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January 4, 2023

Embedding Racial Equity in Your Business Strategy

Margaret H. Greenberg & Gina Greenlee

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This blog is guest written by Margaret H. Greenberg and Gina Greenlee, executive coaches, organizational development consultants, and the coauthors of "The Business of Race."

If you think racism is a U.S.-only issue, think again. If you believe solving racism is best left to governments, think again. If you're under the impression racial equity is just a new twist on racial equality, think again. And if you think racial equity is just another training program to roll out, then, yes – think again.

Every society has centers of influence, such as education, religion, healthcare, and government. The workplace is another of these centers. From the industrial revolution to the digital revolution, the workplace has been where we experience change in the making.

Business leaders around the globe are now leading another transformation: creating a workplace that reflects the multicultural world in which we live.

Business Leads Change

For several decades, the global communications firm, Edelman, has conducted an annual trust and credibility study. They call it The Edelman Trust Barometer. Last year's results (of 38,000 respondents from 28 countries) found that "business," once again, is the most trusted source. Sixty-one percent of respondents said they trust business, ahead of NGOs at 59 percent, government at 52 percent, and media at 50 percent. This puts business leaders in the best position to advance racial equity in the workplace, and in turn, society.

What Is Racial Equity?

Through our own exploration, we define equity as a measure of diversity and inclusion, which together make DEI (or EDI). Neither finite nor absolute, "E" measures how and to what extent "D" and "I" are embedded into an organization’s business strategy and every business policy and practice. An organization's "E" perpetually monitors and, as necessary, recalibrates "D" and "I" to stay ahead of potential relapse and continually advance toward an antiracist workplace.

When something is a little tricky to understand, sometimes it's helpful to describe what isn't. Racial equity is not a Black Lives Matter statement on your company's website; it's not an addendum to your company's values statement; it's not checking a box for Human Resources that confirms you sponsored or attended a workshop on unconscious bias; it's not writing a check to your favorite non-profit organization. It takes more than that to embed equity in your organization.

Equity Versus Equality

We are often asked, "So what's the difference between equity and equality?" We believe that the Annie E. Casey Foundation describes it best:

"Equi­ty involves try­ing to under­stand and give peo­ple what they need to enjoy full, healthy lives. Equal­i­ty, in con­trast, aims to ensure that every­one gets the same things in order to enjoy full, healthy lives. Like equi­ty, equal­i­ty aims to pro­mote fair­ness and jus­tice, but it can only work if every­one starts from the same place and needs the same things."

The Racial Equity Continuum

Before you can embed racial equity into your business strategy, you must define what racial equity means for your organization specifically. Equity is a relative newcomer to the diversity and inclusion space. Many DEI professionals and business leaders alike are still wrestling with what it means and how to implement it.

Two internal DEI professionals, from two different global companies (one tech, one research), recently shared with us how their organizations define equity:

  1. When there are no systemic biases that impact the employee lifecycle.
  2. When race is no longer a predictor of our outcomes.

Notice how the first definition does not mention race, while the second one does.

By not specifically mentioning race in its definition, it may signal that this organization is “race tentative,” to use the term the Annie E. Casey Foundation uses in its learning continuum for race-focused work (see figure below). The continuum shows the stages an organization goes on in its journey toward embedding equity.

[Figure 1: A learning continuum for race-focused work. (Courtesy of the Annie E. Casey Foundation.)]

After decades of work, some organizations have moved from "color-blind" (avoids or shuts down conversations about race, believing it will only create unmanageable discord), to "diversity-only" (proposes universal strategies that are presumed to work for all employees), to "race-tentative" (employees or management has gone through antiracism or unconscious bias training, but the organization is still unclear about what to do next), and now to "equity-focused"(measures are in place for management accountability). This transformation doesn’t happen overnight. It requires intention, commitment and resources.

Conversation Is Key

Another DEI professional we interviewed for our book, The Business of Race, was Nereida Perez, from the global spice company McCormick. Perez believes that understanding workplace racial equity surfaces from cross-functional conversations about how your company will measure progress, like you do for any other strategic business priority. "What I've seen in the industry is the term 'equity’ being introduced, but these deeper conversations are not happening," Perez told us.

We agree. Your definition of racial equity will only surface through deep conversations – and not solely with your most senior team. One of the resounding themes from the more than two dozen business leaders we interviewed was that you cannot do this work in a vacuum: you must engage your employees and other key collaborators.

Racial Equity in Action

Once you commit to having deeper conversations on what racial equity means for your organization, you can then begin to examine your policies and practices to see how racially equitable they are. But don't try to tackle every policy and practice at once.

Instead, pick one. Then create a diverse, cross-functional team to examine the current state, define the desired state, set specific goals with clear accountabilities, identify measures, and then report on progress – just like you do for other strategic priorities.

Want to take it a step further? Tie a percentage of executive compensation to the achievement of your racial equity goals, like Starbucks, Prudential Financial, and other companies have done.

Closing the Wage Gap

Let's take a closer look at one thing that we can all relate to, regardless of where we sit in an organization: compensation.

A September 2020 report by the global banking and financial services company, Citigroup, found a plethora of inequities between Black and White communities in the U.S. Specific to the workplace, the economists found income levels peak for Black men sooner and lower (ages 45–49, $43,849) than for White men (ages 50–54, $66,250).

Pay inequities related to race are not unique to the U.S. According to the Resolution Foundation, Black male university graduates are paid 17 percent less than White male university graduates in the U.K. – the equivalent of £3.90 an hour, or £7,000 over a year. And Black female university graduates are paid 9 percent less than White female university graduates, or £3,000 less over a year.

Fixing Pay Inequity

To combat this trend, we recommend organizations conduct a pay equity analysis, that includes a focus on race, to establish a baseline. Be transparent in your reporting of where you are today and identify steps with clear accountabilities to close the gaps. Repeat the process annually to measure progress, just like you would for any other strategic priority.

What will you gain by ensuring your pay is racially equitable? A competitive advantage. You'll be more likely to attract and retain talent when they know there is fair compensation.

A growing number of U.S. federal states and local municipalities have passed laws requiring employers of a minimum number of employees (some as few as one) to disclose salary ranges or minimum/maximum wages for open positions and in some cases, current positions. Some innovative companies, like software development firm Truss, implemented pay transparency long before it was mandated. Why? Because they knew it would attract and retain more diverse talent.

If the state or city you do business in has not enacted pay transparency laws, get ahead of the curve and begin this work now. Competition for talent continues to be at or near the top of the greatest business challenges list of nearly every executive we work with.

The Journey to Equity

Embedding racial equity into your business strategy is a journey. A journey that will be both exciting and daunting. One that is fraught with missteps and filled with surprising giant steps. A journey that is both self-reflective and other-focused. What's one actionable step you can take to advance a more racially equitable workplace?

About the Authors

Margaret H. Greenberg and Gina Greenlee are executive coaches, organizational development (OD) consultants, and the coauthors of "The Business of Race: How to Create and Sustain an Antiracist Workplace and Why It's Actually Good for Business" (McGraw-Hill, 2021).

They recently added two more cohorts of their 6-part, live series, Embedding Racial Equity into Your Business Strategy. One cohort kicks off January 19th 4:00-5:30 pm EST (UTC -5) and the other on January 23th 7:00-8:30 am (UTC -5). See their website to learn more and reserve your virtual seat.

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