Corporate America has been put on notice about its lack of diversity by California’s Democratic Rep. Maxine Waters, who is poised to chair a key congressional committee.
Waters intends to use her new authority to pressure companies to hire more people of color and women to serve in top positions, Politico reported on Wednesday.
After sweeping House Republicans out of power in the midterm elections, Waters is expected to make history on Jan. 3 as the first woman and first African-American chair of the House Financial Services Committee. That enables her to turn up the heat on American’s wealthiest corporations.
The lack of diversity at Fortune 500 companies is shameful. About 73 percent of whites hold senior executive positions, according to Fortune. Asians represent 21 percent of business leaders, while Latinx and Blacks hold just 3 percent and 2 percent of those positions respectively.
Behind the scenes, some firms are reportedly panicking at the thought of Congress putting them under a public microscope over their hiring practices.
“They have a right to be nervous. They should feel the fire is getting started and will burn, at least for two years, and hopefully beyond,” said Missouri’s Democratic Rep. Emanuel Cleaver who is a member of the financial services committee and the Congressional Black Caucus.
Waters wants to create a subcommittee that will focus on corporate diversity. As a first step, legislation is already prepared that’s aimed at compelling corporations to reveal how many minorities and woman are on their boards.
White male dominance on corporate boards drew national attention in June when Mellody Hobson moved up into the role of Starbucks’ vice chair after the departure of Executive Chairman Howard Schultz.
She is one of the few African Americans who holds multiple board memberships on the nation’s wealthiest companies. Hobson, who has served on Starbucks’ board since 2005, has defied the odds. JP Morgan Chase & Co. also appointed her to its board, and she has been on Estee Lauder‘s board since 2004.
African Americans have made small gains in diversifying corporate boards. Black men increased their boardroom presence by 2 percent and Black women by 18.4 from 2012 to 2016, according to a multi-year study by the Alliance for Board Diversity (ABD).
The ABD report found that Blacks had the highest rate among all demographics of serving on multiple boards, which falls right in step with Hobson’s professional achievements, according to Ronald C. Parker, ABD’s chairman.
It’s an indication “that companies are going to the same individuals rather than expanding the pool of African-American candidates for board membership,” Parker told the New York Times in 2017.
Few companies have taken steps over the years to diversify, a financial industry insider told Politico.
“Now companies are focused like a laser on identifying top African-American talent with Congressional Black Caucus relationships to help them understand and mitigate the striking lack of diversity within their corporations,” the person added.