Corporate America Wakes Up to Systemic Racism. But What Happens Next?

BY Stephen Koepp | June 18, 2020

The NFL takes a knee. Juneteenth becomes a corporate holiday. NASCAR bans the confederate flag. The stereotypical product mascots Aunt Jemima, Uncle Ben and Mrs. Butterworth are suddenly retired. The Oscars promise to be not-so-white anymore. Band-Aid says it will start making bandages in darker shades. A parade of corporate press releases announces that companies will spend hundreds of millions of dollars to fight racial injustice and inequality. And at companies with widespread complaints about toxic workplaces for people of color, heads roll.

All of these things could have happened over the course of decades, but they unfolded in a matter of days. Suddenly, Corporate America was promising to make the well-being of Black America a top priority. It was not necessarily a matter of courage. After the horrific police killing of George Floyd and the waves of protest that circled the globe, corporations could see which way the wind was blowing. According to many recent polls, a two-thirds majority of Americans support the protests against policy brutality and racial discrimination. Almost overnight, Black Lives Matter has gone from marginal to mainstream, from argument to consensus.

The corporate turnabout began earlier this month with a flurry of statements offering contrition about past neglect and support for the BLM movement. Many were filled with promises to “do better” and “do more,” with some offering pledges of money and proposing changes in corporate and public policy. Adidas, under pressure from employees of color and their allies, committed $120 million to programs that support Black communities. As the company announced on Twitter, “First, we need to give credit where it’s long overdue: The success of Adidas would be nothing without Black athletes, Black artists, Black employees, and Black customers. Period.”

Johnson & Johnson CEO Alex Gorsky, whose company pledged $10 million to fight racism, wrote in a LinkedIn post: “As the CEO of the world’s largest health-care company, I must state unequivocally that racism in any form is unacceptable, and that Black lives matter. And as a white man, I also need to acknowledge the limits of my own life experience and listen to those who have faced systemic injustice since the day they were born.”

From IBM came a letter to Congress by CEO Arvind Krishna, who said the company would like to work with lawmakers “in pursuit of justice and racial equity, focused in police reform, responsible use of technology, and broadening skills and educational opportunities.” IBM, as well as Amazon and Microsoft, said they would back away from selling facial-recognition technology, at least for now, bowing to concerns about its misuse or abuse by law-enforcement authorities.

While some of the declarations took flak for being disingenuous or too-little-too-late, they were generally welcomed as a potential turning point. “I think the statements and the additional efforts are extremely valuable,” Marion Brooks, VP of diversity and inclusion at Novartis Corp., told From Day One. Yet as dramatic as it all was, skepticism abounded too, given that “many of the same companies expressing solidarity have contributed to systemic inequality, targeted the black community with unhealthy products and services, and failed to hire, promote and fairly compensate Black men and women,” wrote David Gelles in the New York Times. “Corporate America has failed Black America,” said Darren Walker, the president of the Ford Foundation and a member of the board of PepsiCo, and who is Black. “Even after a generation of Ivy League educations and extraordinary talented African-Americans going into corporate America, we seem to have hit a wall.”

Indeed, while African-Americans constitute about 13% of the U.S. population, their representation tends to be in the low single digits on corporate boards, at the C-Suite executive level, and in technical roles. Facebook has just a 1.5% black tech force, compared with Apple at 6%. Yet this inequality represents just the top of the income pyramid. Overall, since 2000, the wage gap between Blacks and whites has grown significantly. That feeds the huge wealth gap. On average, white households have nearly 6.5 times the wealth of black households, reports Bloomberg. Inequalities in wealth and access to health care have contributed to the vastly disproportionate impact of COVID-19 on people of color.

As Corporate America began to reckon with these realities, here’s how the responses unfolded:

Statements and Gestures

One of the earliest statements, on May 29, came from Nike, which posted on social media a simple black square with a saying in white letters protesting police brutality and racial injustice: “For Once, Don’t Do It.” Alluding to its trademark motto, the statement was in keeping with the company’s voice on social issues, including its ad campaign in support of Colin Kaepernick with the line, “Believe in something, even if it means sacrificing everything.”

Before long Nike’s white-on-black design became the default format for corporate statements, as dozens followed the template, diluting the impact. It became an exercise applying corporate branding to popular sentiment. “Unfortunately, the reality of the groupthink, even if backed by the best of intentions, transformed these messages into homogenous–and largely meaningless–wallpaper,” opined Jeff Beers in Fast Company. (Nike, for its part, followed through by committing $40 million to social-justice organizations.)

Other companies attempted more original statements. Jamie Dimon, the CEO of JPMorgan Chase, the largest U.S. bank, knelt with staffers in a branch office, wearing shorts, sneakers and a mask. Chase says that it’s making multibillion-dollar investments to address racial and economic inequality, “particularly for the Black community.” Even so, advocates of social equity want to see results more than symbols. “There’s a lot of performative allyship going around,” Y-Vonne Hutchinson, CEO and founder of diversity consulting firm ReadySet told the Washington Post. “Nobody’s asking for a CEO to take a knee. You take a knee after you change your policies.”

Well then, at historic moments like these, what are the most important words and deeds for companies to get across? Business Insider, with the help of a PR veteran, analyzed 27 memos from business leaders responding to George Floyd’s death. The conclusions: “The strongest memos acknowledged where leaders and their organizations had fallen short. They confronted discomfort head on, and invited difficult conversations. And they outlined concrete plans for cultivating diversity and inclusion, both in the workplace and in the U.S. more generally.”

Many companies hurried to embrace a prospectively more durable gesture by recognizing Juneteenth, the day commemorating the end of slavery in the U.S. Nike, Twitter, Target and Spotify were among the small but growing number of companies designating June 19 as a paid company holiday.

Changing Positions and Products

The NFL, which has fought with its players for years over their rights to protest police brutality by taking a knee during the national anthem, did a complete 180-degree turn. “We, the NFL, admit we were wrong,” the league tweeted in an official statement. In a video accompanying the tweet, NFL Commissioner Roger Goodell said, “Without Black players, there would be no National Football League. And the protests around the country are emblematic of the centuries of silence, inequality and oppression of black players, coaches, fans and staff.” The turnabout had resonance far beyond sports, given how President Trump had exploited the controversy as a wedge issue, painting Kaepernick and fellow protesters as unpatriotic. Shunned by teams as too controversial, Kaepernick has not played professional football since 2016.

Other organizations decided quickly to change policies that seemed discriminatory, culturally unaware, or dismissive of the different needs of diverse customers. Walmart said it would no longer place “multicultural hair and beauty products” in locked cases, which it had been doing in about a dozen stores. “Predominantly African-American people are buying those products, so the assumption is we’re thieves,” a customer told NBC News. NASCAR, a bastion of the white working class, said it will no longer allow the Confederate flag to be displayed at events and properties, while driver Bubba Wallace, the first full-time African-American NASCAR driver in decades, earlier this month raced in a car with a Black Lives Matter paint scheme.

The moment proved a catalyst for change in products that for more than a century had continued to display mascots that seemed to endure from the plantation era, despite complaints over the years. Aunt Jemima, Mrs. Butterworth, Uncle Ben and the Cream of Wheat chef were all retired or placed under review by the companies that produce them. Where did these stereotypical characters come from? “The images of placid, smiling Black Americans on commercial products were often created during times of racial upheaval. Characters like Aunt Jemima, who was first depicted as a mammy, followed Reconstruction when white people were scared of what it meant to live alongside newly freed slaves,” reported the New York Times, citing an interview with Kevin D. Thomas, a professor of multicultural branding in the Race, Ethnic and Indigenous Studies Program at Marquette University. (The Frito Bandito, by the way, made his exit in 1971.)

Band-Aids, a Johnson & Johnson product, have been made since 1920 in flesh color, which was fine as long as your color was a kind of soft pink. Earlier this month, the company announced that it will start offering “a range of bandages in light, medium and deep shades of Brown and Black skin tones that embrace the beauty of diverse skin.” Commented Ishena Robinson in The Root: “A whole damn century from the time it was first introduced, Band-Aid brand has finally come to the realization that Black people exist, have skin, get boo-boos, and need bandages.”

Some companies started out on the wrong foot in their policy declarations. Starbucks, which in 2018 had closed its 8,000 U.S. stores for a day of anti-bias training after the misguided arrest of two Black men, responded to the current upsurge in protests by stating in a memo that their baristas and other employees were forbidden to wear shirts or accessories declaring support for Black Lives Matter. When a backlash ensued, the company not only reversed itself, but for good measure said it will produce 250,000 corporate T-shirts promoting Black Lives Matter to be given to employees and sold to customers. That may have been a well-meaning gesture, but this company too was criticized for engaging in performative allyship rather than concrete measures to boost employees and community members.

Going Beyond Words

Investing large amounts of money to create equity and new opportunity for Black Americans is a welcome measure. Apple pledged $100 million, while companies including Walmart, Target, Home Depot and Levi’s were among the name brands promising financial support. Less recognized were employees taking advantage of already-established corporate matching-fund programs to help maximize their donating power. In the week following George Floyd’s killing, the matching-fund management company Benevity saw more than $100 million donated through such programs to civil-rights and related causes.

Even more direct efforts were shown by companies launching programs to train more young people of color for the skilled jobs of the future. Techtonic Group, a Boulder-based software developer, plans to add 100 black and Hispanic apprentices to its Techtonic Academy program, a paid, 14-week course sanctioned by the U.S. Department of Labor, the Denver Business Journal reported. “We came to the conclusion that everybody’s putting up platitudes on social media and that doesn’t really do anything for anybody,” said CEO Heather Terenzio. “So we starting talking about our apprenticeship program and what we could do to help.”

What other measures should companies pursue, beyond words of good intent? "Social statements mean nothing without real actions and investments," Elizabeth A. Morrison, VP of diversity & belonging for Live Nation, told From Day One. "I’m speaking specifically of commitments to increasing workforce diversity, tactics to drive equality and inclusion with clients (like diversity riders in contracts and supplier diversity), donations to social-justice organizations, and supporting legislation for equal justice. Ideally companies are doing many of these, and/or taking other action that is equally powerful and sustainable. Long-term commitment and partnerships are needed for this not to become the flavor of the month."

Indeed, the Black Lives Matter movement strongly suggests that corporations need to get used to a new dynamic of social activism. Jim VandeHei, co-founder and CEO of the news organization Axios, calls it a "bottom-up revolution" that presents a stark new reality for American CEOs. "Doing good is no longer a niche. It's a necessity," he wrote on Axios. "The judgment CEOs feared most in the past was pesky reporters or regulators. The judgment they should fear the most now is idealistic employees on the inside and the social media warriors on the outside." While this presents a new peril, there is a potential upside to embracing this change: "We have found the new generation will work as hard or harder than we did if we provide this clarity of purpose and rolling, unvarnished dialogue."

Steve Koepp is a co-founder of From Day One. Previously, he was editorial director of Time Inc. Books, executive editor of Fortune and deputy managing editor of Time

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Is Talent Acquisition Equipped to Go Up Against the Global Labor Shortage?

For all the concern about AI taking over jobs, an equally pressing question has arisen: Who’ll fill the jobs that still call for human workers? A growing, global talent shortage presents a major threat to businesses across all sectors, countries, and continents. Energy companies don’t have enough green-skilled workers, professional services firms can’t find accountants, and manufacturers are struggling to fill roles on the shop floor.Despite the desperate need for workers, talent acquisition teams report being asked to cut costs and do more with less. Human resources may have moved into the C-suite as a strategic contributor, but not everyone in the department has a seat at the decision-making table. According to new research from the Josh Bersin Co., just 32% of talent acquisition leads feel that they’re strategic contributors to the business. Corporate plans change too quickly, they say, if there is a plan at all, and executives treat workforce planning as an afterthought. Right now, Labor Department statistics show overall job growth slowing more than expected, but employers need to take a long-term view. The problem, HR analyst Josh Bersin told From Day One, is that “workforce planning isn’t a very strategic process. It’s a once-a-year budget exercise. And when there’s a bad quarter, the company looks at the workforce and says, ‘Freeze the headcount over here, freeze the headcount over there.’”For some business leaders, hiring and firing are reflexes, not strategies. The cycle is so predictable that a 2023 story in the Harvard Business Review advised employees to assess their job security by checking their company’s quarterly filings. A bad quarter foreshadows layoffs.Companies can no longer afford to run their recruitment departments like e-commerce warehouses, Bersin argues. And unless leaders start taking it seriously, businesses won’t be able to outrun the talent shortage.Updating Antiquated Talent Acquisition ModelsThere are two types of TA departments, said Bersin: Operational and strategic. The former works like a fulfillment center. A requisition is opened, recruiters source candidates, conduct interviews, present options to managers, and complete the hire. “They’re operationally measured and operationally configured. They look at cost-of-hire, they look at channels and sources, they outsource a lot of stuff, and they design around scale,” Bersin said. The strategic TA team works differently. When someone wants to open a req, they ask questions: Who do you want to hire? What skills should they have? How will they contribute to the business? Is there someone internal who can fill the role? Could the responsibilities of this role be automated?HR analyst Josh Bersin (Photo courtesy of Josh Bersin Co.)If a talent acquisition team isn’t strategic, it’s not necessarily their fault, according to Gina Larson, an HR consultant with more than a decade of experience in HR and talent development. “It’s the direction of the business, the remit that they’re given, and the control that they have” that determines how strategic they can be, she said. “Most companies aren’t set up to invest time and energy into developing more diverse and non-traditional hires that would bring the company into the future.”When Bersin’s company surveyed business leaders about their views of TA, 55% of the respondents said they see the function as an integral part of the organization, but it appears they haven’t learned to treat it that way, and they continue to set the wrong expectations. Old habits die hard, it seems.If executives think recruiters are order-takers, then that’s what they’ll be, Larson said. “We all report to someone. Short-term results typically get the rewards. If you’re struggling for a while and you say, ‘Just trust me, we have long-term results coming,’ it’s hard. Everyone has a stakeholder, and I think there is the pressure of short-term results.”Operational teams are a vestige of an outdated philosophy that equates headcount with revenue, one that prioritizes cost-to-hire and time-to-hire above all else, Bersin said. Companies that run operational TA teams are typically ones that put the business–and its workers–at the mercy of market swings. “The financial pressures on companies these days are so quarterly-based,” Bersin said. “I think CEOs and CFOs have to deal with this very short-term mentality in their investor base. A lot of companies over-hire and then lay people off, and then over-hire and lay people off. What I call ‘enduring companies’ don’t think that way. They ignore those signals and think about long-term, sustainable growth.” When Bersin’s company asked TA leaders to identify the biggest barriers to becoming a strategic business partner, 36% said that shifting business priorities is obstacle No. 1.Talent Acquisition and the Future of BusinessIt seems that no industry is safe from the skills shortage. In the energy sector, imperatives to develop next-generation technologies mean companies need workers with green-energy skills, but seven in every eight workers globally have no green skills to speak of, according to research from LinkedIn. In 2023 the World Economic Forum declared the talent shortage “the next energy crisis.”Companies ranging from auto parts retailers to biotech companies blame financial-reporting problems on the lack of accountants, a shortage so severe that industry-regulating bodies are considering cutting certification requirements for the role. Meanwhile, consulting firm Korn Ferry estimates that the media and telecoms industry is on track to “hit a wall” with a shortage of 4.3 million workers by 2030, and manufacturing is forecasted to have 2.1 million empty jobs by then.Korn Ferry projects that, globally, the shortage of skilled workers will result in more than 85 million empty jobs by the end of the decade. Fifty-seven percent of respondents to the Bersin Co. survey said that it’s the skills shortage that will present the biggest challenge to the TA field in the next 12 months. Some companies are thinking strategically, however. Talent intelligence, as it’s situated in HR, is an increasingly influential discipline, Bersin said. That’s typically led by a data-wielding analyst who advises HR on where to look for the best candidates, what cities they live in, and which schools they graduate from, even the companies they work for. Some companies, like Aon, have invested in apprenticeship programs that train unskilled workers into highly skilled ones. PwC is trying to influence college curriculums to create more accountants. Talent acquisition just can’t afford to work on the sidelines, said Kumud Sharma, chief people officer at financial advisory firm Betterment. Her recruiters work cross-functionally, getting to know all parts of the business. Otherwise, how will they show candidates what the company can offer them?Sharma remembers when talent acquisition was its own entity outside of HR–working like a restaurant window. A hiring manager filled out a form requesting one engineer, and recruiting served up one engineer. But that doesn’t work anymore–because we know better, she said. “We’re not thinking of people as widgets anymore. We’re not thinking of people as products. We’re thinking of people as people now.” It’s this change in thinking that has changed the HR profession altogether.“For 30 years or so, we have been saying that people are the assets of the organization. Who’s bringing those assets in? Those assets are coming through talent acquisition,” said Sharma. “How can that not be a strategic function?”Emily McCrary-Ruiz-Esparza is a freelance journalist and From Day One contributing editor who writes about work, the job market, and women’s experiences in the workplace. Her work has appeared in the Economist, the BBC, The Washington Post, Quartz, and Fast Company.(Featured photo by Izusek/iStock by Getty Images)

Emily McCrary-Ruiz-Esparza | August 19, 2024