Discrimination in Leadership: Potential Solutions in Selection and Development

Why does a staggering lack of diversity exist among Fortune 500 CEOs? What are the possible solutions to this problem? As of 2014, 95 percent of Fortune 500 CEOs identified as white, 95 percent identified as male (Banga, 2014) and more than 99 percent identified as straight (Snyder, 2014). However, according to the 2010 Census, 64 percent of Americans identified as white and 49 percent identified as male (US Census 2010), and according to Gallup, four percent of the population identified as LGBTQ+ (Gates, 2017); however, according to a 2017 NBC poll, 20 percent of Millennials identified as LGBTQ+ (Gonella, 2017). Without discrimination of some kind, these sets of numbers should be identical. That is, Fortune 500 CEOs should be representative of the population. Therefore, why do the richest companies limit themselves to less than 30 percent of the population to lead their organization? It is important to explore reasons as to why this disconnect exists, and to understand how companies select and develop a more diverse population of leaders.

So, why do these tremendous differences exist between Fortune 500 leaders and the general population? Access to education is the most prevalent reason (Glass Ceiling Commission, 1995). Beginning at a very young age, whites have more opportunities to gain higher levels of education (Master & Meltzoff, 2016; Rocha & Hawes, 2009). Second, males are disproportionately steered to educational subjects valued by businesses, such as STEM and/or business courses (Griffith, 2010). Furthermore, and most importantly, stereotypes and discrimination against racial minorities, females and LGBTQ+ individuals are pervasive in mass media (Mutz & Goldman, 2010), education (Master & Meltzoff, 2016; Rocha & Hawes, 2009), business networking (Eagly & Carli, 2007; Vance, 2016) and occupational opportunities (Pew, 2016; James & Herman, 2017; Pew, 2018). Discrimination is prevalent in the United States, so it is not surprising that minorities, women and LGBTQ+ individuals do not have access to the same opportunities as straight, white men to gain the knowledge, education, experience and skills Fortune 500 companies desire.

The root cause of the problem of lack of diversity in leadership may be that many organizations rely too heavily on knowledge, education, experience and skills. All three of these could demonstrate adverse impact (Pulakos, 2005). That is, those who identify as straight, white males are disproportionately more educated, more experienced and have had the opportunity to obtain more skills; however, research also demonstrates that these differences (knowledge, education, experience and skills) are not because straight, white males are smarter, but because they face less discrimination (Bertrand & Mullainathan, 2004). Therefore, companies must rely on other means to evaluate their employee population and those who they want to include in their population. As will be discussed shortly, the first place to examine are the talents and strengths of individuals. According to Clifton StrengthsFinder 2.0, talents are “a recurring pattern of thought[s], feeling[s] or behavior[s]” that “naturally exist within individuals” and strengths are “the ability to provide consistent, near-perfect performance in a specific task” (Asplund, et. al. 2007). Furthermore, talent, or strengths, show little to no adverse impact (Bobko, et. al., 2006; Sackett & Lievens, 2007). Therefore, these findings demonstrate that minorities, women and those who identify as LGBTQ+ show just as much leadership talent as straight, white men.

In fact, the general population does not consider knowledge, education, experience nor skills as important as talent when describing great leaders. In March of 2018, DHM Research conducted a panel survey of adults in Oregon. They asked: “What three words would you use to describe a great leader?” Ninety-nine percent of responses focused on talents; whereas, less than one percent listed “Knowledge,” “Educated,” “Experience” or “Skills” as important. The most common characteristics describing leaders were: “Honest,” “Intelligent,” “Strong,” “Visionary,” “Determined,” “Wise,” “Caring” and “Courageous.” All eight of these are defined as talents. This means when the general population thinks of great leadership, they focus on talent above all else.

Therefore, how do companies overcome these staggering differences between Fortune 500 CEOs and the general population? The answer seems to be two-fold: focus on talent and focus on development. First, perhaps, Fortune 500 organizations are focused on the wrong aspect of a person when selecting and developing them into leadership positions? Organizations ought to consider utilizing personality tests, or talent, when selecting individuals into their organizations. As of 2008, only about 80 percent of all companies use some type of talent interview when hiring leaders (Dattner, 2008). Most rely heavily on resumes (knowledge, education, experience or skills), and therefore they may be limiting their leadership pool. By focusing on talents, Fortune 500 companies immediately open the door to a more diverse population. Structured interviews that focus on talent, show high validity levels (0.52) (Schmidt & Hunter, 1998), which is higher than education attainment, job experience, biographical data or job knowledge tests (Schmidt & Hunter, 1998). Structured interviews which emphasize talent also have the benefit of leveling the playing field as the interviews themselves are presented the same regardless of race, gender or LGBTQ+ status.

Another important factor is the organization’s focus on development. According to Apslund, et. al. (2007), talent must be developed and are the product that results when one’s talents are refined with acquired skills and knowledge.” Leadership training/development is underutilized in most Fortune 500 companies. In fact, 96 percent of CEOs desire learning and development programs, but only eight percent believe it is happening (Stern, 2011). In addition, leadership development will be a critical issue in the future of human resources as Baby Boomers, many of whom are in leadership, retire (SHRM, 2017). Therefore, after leaders have been selected into organizations, they ought to have more opportunities for development, which can take many forms, including additional opportunities for leadership education, executive coaching, as well as external consulting on teams and organizations. Once again, none of these opportunities have to do with knowledge, education, experience or skills. Development opportunities would likely lead to greater networking opportunities as well, which would help open additional doors to minorities, women and those who identify as LGBTQ+. Furthermore, these opportunities must also be available to all potential leaders regardless of race, gender or LGBTQ+ status. As is evident by the aforementioned statistics, those in leadership positions have had more opportunities for development and advancement. Rather than focusing on experience, companies ought to examine talent and fit when considering individuals for advancement.

Clearly the demographic differences between Fortune 500 CEOs and the general population are staggering. Research demonstrates that no differences exist across gender, races or LGBTQ+ and the talent for leadership they possess. However, because Fortune 500 companies continue to rely on knowledge, education, experience and skills, institutional discrimination continues to be pervasive. This paper argues that these organizations must rely more heavily on talent and development as they look to find a more diverse leadership. Rather than limiting themselves to 30 percent of the population, they could open the doors to a talent pool that is 3.3 times larger than the one they use now. The advantages go far beyond simple diversity, but may lead to greater diversity of thought, organization growth and revenue.

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