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By Laura Yan
After the death of George Floyd in 2020, a racial reckoning spread across the country. Mass protests swept the streets of cities in America. Individuals and friends had difficult conversations and faced their own biases. And corporations and businesses across the country pledged money or began initiatives to repair the racial inequity within their organizations.
Kedra Newsom Reeves and Justin Dean, two leaders in Diversity, Equity, and Inclusion at Boston Consulting Group (BCG) saw those efforts to change firsthand. “After all of the unrest in the summer of 2020, we had an opportunity to talk to over 100 different CEOs and C-suite executives across a variety of industries,” says Dean. “All were supportive of doing more, but there was a wide spectrum of understanding how they could leverage their corporate influence to drive greater racial equity.”
Diversity and inclusion are in the “top five agenda items for many of our clients,” says Reeves, though organizations may not always know the best ways to approach it. Is it enough to focus on internal diversity within recruiting, retention, and leadership? Is it enough to donate to funds? For BCG, working towards DEI means taking a multipronged, three-tier approach: embedding an equity lens as part of business strategy, looking internally at organization and culture, and how companies think about their influence on policy, their own philanthropy, and their community engagement.
While many leaders often recognize the importance of “organization and culture,” Dean found very few fully understood the impact their corporations could drive through execution of their strategic priorities or revisiting how they thought about philanthropy. “That was very eye-opening to several executives,” Dean says. “And it is one of the most significant changes we’ve seen with corporate leaders over the last 12 months — thinking holistically about the corporation’s role to influence change and drive more equitable structures.”
BCG itself approaches racial justice through this three-tiered, holistic approach. The company has its own internal Black and Latinx employee network that began with less than 10 members over 22 years ago. Today, they have over 900 members across the United States and Canada. “With clients and internally, we work to focus on the fundamental challenges which lead to a lack of diversity in leadership and management slates across the private sector. Through BCG’s Global Diversity survey, teams found that a bias-free environment is at the top of the list for diverse individuals across industries,” Reeves explains. “This means that every interaction [has to be] bias-free. Every manager in an organization must really think about their role in creating that environment. And that’s a big cultural shift for many organizations.”
Within BCG, this means not just thinking about recruiting Black and Latinx talent, but creating an environment where they can thrive, Dean says. “We’ve tried to help ensure there’s a greater sense of belonging, through formal mentorship programs, informal mentorship programs, and helping our non-diverse leadership understand that [belonging] is not the individual consultant’s problem to solve.” BCG is also one of 50 companies that signed up for Management Leadership for Tomorrow’s (MLT) Black Equity at Work certification, the first of its kind to encourage organizations to genuinely commit to racial equity.
“While I am proud of the work that BCG has done to remain committed to diversity and inclusion, we must always be thinking about how to accelerate our progress in these areas,” said Joe Davis, former North America Regional Chair at BCG. “We’ve taken a hard look at the last few decades to better understand how to push forward in ways that drive meaningful impact for our many diverse communities. Leaders must act aggressively to shape their organizations into the most equitable spaces they can be. We at BCG understand that you must go beyond supporting anti-racist causes, and have implemented six actions to actively fight racial injustice in the U.S. These actions include the launch of our first public diversity, equity and inclusion report, a monthly racial equity engagement series, and more. To truly make progress, it is critical that we continue to take action and remain open to learning about our biases and inequities.”
In 2020, BCG also launched its new Center for Inclusion and Equity, engaging their clients and partners in conversations about how to approach DEI from a more holistic perspective. BCG is working with over 80 organizations and leaders at Vista Equity and PayPal to solve on-the-ground-inequities in six of the most impoverished and inequitable communities in the South, in cities like Charlotte, Birmingham, New Orleans, and Houston. Leaders from companies like Vista Equity and PayPal joined the project, tackling challenges like closing the digital divide by creating more Internet access for impoverished communities, or modernizing infrastructure at historically Black colleges and universities.
The solutions for these programs aren’t always simple, Reeves says. Different geographies require different solutions. Business policy and practice must be considered. For instance, the US credit system is based on a credit score, but it is well known that falling below a certain credit score is not predictive of an applicant’s likelihood to pay back that debt. To develop a new way to assess creditworthiness, an organization must assess its data systems. “For a company that hasn’t deeply invested in their basic data and analytics capabilities, and has not incorporated new types of data, that’s a big investment. And it’s a question of, do I make this investment or another investment? And do I have the talent ability in my organization to build out a good data and analytics practice? And do I then deploy that data in analytics, practice, and expertise against this issue or something else?” Reeves says. “We’re now at a point in time where some leaders are realizing the solutions are not as straightforward as people may have expected.
But though the solutions may not be straightforward, the benefits often are. Diverse companies outperform the market consistently in earnings and outcomes. A BCG analysis found that companies with diverse leadership are more innovative, leading to 19% higher revenue. A recent study by the Carlyle Group also saw that companies with diverse boards had 12% earnings growth. Diverse companies also have a greater ability to truly impact the communities around them and might matter more to customers. “I think I’d also argue that when we apply innovation to challenges around equity, those innovations benefit everyone, and may result in lower costs for all customers or clients of an industry, not just those populations that have been historically marginalized or excluded,” Reeves says.
When businesses aren’t clear on their next steps, they may stall on their actions. “I think this is the one area where corporations can do better,” Dean says. Rather than celebrating a flurry of initiatives, Dean thinks businesses could approach solving racial equity in the same way they would solve other difficult problems, like meeting earnings projections or shareholder returns. When companies miss their marks, there’s a rigorous root cause analysis of why that happened, Dean explains. What if companies started celebrating DEI initiatives around outcomes, rather than activities? When an initiative isn’t working, they could adapt or change them, and try again. When an initiative is working, they can figure out why.
“I think many of the executive leaders that had made commitments [in 2020] still are holding true to those commitments, but unless we [start] to drive structural changes to how corporations operate and getting some of those commitments and strategic plans, we will lose this opportunity to drive change,” Dean says. “At the end of the day, it’s about helping everybody understand that the focus on diversity is not taking away from them — it’s something that’s additive for the community around them.”
Though both Reeves and Dean have seen activity around DEI slow down a little since the height of the racial justice conversations in 2020, they both also see reasons to remain optimistic. “Last year, we were initiating conversations [about DEI],” Reeves explains. “And now [we’re] seeing the proactive outreach of very senior leaders. Not seeing this topic die down has been exciting and heartening.”
That optimism goes beyond the boardroom, too. “What has been inspiring for me is, as a country, we are now more open to understanding the inequities that exist. And I think, committed more than I’ve seen in my lifetime around making that change,” says Reeves. “To do that, we have to ensure that we are steadfast to drive real action with the commitment.”