The CFO – Key to C-Suite Diversity

The Broken Rung

Some call it “the broken rung”—the step on the corporate ladder preventing women and members of minorities from gaining access to the C-suite. Despite diversity’s status as the hottest of hot-button issues, this impediment continues to go shockingly unaddressed. The dream of the inclusive working environment remains just that. It’s baffling, even from the most hardline of perspectives: empirical evidence affirms that organizations that prioritize diversity enjoy a decided competitive advantage. Still, C-suites today continue to suffer a crisis of conformity.

The Slow Escalator 

According to a fortune.com study on leadership and boardroom diversity, close to 90% of Fortune 500 CEOs are white males: https://fortune.com/2021/04/28/leadership-inclusion-revolution-c-suite-boardroom-diversity/  Further, a 2022 study published in journalofacountancy.com reports that only 7.3% of sitting CEOs and 16% of CFOs are women and that a mere 10.7% of sitting CEOs and 10.9% of CFOs are racially or ethnically diverse: Crist | Kolder Associates Volatility Report 2022

True, these numbers represent an upward trend over the last decade. That said, the best we can upgrade the “broken rung” is to an extremely slow escalator. 

Why DE&I?

Reasons for diversifying one’s C-suite go far beyond the matter of optics. To wit:

• Better Performance – According to S&P Market Intelligence, public companies headed by female CEOs or CFOs are more successful financially, and deliver better stock performance, than male-managed organizations: https://www.spglobal.com/marketintelligence/en/news-insights/blog/changepays-although-still-underrepresented-women-in-the-c-suite-are-driving-profitability
• Staying Power – Female and minority CEOs and CFOs tend to have longer tenures, bringing companies much-needed stability. The aforementioned journalofaccountancy.com maintains that currently, the average female/minority CEO of a financial company has been on the job for 9.7 years, the average CFO 5.4 years—and counting: https://www.journalofaccountancy.com/news/2022/aug/diversity-among-ceos-cfos-continues-rise.html
• Increased Business – According to survey results collected by Zetty.com, companies with the highest level of ethnical diversity will bring in 15 times more sales revenue compared to companies with the lowest: https://zety.com/blog/hr-statistics#diversity-statistics

DE&I – CFO

While popular thinking has it that adopting a systematic, business-led approach to diversity and inclusion is the responsibility of the Board of Directors and/or the CEO, the broadening palette of duties afforded today’s CFOs (of which we have written extensively in these blogs) makes the CFO just as valuable an instrument in the battle against corporate homogeneity.

As proof, when Deloitte asked the CFOs taking part in their second quarter 2021 North American CFO Signals™ survey if they planned to have a defined budget for DE&I in the coming year, 60% responded affirmatively. No doubt, these CFOs recognized that DE&I programs help to provide the support required for key demographic groups to succeed in C-suite positions. Too often, women and other minorities are granted such opportunities only at companies in precarious condition, situations in which expectations are high and infrastructural support low. 

Prescriptive Actions

Among the prescriptive practices by which CFOs can address the DE&I problem are…

• Integrate DE&I programs within dedicated budgets – Shifting DE&I from the statement of operations to the balance sheet legitimizes the practice; so contextualized, company leaders are brought to recognize DE&I as a statutory convention of operations
• Emphasize DE&I’s tangible returns – By gathering data supporting the increased stock return of diverse companies v. non-diverse, CFOs can fortify DE&I’s status as a bona fide contributor to the bottom line
• Link DE&I to retention and recruitment – When a clear value is placed on DE&I, an organization prospectively broadens the availability and caliber of its talent pool, particularly among the socially-conscious millennials
• Promote DE&I as an incentive to investors – Famously, NASDAQ has instituted a disclosure standard designed to provide stakeholders with a running update of the make-up of their boards. This rule also applies to smaller reporting companies and foreign issuers
• Emphasize the global push to DE&I – Internationally, an increasing number of businesses are signing accords committing them to minimum boardroom diversity targets. These playbooks include the Generation Equality Forum, a global initiative launched last year: Generation Equality Forum                                                                                   

TALK TO GRAYHAWK SEARCH

Grayhawk Search is an unwavering believer in the CFO as co-creator of a more equitable and inclusive work environment. Only Grayhawk Search, with its demonstrated research and recruiting practices, can help locate and procure the progressive, persuasive CFO your company needs to affect change within your culture, actively promoting DE&I while protecting and augmenting profitability.   

Grayhawk Search – Your commitment to inclusion should include us. 

Please visit our further Insights to see all that we can provide for you