Good morning!
If your company is one of the many that hired a chief diversity officer in recent years, I have some unfortunate news for you: your CDO is likely already eyeing an exit.
The average tenure for a CDO is 3.4 years, according to research from management consulting firm Russell Reynolds Associates. CDOs are known to have some of the shortest incumbencies among their C-suite peers, and experts say the costs associated with their high turnover extend far beyond finances.
“The cost of turnover for these individuals is exponential,” says Tina Shah Paikeday, global head of the diversity, equity and inclusion practice at Russell Reynolds. She’s a firm believer that the type of change needed to make progress in DEI requires a multi-year journey—a prolonged period of time that many diversity heads aren’t afforded.
Nearly 60% of CDOs who held their roles in 2018 have since vacated their positions, her company’s research shows. And the majority of them have left the CDO track altogether. Their departure from the field has created a knowledge gap of sorts. Just 18% of CDOs in 2021 said they had previous diversity experience, down from 26% in 2018.
Despite the turnover, companies are still investing in the role and building out diversity teams at a rapid clip, compared to pre-pandemic. Seventy-one percent of S&P 500 companies have a DEI officer, and 91 new DEI officers have been appointed since February 2021, according to Paikeday’s most recent analysis.
Aarti Shyamsunder, global head of diversity, equity and inclusion at Accenture’s YSC Consulting, says she wouldn’t know where to begin calculating the financial loss of a CDO, but the repercussions transcend the direct bottom-line impact.
“It’s not just the cost of replacing a hire,” she says. “It’s about the message that it sends out, the loss of reputation, the suspicion or fear that it might cause, especially in minority group members’ minds. With all these sorts of intangible costs, it’s impossible to put an amount on it.”
What’s more, high CDO turnover could understandably make employees question whether the company truly values DEI as a core business strategy. Shyamsunder says employees are fast to pick up on leadership signals, which she defines as “daily ways of signaling your commitment to change and the culture that you want to bring about.” Any incongruence between leadership’s stated values and actions can erode trust.
To retain DEI heads, companies will need to provide the space, resources, and support they need to succeed. That includes setting realistic expectations for change and the time it takes to hit certain goals. New DEI leaders often spend the first six months embarking on listening tours, collecting workforce data, and laying the groundwork, so they can better understand the organizational landscape and build key relationships for transformation work, says Paikeday.
“The level of trust that is required to affect change on topics that often trigger heightened emotions takes time to build, especially when individual behavior change will be required,” she says. “Some chief diversity officers are builders and will naturally move on to the next role after a couple of years formulating and rolling out strategy, while others are the change-makers for the long haul.”
It’s the latter profile that’s critical to affecting long-term and sustainable change.
Amber Burton
amber.burton@fortune.com
@amberbburton
Reporter's Notebook
The most compelling data, quotes, and insights from the field.
ICYMI. The U.S. Bureau of Labor Statistics’ latest jobs report released Friday revealed strong job growth for the month of August, though down from the month prior. Employers added 315,000 jobs in August. At the same time, the jobless rate rose to 3.7%, up from 3.5% in July, while labor participation ticked slightly higher to 62.4%. Here's what else you need to know:
- How the markets reacted. Though job growth was strong and in line with economists’ expectations, optimism was fleeting in the markets. Stocks closed lower after an initial rise following the report. Wall Street Journal
- How the Fed reacted. There are still far more jobs than there are people to fill them, meaning employers will likely have to continue bumping up wages to attract talent. Translation: higher prices. The Fed will want to cool down the inflationary cycle if wage growth doesn’t decelerate. CNN
- Where the jobs are. Though most sectors observed job growth, professional and business services saw the greatest gains. The strongest areas of growth within the sector were computer systems design, management and technical consulting, and architecture and engineering. CNBC
- A new milestone for women. The proportion of women in the workforce between the ages of 25 and 54 finally rose to a pre-pandemic level. Labor force participation among this group increased 0.8 percentage points. Axios
Around the Table
- “We’re going to view our office as a hotel.” As banks push to get employees back into the office, they’re offering more perks than ever, including laundry services, showers, and, of course, snacks. Reuters
- New York City is suing Starbucks for unlawfully terminating a barista for his union organizing efforts. The lawsuit is the first instance of New York’s new “just cause” protections for fast-food workers, which limit the conditions under which they can be fired. CNBC
- Conan O’Brien’s assistant has been “quiet quitting” her job for years. She even wrote a book about it before the phrase became popularized. Business Insider
- Sexual harassment is so common in the service industry that workers sometimes can’t recognize it, according to a survey from the Cornell University School of Industrial Relations. Quartz
- A U.K. headhunter has a unique theory about why companies want their employees back in the office: “do-gooder fatigue.” Companies are getting tired of focusing on employee well-being and just want to get back to business, he says. Financial Times
Watercooler
Everything you need to know from Fortune.
“Oversensitive.” A judge threw out the workplace discrimination lawsuit of a banker at the Canadian Imperial Bank of Commerce’s U.K. office after she was deemed “oversensitive.” Zhuofang Wei alleged her boss repeatedly asked her to babysit his kids and that another superior commented on her “figure-hugging dress.” The judge in the case said Wei was an “unreliable witness.” —Chloe Taylor
The Great Misunderstanding. The debate over returning to the office is really just a big misunderstanding, writes Fortune’s Jane Thier. It’s not so much a power struggle between employees and bosses, as it is a discussion about the best way to work. One thing to avoid, though? The consensus trap, in which two parties meet in the middle only to end up satisfying no one. —Jane Thier
Unemployment thrills. The latest jobs report revealed unemployment jumped to 3.7% in August, its highest in six months. Economists rejoiced as the rise could help mitigate rising inflation. —Colin Lodewick and Will Daniel
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