A promise by two employers to begin reporting diversity figures might not sound like earth-shattering news, but last week's announcement that Goldman Sachs and MetLife will begin doing just that could have enormous implications for people of color, women and the broader corporate community.
Information is power, and transparency around diversity data is the first, most crucial step toward improving diversity. When business leaders in Chicago, for instance, decided to collect data about diversity on the city's corporate boards, they found that a year after the data was published, diversity figures began to improve. When individual companies are no longer allowed to hide behind the aggregated data of their industry and are forced to own their actual track record, it's amazing how much incentive there is to improve.
The corporate sector will also benefit. As the old adage goes, what gets measured gets managed. When diversity figures are accurately tracked and reported, the business case for diversity is further reinforced. Numerous studies have found that firms with senior management and board diversity outperform their competitors for a variety of reasons. A recent McKinsey & Co. report cited, among other reasons, that diversity of background, perspective, skills and life experiences can broaden a company's strategic plan and outlook and, in the war for talent, companies will have a leg up when they recruit the best people outside of traditional pools of leadership. The National Association for Law Placement has been publishing diversity data on the top legal employers in the country for years, and today, a firm's record on diversity is a significant factor in attorney recruiting, associate satisfaction and overall firm rankings. When more companies track and report their figures, the case will be all the more compelling.
Goldman and MetLife, two of the largest and most highly regarded figures in the business, should be congratulated for taking the lead and setting an example. In an industry in which diversity figures are available only in the aggregate, and much reported data is anecdotal, we hope that Goldman and MetLife's transparency will pave the way for other firms to follow suit, spur healthy competition for diversity, and, ultimately, increase diversity at decision-making tables.
We certainly need it. Despite years of corporate commitment to diversity and inclusion, the numbers continue to paint a dismal picture. In the Fortune 500, there are only 6 African-American CEOs, 9 Asian American, 6 Latino and 18 women. And, since 2004, executives of color and women actually lost ground in America's corporate boardrooms. According to a 2010 survey by the Alliance for Board Diversity, Fortune 500 company boards are currently made up of just 2.7 percent African-American males, 2.3 percent Hispanic males, 1.8 percent Asian Pacific Islander males, 1.9 percent African-American women 0.7 percent Hispanic women and 0.3 percent Asian Pacific Islander females.
Thanks to the actions of New York City Comptroller John Liu and New York City's pension funds, the catalysts behind the announcements, a clear message has been sent to employers that diversity matters to its large institutional investors, and improving diversity should be an important part of the corporate agenda.
But let's be clear: reporting on current numbers is only the first step. Once the data has been gathered, the next step is to examine the results more closely to determine what is and is not working in the areas of retention, leadership training and success planning. Reporting, as it has in other sectors such as law, will create a climate of accountability, but we also need to spur the development of more effective and targeted programs and trainings that really enable the development of a more diverse and representative workforce -- at the highest levels. Only then will we see true impact on corporate diversity.
We invite other firms in the financial sector as well as other industries to share their data so that we can create a culture of accountability and truly work together to make a difference.