Sarah Fortt, Counsel at Vinson & Elkins LLP

By Sarah Fortt

Demand for Chief Diversity Officers Is High. So Is Turnover.[1] Do You Know Why Your Company Needs a Chief Diversity Officer?[2] The “Team-Playing” Chief Diversity Officer.[3] These are just a few of the nearly limitless Google search results for “chief diversity officer” published over the past few months. Chief Diversity Officers are as trendy in the corporate world right now as elevated athleisure is in the fashion world. So don your fitted crop top and get woke — corporate edition.

In my article This You? Five Practical Steps for Matching Your Diversity Walk to Your Diversity Talk, I briefly outlined five ways companies could make concrete, long-term changes to reflect a shift in their corporate culture that would align with the public statements they made following the murder of George Floyd and other Black Americans. Appointing a chief diversity officer was not one of the steps I recommended, and for good reason. The truth is that while companies often create these roles with good intentions, many companies fail to do the groundwork necessary to position these roles for long-term success. As a result both the company and the CDO it appoints end up disappointed and disillusioned, to say nothing of the stakeholders who hoped the change in leadership would mean, well, change. I still firmly believe that a meaningful long-term commitment to diversity requires a slow, sometimes boring, and probably decidedly less public slog through cautious and uncomfortable but crucial conversations. However, for both the companies that have carefully considered and crafted their chief diversity officer roles and the companies that have hastily drawn straws and hoped that the individual drawing the short straw would figure out the role and report back, I have outlined below my top five considerations for maximizing the effectiveness of the CDO role.

1. What is your chief diversity officer’s job? The chief diversity officer role is often a poorly defined collection of hopes and dreams. It also is not unusual for companies to struggle to find the right corporate “home” for the role — should it be in PR, IR, HR, operations, risk management, legal? The truth is that the senior leaders who feel the impetus to create the role often have a vision for it, even if it goes unvoiced. Is the role about marketing/corporate branding? Is it about managing existing legal and/or reputational risk? Is it about managing internal human capital management risks? Is it about creating a strategy for talent management going forward? Is it a mix of two or more of these tasks? At a minimum, companies need to define whether the role is outward facing, inward facing, or a split of the two, and provide the individual with a clear articulation of what their role entails, including the identification of concrete tasks and goals. Companies also need to be realistic about what a CDO can actually achieve — it is not fair to expect the CDO to single-handedly tackle deep-seated corporate cultural issues, particularly if those issues rise to the level of “sacred cows.”[4]

2. Is your chief diversity officer qualified for the job? Understanding how to promote diversity, equity, and inclusion (DEI) within an organization requires expertise and experience; however, unfortunately, it is not unusual for companies to treat this complex topic as if anyone can address it in their spare time. While there may be good reasons for a company to appoint an insider who does not have prior DEI experience, if a company takes this approach it should also provide the individual with appropriate training opportunities and should always provide the chief diversity officer with the resources necessary to support the efforts they are assigned to oversee. This includes the hiring of outside experts and the creation of an internal team devoted to the DEI efforts — a chief diversity officer should never function in isolation without any support or resources.

3. How will your chief diversity officer be evaluated and compensated? Related to the prior two points, it also is not unusual for leaders to draw a blank when asked how the chief diversity officer’s performance will be evaluated. It is often the case that companies have not considered how to include DEI-related metrics in compensation prior to the appointment of a CDO. Without doubt, the inclusion of DEI-related metrics, or other ESG metrics, in executive compensation can be a complex undertaking. However, it is an important exercise if CDOs are to be compensated in a manner that aligns to their mission. Of equal importance and no less complexity is the concept of rewarding an individual for creating healthy disruption. When I discuss corporate cultural wellness with clients, I frequently address the topic of healthy disruption — healthy disruption is the cultural moment introduced by an individual or idea that challenges the status quo in a manner that provides an opportunity for growth and creation. Ideally, CDOs will be sources of healthy disruption, meaning that at the outset, they may instigate uncomfortable but crucial conversations. Rewarding people when they confront leadership in a way that may make leaders uncomfortable is challenging, but important if chief diversity officers are going to achieve their assigned tasks.

4. How does your chief diversity officer report up? Managing up. Many of us have been in the position of having to convince our boss of the value proposition of a particular area of expertise, experience or assigned task. Chief diversity officers, perhaps more than any other corporate role, are often in this position. I call this misalignment — when an individual is tasked with a mandate that is not only omitted from their boss’s mandate, but that represents an aspect of the corporation that others may actively seek to avoid — the “sin-eater” issue. And while it may not be all that rare, it is unfair to require the CDO to convince the c-suite and board of the importance of their mandate, and doing so almost certainly sets the CDO up for failure. To circumvent this misalignment, ideally, the chief diversity officer’s boss, and their bosses all the way up to the CEO, should have DEI as a part of their mandate and, ideally, their compensation. Members of the CDO’s reporting line should also have required ally training. I discussed the importance of ally training in my prior article, but in summary, it is often the case that while nondiverse leaders can provide diversity efforts with powerful internal support, the good intentions of such individuals may not make up for a lack of education regarding and exposure to the stories and experiences of those they hope to support. I also recommend that CDOs have the opportunity to report directly to their boards of directors at least once each year.

5. How does the organization support the chief diversity officer? The chief diversity officer role can be a lonely one. Frequently charged with functioning outside of the company’s core strategic initiatives and functions, the CDO role may lack the internal support for it to be viewed as vital. This is particularly the case at organizations where the chief diversity officer is a chief in name only, and actually sits many levels below the c-suite. As a result, internal stakeholders may see the CDO role as ancillary, or worse, as a corporate talisman used to ward off arguments that the company is falling short with respect to DEI matters, and the role may fail to have the internal impact that leaders originally hoped for. To avoid that outcome, it is important for the CDO to be publicly supported by the CEO and board, beyond the provision of training and resources, and for senior members of management and the board to make clear and unequivocal statements and take actions of support for the company’s DEI efforts. Ultimately, a company’s approach to DEI matters should be left to the discretion of its senior management and board, but an effective approach will always require that leaders be consistent and thoughtful in their efforts.

[1] Chip Cutter and Lauren Weber, Demand for Chief Diversity Officers Is High. So Is Turnover, Wall Street Journal, Jun. 13, 2020, https://www.wsj.com/articles/demand-for-chief-diversity-officers-is-high-so-is-turnover-11594638000.

[2] Mita Mallick, Do You Know Why Your Company Needs a Chief Diversity Officer?, Harvard Business Review, Sept. 11, 2020, https://hbr.org/2020/09/do-you-know-why-your-company-needs-a-chief-diversity-officer.

[3] Karen H.C. Huang, Ph.D., Andrés Tapia and Louis Montgomery Jr., The “Team-Playing” Chief Diversity Officer, https://www.kornferry.com/insights/articles/best-chief-diversity-officer.

[4] I discussed sacred cows, which are the people, products, practices or principles that an organization will go to any lengths to protect, in my prior article.