Bryant

At Kellogg, the Executive D&I Council reviews and approves the overall company D&I strategic plan. D&I goals are linked to executive compensation through the Annual Incentive Plan (bonus program) and the annual performance-management process. The bonus-program goals are set by King and Chief Human Resources Officer Sammie Long, then are sent to Bryant for approval. Diversity goals include hiring, promotions, retention and engagement, and account for 5 percent of the program payout. This applies to the top two levels of the company.

At Wyndham Worldwide, all senior vice presidents and executive vice presidents have diversity-and-inclusion goals—including hiring, talent development, promotions, teaching, presenting diversity initiatives, supplier diversity, mentoring franchisors from underrepresented groups, and community leadership. “Everyone’s goals are aligned to our ABCs—Associates, Business, Community,” Lee says. “At mid-year and end year, Steve says, ‘At the end of the day, if you aren’t doing your goals, if you aren’t practicing what’s important to the organization, you’re not here.”

EY notes that every P&L leader is evaluated on D&I goals, with every line of business having a representative on the council.

5. CEOs who chair their council are more available to chief diversity officers.

At all five companies interviewed—and at the majority of Top 50 companies where CEOs chair the council—there is unusual access to the CEO, even if the CDO is not a direct report.

Murphy jokes that his access to CEO Mooney “is probably more than I want,” adding that she is “one floor away and I talk to her on every type of front.”

Twaronite puts it quite eloquently: “The way Steve operates with me, he makes me an insider. When you are doing culture-change work, being an insider is critical—you have trust, you have the ability to get real-time feedback.”

Register for the 2015 DiversityInc Top 50 Event April 23 at Cipriani Wall Street in New York City!
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