Diversity: ‘If It Isn’t There At Your Company, It Will Be, Because America Is Changing Very Quickly’
Instead of forming diversity committees, companies should make diversity their “default state,” says Tristan Walker, founder of a health and beauty company for black people with a staff that is majority-minority and whose products have earned superstar endorsements.
Silicon Valley has a diversity problem, Washington Post reported in 2015. Several tech firms voluntarily become transparent on the extent of the problem, and on how many minorities they hire. Some companies promised to do better and formed diversity committees.
Yahoo admitted blacks made up 2 percent of its work force, and Hispanics, 4 percent. Facebook reported that in 2014 it had employed 81 black people among its 5,500 U.S. workers.
Walker and his company, Walker & Company Brands — especially his Bevel trimmer — have become an iconic symbol for Black founders, Caroline Fairchild reports for LinkedIn.
A Stanford Business School graduate, Walker was an entrepreneur-in-residence at Silicon Valley venture capital firm Andreessen Horowitz before launching his own startup. His company has enjoyed $30 million-plus in funding. He’s been named a USA Today Person of the Year, and gets the kind of media attention money can’t buy.
Walker is using the attention to advocate for more diverse companies. In the past two years, there hasn’t been much progress at companies, he said, and it baffles him:
“There is no shortage of research that shows that diversity leads to better outcomes, so why aren’t people taking this more seriously? I don’t understand the logic. We are sending rockets to the moon in 18 months, why can’t we figure this out? And actually, we do ourselves a disservice by saying we need to “figure out” diversity because, it just is. And if it isn’t there at your company, it will be, because America is changing very quickly.
The existence of a diversity committee at many companies — “they are in every single industry, whether it is tech, finance or insurance” — is a short-term solution to get people off their back, Walker said in the LinkedIn interview:
“That just shows that there is no way that (diversity) will be a default state. It will always be some project and it shouldn’t be. At Walker & Brands, we made it our default state. My advice to them would be to think about what it would take to make diversity your default state. Maybe that will take 10 to 15 years, but you have to have a plan and that plan is different than how you fix things in the next nine months to get people off our backs.”
In 2016, Walker’s Bevel Trimmer got a major marketing push from brand ambassador-investor Nasir bin Olu Dara “Nas” Jones, an American hip hop recording artist, record producer, actor and entrepreneur, Huffington Post reported.
Nas’ lyrics on the chorus of DJ Khaled’s single “Nas Album Done” underscored for Walker the company’s instinct to uplift and enrich black businesses, Walker told Huffington Post.
“By (Nas) saying ‘My signature fade with the Bevel blade,’ everybody knows about Nas’ haircuts. So for him giving us the cosign and taking responsibility for his lineup, that’s significant,” Walker said. “It’s not only significant, it’s authentic. It makes sense. And also, his message is celebrating black business and empowerment.”
After the song was released, the trimmer was named among GQ’s best grooming products of 2016.
“We’re thankful that we have the partners and investors to do stuff like that on our behalf without our knowing,” Walker said, “and we’re only gonna see more of that.”
Beyond knowing intuitively that diversity matters, it also affects the bottom line, according to McKinsey & Company, a New York City-based management consulting firm and analyst that evaluates management decisions in public and private sectors.
Companies in the top 25 percent for gender or racial and ethnic diversity are more likely to have financial returns above their national industry medians, McKinsey reported two years ago in its report, Diversity Matters. Companies in the bottom 25 percent are statistically less likely to achieve above-average returns.
Diversity is probably a competitive differentiator that shifts market share toward more diverse companies over time, McKinsey said.
McKinsey has been examining diversity in the workplace for several years. The Diversity Matters report examined proprietary data for 366 public companies including financial results and the composition of top management and boards in the U.S., Canada, Latin America, the U.K. Here are some other findings:
- Companies in the bottom quartile both for gender and for ethnicity and race are statistically less likely to achieve above-average financial returns than the average companies in the data set (that is, bottom-quartile companies are lagging rather than merely not leading).
- In the U.S., there is a linear relationship between racial and ethnic diversity and better financial performance: for every 10 percent increase in racial and ethnic diversity on the senior-executive team, earnings before interest and taxes rise 0.8 percent.
- Racial and ethnic diversity has a stronger impact on financial performance in the U.S. than gender diversity, perhaps because earlier efforts to increase women’s representation in the top levels of business have already yielded positive results.
- The unequal performance of companies in the same industry and the same country implies that diversity is a competitive differentiator shifting market share toward more diverse companies.
The case for greater diversity is becoming more compelling, McKinsey reported, but achieving diversity is not easy.
“Given the higher returns that diversity is expected to bring, we believe it is better to invest now, since winners will pull further ahead and laggards will fall further behind.”
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