2019 CalPERS CalSTRS Diversity Forum lived up to its billing as a unique opportunity to engage with industry leaders and experts on diversity and inclusion topics such as:
- The “Why” and “How” of driving diversity and inclusion
- Building and sustaining a positive corporate culture
- Human Capital Management metrics and their value to investors
In the following post, I reflect on the day, highlight findings from a recent Conference Board Report, and suggest possible improvement by incorporating a proxy roundup day. Looking for a recap? Go to the CalPERS YouTube Channel and/or CalSTRS YouTube Channel in about a week to watch posted videos. In the meantime, check out the posts to Twitter at #CADiversityForum.
If you attended the Forum, please post your impressions and recommendations in the comment field below. What were your takeaways? How can the Forum be improved?
2019 CalPERS CalSTRS Diversity Forum: Reflections
In their welcoming remarks, Henry Jones of CalPERS and Sharon Hendricks of CalSTRS, emphasized that financial returns increase with diversity. They gave examples of engagement and increased willingness to go after Nominating and Governance Committees when progress is slow.
Sallie Krawcheck, of Ellevest, provided insight into the leverage, greed and group think of the financial crisis. Those at trading desks were like clones. The antidote is cognitive diversity, originating in background, education, skin color, gender, perspective, etc. Research has shown that diversity brings higher returns, lower risk, greater innovation, more client and staff interaction. Diverse teams outperform smarter teams.
A basketball team with all point guards is unlikely to beat a team with a wider range of skills. Having a diverse workplace means getting the best person to round out the team. 86% of financial advisors are white males. Women leave for more money and for promotions. Progress in diversity is primarily down to a CEO deciding to make it a priority, not because of all the programs (although they can be helpful). To me, that’s evidence that CEOs have too much power. Shareholders, directors, and other stakeholders should have enough power to force change when CEOs resist.
The discussion between Celia Huber and Lori Nishiura Mackenzie provided the most detail on stalled progress. See Women in the Workplace 2018 from Leanin.org and McKinsey & Company. The study includes plenty of graphs, such as the famliar gender/race pipeline (little improved); “Women onlys” experience more micro-aggession; and basic practices for improving (notice how few hold managers accountable for progress).
Large companies are changing. Progress at small companies is slower. Use a rubric or scorecard to let people know how they are reviewed and AI to screen applications. Tips.
Cambria Allen-Ratzlaff discussed the Human Capital Management Coalition’s petition to the SEC for rulemaking to require issuers to disclose information about their HCM policies, practices and performance. The petition is full of materiality citations and rationale for data needs, as well as data use. Eric Bradbury described his conversion as a result of working on the Embankment Project for Inclusive Capital (EPIC), which is changing value measurement. Video. Dr. Anthony Hesketh emphasized HR needs to talk in Excel, not PowerPoint. EPIC found the return on investment in talent was 300%. Read his letter to the SEC-IAC in support of a rulemaking to specify needed human capital disclosures.
Leaders in the investment community (Kara Helander, Erika Irish Brown, Sekou Kaalund, and Rakhi Kumar discusses successful engagements. Use Rooney Rule mechanisms to insure candidate pools are inclusive. Set measurable goals around hiring and supplier diversity, with an emphasis on feedback loops. Small actions can have a big impact. State Street asked for one woman on boards without them and often got two. Companies need to disclose goals and strategies for every pay level. That creates value. There were many other fascinating speakers, but the above should give you a taste of the day.
2019 CalPERS CalSTRS Diversity Forum: Conference Board Report
Corporate Board Practices in the Russell 3000 and S&P 500: 2019 Edition. According to a comprehensive review of SEC filings made in 2018, 50.4 percent of Russell 3000 companies and 42.5 percent of S&P 500 companies disclosed no change whatsoever in the composition of their board of directors. Only one-quarter of boards elected a first-time director.
- SEC: Rulemaking and how to provide comments; new interpretive bulletins and their impact; trending no-action letters; how the SEC-IAC can facilitate change: new Commissioners and what to expect.
- Proxy proposals: What is each organization working on and are there opportunities to support each other?
- Legal developments: Evolving rules, laws, and court cases.
- Technological developments: Use of tools from PX14A6G forms to the Gender Diversity Exchange to Change.org, Stake and others.
- Diversity empowerment: Empower diversity through broad-based shareholding and wide adoption of employee stock ownership plans. See Real Main Street Investors Endangered, The Beyster Symposium, NCEO, and Coworker.org.