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As retailers focus on diversity, executive representation is stagnant

Protests against systemic racism this year pushed retailers to take a magnifying glass to diversity, and many areas are lacking.
Danielle Ternes/Retail Dive

Editor’s Note: This article is part of a package on diversity. You can find the rest of the stories here.

This year will be remembered as the year of the coronavirus, but another, more deep-rooted crisis also came into focus in 2020: diversity. Or more specifically a lack of diversity at the leadership level of U.S. corporations.

Since 2010, the percent of executives of color in retail has hardly changed, according to Retail Dive’s analysis of data from the Equal Employment Opportunity Commission. (The EEOC measures the number of White, Black, Hispanic, Asian, American Indian and Hawaiian employees at companies, as well as employees of two or more races.) Women, too, remain underrepresented in executive ranks, but this year has brought specific attention to the lack of progress for people of color.

Diversity had been a topic business leaders pledged to address long before 2020, but events this year brought new urgency to the issue as protests against systemic racism broke out in June across the U.S. following several high profile police killings of Black people. Many of the protests explicitly evoked the name of George Floyd, a Black man killed in Minneapolis when a police officer kneeled on his neck while he was in custody.

Ella Washington, CEO of diversity and inclusion strategy firm Ellavate Solutions, and a professor at Georgetown’s McDonough School of Business, said the protests marked a shift in companies feeling more accountability to speak out.

“In previous years, organizations had kind of resisted entering conversations around social injustice, particularly race,” Washington said. “So I think we have certainly entered a new era where not only are organizations feeling empowered to speak up on these topics, but they’re expected to from their employees, and from their shareholders and from the consumers that engage with them.”

This isn’t the first time in recent years that a social movement created waves that shaped corporate America. The #MeToo movement ultimately led to more than a few leadership resignations and pledges to improve working conditions and career opportunities for women by pushing businesses to focus on gender diversity. And 2020 may be remembered as the year when racial inequities in the boardroom and in executive leadership roles came into sharper focus.

Andy Challenger, senior vice president at outplacement firm Challenger, Gray & Christmas, said his firm started seeing positive improvements at companies related to gender equality and making workplaces safe about a year and a half after the beginning of the #MeToo movement, and he expects to see similar shifts in response to the killing of George Floyd and subsequent protests against systemic racism.

An initial survey on the subject found that “well over 80%” of companies were talking about George Floyd, Challenger said, something he noted was “really encouraging,” especially as topics like racism can be taboo in the workplace.

Protests this year pushed retailers, in particular, to respond to the broader social movement and develop plans to address organizational inequities. Many retailers announced hiring goals focused on underrepresented groups and pledged money to support organizations or initiatives tied to fighting racial inequality. Retailers have also seen change within their own organizations. Walgreens, for example, has seen small diversity and inclusion groups crop up on specific teams throughout the company, in addition to its overarching diversity team.

Real change could be underway, but measuring progress on representation and diversity is a long game. Changes implemented now may not bear fruit for several years, or decades even.

“It’s like trying to turn a huge ship,” Victor Arias, managing director at Diversified Search, said of efforts to increase diversity. “Making it turn 10 degrees, even that change is really difficult.”

Retailers now have access to ample data about changing demographics in the U.S. that are already influencing how they create products and target audiences that may have been traditionally underserved, Arias said. Communities of color in particular are growing, and therefore have growing importance for retailers as customers. However, progress in the workplace and in the leadership of many of those same companies has been slow.

How retail compares to the average on gender and racial representation

Race and gender breakdown of workers in each job role in 2018
Change breakdown:
All industries
Retail
Nami Sumida/Retail Dive

So where does retail stand as an industry? Based on 2018 data from the EEOC (the most recent available at press time), retail industry diversity was in line with the aggregate of all industries the EEOC measures. That year, 85% of all executives and senior-level officials and managers were White. In retail, that number was 86%. In terms of the representation of women, 31% of all executives and senior-level officials and managers were women in 2018, whereas retail had 29% women. As the EEOC does not measure if employees self-identify as a member of the LGBT community or as non-binary, Retail Dive focuses throughout this piece on the percent of men and women at the executive levels, though gender diversity encompasses much more than this.

Challenger noted similar findings in his own work, with the percentage of female employees in retail roughly equivalent with the percentage of total U.S. workers that are women. Likewise with the percentage of White employees, and of people of color in the workforce. From a very general perspective, retail is in line with broader workplace diversity trends. Retail is also in line with other specific industries in terms of workforce makeup.

Where retail stands against other key industries on gender and racial representation

% of women and people of color in each job role who are employed in the following industries in 2018

The top executive levels at retail companies, however, remain overwhelmingly White. As measured by the EEOC, a combined total of 14% of top-level executive employees in retail are Black, Hispanic, Asian, American Indian, Hawaiian or of two or more races. That’s higher than the wholesale and real estate industries, but almost 10 percentage points lower than the accommodation and food services industry. Still, retail’s representation is just 2 percentage points under the aggregate.

When it comes to the percent of women in leadership, retail is second to last out of a set of seven industries. Its 29% of female top executives is within 6 percentage points of most of the other industries measured, but is dwarfed by the female-dominated educational services and healthcare and social assistance industries. As with racial representation, retail sits just 2 percentage points under the aggregate.

Retail may not lag behind other industries, but its progress over time and its representation at the highest levels still have significant improvements to make. Much as gender representation became a focal point a couple of years ago, racial equity seems poised to get more attention from retailers in the years ahead as customers demand more from leadership.

“African Americans have had it tough over the years. Me personally, I’ve had it tough and I sit atop a very large organization and a very large company, and I still get profiled when I go into stores. That’s real for us,” Carlos Cubia, vice president of human resources and global chief diversity officer of Walgreens Boots Alliance, said. “I’m optimistic that we’re going to see something positive come out of this. But I’m not naive because we’ve been here before in history.”

It may take years before the industry makes meaningful changes — if it makes meaningful changes — but the most surprising piece of the conversation happening in 2020 may be that it started as retailers juggled a pandemic. Many observers of retail diversity, including Karen Dahms, a research director for Diversity Best Practices, worried that the disruption of coronavirus would mean less attention on diversity and inclusion. So far, that hasn’t been the case. In fact, Dahms noted she’s seen more attention on diversity and inclusion efforts so far, and there’s a perfect storm of factors to keep companies focused on it going forward.

“I think all these things are kind of happening at the same time. We’ve got a growing ethnic population. We’ve got a decreasing White population. We’ve got a White population of senior leadership positions, many of which are coming up on retirement. We’ve got a recognition of the business case for having diversity on teams,” Dahms said, adding that younger generations are increasingly focused on corporate values. “All of these things are happening at the same time and really creating this moment in time where companies are understanding that these investments are important — and on many different levels.”

The story the numbers tell

The percentage of employees of color has slowly increased across retail job functions since 2010. Some areas have seen larger increases than others, though, with employees of color making up a higher percentage of roles classified as laborers, service workers, and sales workers than executive positions. Likewise, women represent a much higher percentage of sales workers, and professionals, office and clerical workers, than executives.

People of color and women remain noticeably underrepresented in leadership roles

% of women and people of color in each job role in the retail industry

The percentage of executives of color has hardly changed since 2010. For the entire nine-year period, White employees made up 86% or more of executives. Women made up between 26% and 29% of executives within the same timeframe. Challenger called both stats “dismal” and the lack of improvement in the diversity of executives “super concerning.”

“That is a huge, almost 10% gap between what the working population in the United States is and what’s being represented at the very top of organizations, and it just shows that there’s still a long way to go in terms of racial diversity within organizations,” he said.

Retailers are beginning to acknowledge that gap, thanks in large part to consumer pressure. This year alone, many retailers made donations to support organizations fighting social injustice and, perhaps more importantly, set hard goals for increasing diversity. Target in September said it would increase the representation of Black employees in its workforce by 20%, while Lowe’s launched a Shark Tank-style program to benefit diverse businesses and bring their products to its store shelves.

Lowe’s program was directly tied to the impacts of both the pandemic and systemic racism.

“We know that diverse small businesses have been disproportionately impacted by the pandemic, by broader systemic racism and by barriers that preclude diverse-owned businesses from having the same opportunities as others,” Bill Boltz, executive vice president of merchandising at Lowe’s, said in an email. “Through our grant program, we saw first-hand the overwhelming need from diverse communities. … Success through this program is success for the small business owner and success for our customers.”

Retailers also took up Sharon Chuter’s Pull Up for Change challenge, which called on them to be more transparent about how many Black employees they had at every level of their organization and find ways to improve it. And Aurora James’s 15% Pledge pushed others to take stock of how many Black-owned brands they sell and increase that amount to 15% of their total offering.

The events of the past year pushed racial diversity conversations to the forefront, but some industry efforts were already underway. The Retail Industry Leaders Association launched a diversity and inclusion initiative in 2018, at the urging of Target’s Brian Cornell, which sought to understand what diversity and inclusion programs already existed in retail, and what was working and what wasn’t.

RILA President Brian Dodge said the group is focused on solving the unique diversity challenges of retail and creating goals to help overcome those challenges. The initiative paired diversity and inclusion practitioners with a board of CEOs to “make sure that our goals were tethered to realistic business objectives,” but also to avoid the problems with diversity and inclusion initiatives that were purely CEO-led or purely practitioner-led.

Right now, he said, it’s focused on helping retailers achieve more qualitative measures of diversity, rather than setting any employee diversity metrics, including defining the business case for diversity in every team, engendering business-wide participation, succession planning and weighing in on social issues.

Walgreens, a member of RILA, has benefitted from the work, according to Cubia and just launched its first global report on diversity and inclusion. Cubia said those involved with RILA share information about their programs with each other, including pitfalls and successes, and counterparts involved with the program have already reached out to him on how to best craft their own D&I reports.

“We’re not competing on D&I information,” Cubia said. “What we’re doing is sharing best practices. It benefits all of us to get this right, to create more inclusive cultures, more diverse cultures.”

And indeed: Collaboration is the main goal. Dodge says there’s a lot to do beyond just hard metrics, especially when it comes to creating an inclusive workplace so underrepresented groups will want to stay once hired. Even retailers’ moves this year to give employees time off to vote are a positive step, Dodge said.

“The focus on these issues across the industry is magnified when you start to think about the impact that it can have on communities, consumers and on suppliers,” Dodge said. “Just the number of relationships that retailers have: A deep commitment to diversity and inclusion can have a broad impact.”

Still, it’s hard to address diversity without addressing the metrics. And racial and gender disparities are prevalent in retail’s executive ranks. There were over 25,000 (62%) White, male retail executives in 2018, by the EEOC’s measure, while none of the other male racial groups surpassed 1,500. Black male executives made up only 1% (572) of the whole, while Hispanic and Asian male executives made up 3% (1,299) and 4% (1,452) respectively. Likewise, White women far outnumbered any other racial group, with 9,688 (24%) White, female executives in 2018, compared to 732 (2%) Asian women, which was the next-highest group. Hispanic women comprised 2% (718) of female executives, while Black women made up just 1% (331).

Improving the number of women in leadership globally is a key focus for Walgreens, Cubia said, while in the U.S. the company is also committed to representation for people of color, with an emphasis on African American employees.

White women and men vastly outnumber people of color in executive roles

Number of executive/senior level officials and managers in the retail industry in 2018
Men
Women
Nami Sumida/Retail Dive

While the executive level is not the only important place to track diverse representation, it can be deceiving to look at retail’s overall diversity numbers. Diversity Best Practices, which has an index companies can use to track their year-over-year performance, found large differences between retail’s overall diversity and its diversity at the exec level.

“The numbers really tell a different story when it comes to looking at representation in senior roles,” Dahms said. She noted that while 20% of employees are Latinx at the retail companies on Diversity Best Practices’ index, less than 3% of executives are. Similar issues complicate the view of women in retail.

“If you look at gender diversity in leadership roles, 34% of corporate executives in retail are women,” Dahms said. “That’s pretty high. When you look at the other index companies, that percentage is 23% of women in corporate executive positions. The problem is these are all White women.”

Based on Diversity Best Practices’ index, just 0.5% of corporate executives are Black women and 0% are Latinx women. Compared to last year, Dahms said some areas improved slightly, and others were trending downwards, including the number of employees from underrepresented groups in senior roles and on the board, but she stressed that since those numbers are so low to begin with, even one or two leadership changes can have a serious impact on the percentages.

Increasing diversity at the executive level is also a multifaceted issue. It’s not as simple as retailers recognizing there is a problem and hiring more people from underrepresented groups to fill certain roles. Inclusion plays a large part and there are obstacles throughout the path to the C-suite.

“So many well-intentioned companies may be trying to create a stronger pipeline to move people of color and women up the route to the executive ranks but it is going to take a while,” Arias said, adding that the middle of an organization is a particularly tough spot. “It’s getting people from the mid-management level to survive and to believe that they have a shot at making it to the top of the ranks. That’s where the biggest fallout is. When executives of color or women are at that level, that’s when they will most likely leave and most of the time they’re going to form their own companies.”

The importance of touching the money

The road to the office of the CEO is a long one — and for some, it’s cluttered with roadblocks. Perhaps the most obvious reason why executive ranks aren’t more diverse is that the pipeline for those roles is not as diverse, sources said. It’s hard to promote a diverse candidate to the CEO spot, for example, when the company hasn’t made an effort to cultivate experienced diverse candidates within the workplace.

“That seems to be the main obstacle when you get to those super-elite positions is that the systems companies have, filtered out in a lot of cases, powerful women and people of diverse backgrounds from gaining the experience that allows them to be in contention for those roles,” Challenger said, “and that is a much longer part of the process.”

He noted that there’s been a push to diversify that pipeline but “it’s not there yet,” in part because underrepresented groups tend to get pushed down specific career paths. Notably: ones that don’t touch the money.

“They will take [people] off college campuses and put folks in staff roles and keep them there,” Arias said. “There’s nothing wrong with staff roles. There’s nothing wrong with HR. There’s nothing wrong with community relations. There’s nothing wrong with procurement. However, I think that if you look at the track of executives, it is those that touch the money, that touch the revenue stream, that are on that path.”

Women and people of color over-index in certain retail roles

Breakdown by race and gender of specific job levels in 2018

There are distinct differences between what jobs White employees hold versus those held by employees of color. The percent of employees of color in laborer roles was 6 percentage points higher than White employees in those roles, and those employees are also under-indexed by 4 percentage points in first and mid-level officials and managers roles.

People of color may frequently be tracked into roles like chief diversity officer, community relations and some procurement and supply chain roles. Arias said underrepresented groups should be aiming for, and better represented in, high-level marketing and sales roles in order to have a clearer shot to the CEO role.

Michelle Ngome, marketing strategist at Line 25 Consulting, said the situation is a Catch-22.

“Yes, we get those roles. We don’t have to take those roles,” she said. “At the same time, maybe we are best suited for those roles so that way we can protect those roles.”

Women are overrepresented in clerical and human relations roles. When women do make an appearance in the C-suite, they often fill a role like chief of human resources. In Retail Dive’s analysis of top executives at athletics and beauty retailers, when women make an appearance on leadership teams they often serve in administrative or HR-related roles, including general counsel and communications positions. There are notable exceptions, including Nike’s president of consumer and marketplace, Under Armour’s president of North America, Estée Lauder’s CFO and L’Oréal’s president of Active Cosmetics, among others.

In retail in 2018, the two top roles for women were sales workers, and office and clerical workers. The percent of women in sales worker roles was 16 percentage points higher than the percent of men in those roles, and 3 percentage points higher for office and clerical workers.

Challenger noted that less than 25% of C-suite executives in retail are women and a lot of the role division in gender starts from the very first promotion.

“Those divisions become exponential, and so then there’s only a handful of diverse gender and race candidates in the pipeline for those boards to choose from,” he said.

In addition to HR-related roles, Dahms pointed out that many underrepresented groups in retail are working at the lowest levels of the organization, which means lower wages, less stability and fewer opportunities for promotion. In a report Dahms authored in 2018, she found that 33% of low-wage retail jobs were filled by women of color, and that women as a whole made up two-thirds of low-wage retail jobs.

Both Dahms and Dodge also noted that retail faces unique challenges in having a high turnover rate and an incredibly large workforce.

“Every industry and every business is a pyramid, in terms of the number of positions,” Dodge said. “But the retail industry is a pretty accentuated pyramid, just given the size of the frontline workforce and the fact that tens, if not hundreds, of thousands of employees are spread across hundreds of thousands of locations.”

The apparel sector has the highest percentage of female executives and executives of color

% of women and people of color in each sector in 2018
Women
People of color

In addition to having unique challenges as an industry, retail also has different problems in different sectors. For example, the health and personal care and miscellaneous retail sectors rank in the bottom three of the sectors Retail Dive looked at for the representation of employees of color in both executive roles and manager roles. Both rank higher in terms of the percentage of women in those roles. The apparel sector ranks highest for both the representation of employees of color and women in the two top management groups.

In an effort to help retailers tackle their own unique diversity challenges, RILA provides them with a web-based evaluation tool that can highlight areas for improvement and benchmark them against their peers. At the end of the day, though, a big obstacle to increasing diversity is the measurement of it.

Lauren Bitar, head of insights at RetailNext, said having quantitative goals doesn’t automatically mean a company is successfully tackling diversity.

“I think in many places, they’re trying to meet some sort of quota,” Bitar said. “But I’m not sure how many places are being thoughtful as to why they’re doing it or what the quotas should be and what it should be in different areas of the organization.”

The challenges of measuring diversity

While the EEOC and other government agencies can provide a big picture view of how diverse retail as an industry is, it can be challenging to get a sense of how diverse individual companies are — and whether or not they’ve improved over time. At the heart of the issue is an inconsistency in how retailers measure organizational diversity and what they’re willing to share on the subject.

Put simply: Retailers vary dramatically on how they report diversity statistics, from how detailed they are to what positions they count as leadership. In reporting this story, Retail Dive asked 56 retailers for the same six diversity statistics — and received a wide range of responses.

Retailers vary dramatically on employee diversity statistics

Top retailers’ responses to requests for information about diversity at different levels of the company
Retailer % people of color % women
Nami Sumida/Retail Dive

One trend that emerged: Retailers were more likely to share statistics about the percent of women they had at various levels of their organization than about the percent of people of color.

“People are just more comfortable with it, and part of doing this work authentically is getting uncomfortable,” Washington said of why gender statistics tend to be more available. “I think that’s where organizations miss the mark, by only entering in this conversation in the spaces that they’re comfortable.”

Some countries retailers are headquartered in don’t track racial representation, or at the least don’t have regulations requiring it. Walgreens’ Cubia, however, says this has begun to change, with some companies beginning to track the information themselves even if not required.

For the companies that did share statistics on racial diversity, some gave simply the percent of employees of color in various roles, whereas others provided more granular data on representation.

Still others opted out of commenting entirely or never responded to requests for comment.

“The information is there. It’s just: Are people doing the work to track it?” Ngome said, adding that companies could easily make internal reports monthly or quarterly to track who is getting promoted or receiving pay raises to hold themselves accountable. “That’s the thing: All of this stuff has to be reported, it’s just how granular do these companies want to go?”

Ngome noted too that companies invested in diversity should be able to provide stats on improvement or backsliding from previous years, as well as the full breakdown at their company.

“If you just tell me, ‘Oh, we have 60% White women,’ I’m like, ‘OK. So are the other 40% White men? What’s the break up?’” Ngome said.

Cubia expects the levels of transparency coming from companies to improve over time, and noted that not sharing work on diversity and inclusion is “kind of defeating the purpose.” Sources agreed that much of the inconsistency is likely because companies are not proud of their diversity statistics or not fully committed to diversity. Challenger said the racial makeup of executive teams especially remains “opaque.” Arias noted it’s also easier to identify female executives than it is to identify executives of color.

“What gets measured, gets changed,” Washington said. “If they are not measuring diversity, and they’re not reporting on it, then it’s hard to hold them accountable.”

She noted, too, that companies that truly want to improve need to focus on the entire recruiting and hiring process, rather than just numbers. It shouldn’t be about “diversity goals,” which implies a demographic focus, but also goals surrounding inclusion, Washington said.

The differences in how retailers measure diversity also make it harder to compare between companies, especially when it comes to leadership.

“Their numbers look one way, and they might look very good because they’re including those lower management levels,” Dahms said. “Then you have other organizations that call senior managers the C-suite. Other organizations call senior managers the managers that report to the C-suite. It’s not easy to compare apples to apples.”

Catherine Lepard, managing partner of the global retail practice at Heidrick & Struggles, also noted that dedicated retailers are tracking all levels of leadership, rather than just the C-suite or all managers as a collective.

“Most organizations that are committed to diversity are taking a look at the entire lifecycle and funnel that they have to work with,” Lepard said. “So if you take a retailer, they’re going to be focused on diversity at a store manager level, at a director level, because that’s going to be the future for their VP levels and the VPs are the future for the SVPs and so on. So most organizations are going to track it at all levels and make sure that they’re feeding the funnel at all levels.”

In addition to the internal politics of tracking diversity, a myriad of other factors complicate efforts. For example, ingrained biases about which colleges and universities to pull talent from can make it harder to get applications from diverse candidates, and where a retailer’s stores or headquarters are located can change what talent pools they have access to and how diverse those talent pools are. Lepard noted that the latter challenge might be eased by the shift to remote work that the pandemic has brought on, making it easier for employers to recruit a more diverse set of candidates.

The way jobs are messaged, including required and preferred skills, can also deter some candidates from applying, and even what a company website says about diversity is important in how it comes across to candidates.

Outside of what retailers can do themselves to promote diversity, trying to build a diverse company also relies on employees disclosing personal information that they may not want to reveal.

“We’re still trying to figure out, I think, the best way to measure because we’re talking about gender diversity, but then you’re by accident using a heteronormative term that isn’t necessarily appropriate,” Bitar said.

With how multifaceted diversity is — it goes far beyond just the representation of women and employees of color in the workplace — measuring it can seem an impossible task. At the same time, though, not measuring it means losing the ability to hold oneself accountable for improvement.

For the moment, at least, the events of 2020 have pushed more retailers to embrace that difficulty, and commit to the task of not only tracking diversity, but achieving diversity-based goals. Now, the question becomes how long that commitment will last. Washington said she has seen some companies “back away” from the emphasis they placed on diversity in June, but others have stayed committed.

“It’s hard to tell. It’s reactive clearly,” Arias said of retailer responses to the protests. “Which is OK. But how sustainable is this? In my mind, the immediate reaction is to go out and find people. The real catch will be in three years, are those people still there?”

Methodology

Retail Dive’s analysis in this series focuses on representation gaps for people of color and women, and is rooted in available data.

Much of the data in this piece comes from the Equal Employment Opportunity Commission, and as such, we use the same definitions and terminology in our analysis. EEOC data includes the following groups and identifiers: White, Black or African American, Hispanic or Latino, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, and two or more races. These titles are shortened by the EEOC in summary tables, and we shorten them accordingly as well. We use the most recent data available from the EEOC in October 2020.

When discussing Black, Hispanic, Asian, American Indian and Hawaiian employees, as well as employees of two or more races, as one group, we use the terms people or employees of color. The piece also uses the term underrepresented groups to refer to people of color and other minority groups in the workplace, including women. However, not all organizations and sources use the above terms. As a result, some quotes and information provided by sources or companies may use different terms in this piece.

In discussing race and gender by job level, we use the EEOC’s 10 categories throughout, which are: Executive/Senior Level Officials & Managers, First/Mid Level Officials & Managers, Professionals, Technicians, Sales Workers, Office & Clerical Workers, Craft Workers, Operatives, Laborers and Service Workers. The EEOC employs these definitions for the job levels it uses and these for the industries it tracks. For the retail space, we use the EEOC’s Retail Trade (44-45) category in its entirety.

To give a less fragmented picture, in many visualizations we combine some of the EEOC’s job levels in our analysis to give just six categories: Executive/Senior Level Officials & Managers, First/Mid Level Officials & Managers, Professionals and Office & Clerical Workers, Sales Workers, Laborers and Service Workers, and Other (Operatives, Technicians and Craft Workers).

The EEOC’s summary tables, which our analysis is based on, require a minimum threshold of 50,000 total employees and the organization suppresses some values. The data collected by the EEOC comes from the EEO-1 Survey in which information is collected annually from employers who meet certain requirements. The EEOC requires employers give their employees an opportunity to self-identify, but also allows for companies to record race without an employee self-identifying by using employment records or “observer identification.”

In our analysis of individual companies’ employee diversity statistics, we asked 56 retailers for the same six statistics: the percent of people of color and the percent of women at the leadership, board and employee levels respectively. Terminology and level of detail vary depending on the retailer’s response, and occasionally based on what country the retailer is headquartered in and local laws governing data collection.