Corporate Leadership by Race

Companies are becoming more diverse, slowly

Reviewed by Samantha Silberstein

Many of America’s leading companies are increasingly focusing on racial equity. However, there’s a noticeable scarcity of executives from underrepresented groups at the helm of these prominent organizations. Experts frequently point out that these companies struggle to identify and nurture young talent, or to effectively assist their team members in progressing through the ranks of management.

Key Takeaways

• Eight Black chief executive officers (CEOs) led companies on Fortune 500 ranking, only accounting for less than 2% of companies in the S&P 500.
• While boardrooms are only slightly more diverse than top management, the number of Black directors increased after the death of George Floyd.
• Research indicates that diversity in the workplace offers numerous benefits to organizations, including increased profitability, enhanced creativity, stronger governance, and improved problem-solving abilities.

Diversity Efforts

Consumer brands are often accused of sidestepping controversy. But several assumed an advocacy role in the wake of George Floyd’s killing in 2020. Nike ran a video on social media in which the apparel giant asked the audience not to “pretend there’s not a problem in America.”

Meanwhile, Amazon pledged $10 million to nonprofits focusing on “justice and equity.” Employee donations—and the company’s 100% match—raised an additional $17 million. In total, the Amazon community gave $27 million to 12 organizations that the Black Employee Network (BEN) helped choose.

Internally, many organizations are making a concerted effort to diversify their ranks. For example, a 2024 report from executive recruiting firm Crist|Kolder Associates, which examined 671 S&P 500 and Fortune 500 companies, found that:

• In the past decade, the representation of women and racially or ethnically diverse individuals in CEO and CFO positions at large companies has seen significant growth. The number of women and racially or ethnically diverse CEOs has more than doubled, and the number of racially or ethnically diverse CFOs has more than tripled.
• In 2023, women represented 9.7% of sitting CEOs and 17.6% of CFOs, while 13.5% of CEOs and 14.9% of CFOs are racially or ethnically diverse.
• As of 2024, there are 66 female CEOs in all Fortune 500 and S&P 500 companies, up from 32 in 2014; there are 92 ethnically diverse CEOs, a significant increase from 41 in 2014.
• In the study of 674 companies, an all-time high of 99 CFO positions, or 15% of the total, are held by people of color. This includes 9.9% by Asian-Americans, 2.4% by Hispanic individuals, and 2.6% by African Americans.

Race and Power in the Fortune 500

CEOs

Despite Latinx and Hispanic individuals being the largest racial or ethnic minority group in the United States, making up 19.1% of the population according to the latest U.S. Census Bureau data, the Crist|Kolder Associates report shows 26 Latinx/Hispanic CEOs in 2024, down one from 27 in 2023, but up four from 22 in 2022.

And while Black people make up about 13.6% of the country, only 11 were CEOs in 2024, down from 12 in 2023 but up from 8 in 2022. Of the racial and ethnic minority groups, Asian Americans, who comprise 6.3% of the U.S. population, had the most representation at the CEO level: 55 during 2024, up from 50 in 2023, and 42 in 2022.

While the latest report highlights ongoing underrepresentation, it also underscores a positive trend in diversity among corporate leadership. From 2014 to 2024, the representation of Latinx/Hispanic CEOs in the studied companies has significantly increased, doubling from 12 to 26. Similarly, the number of Asian American CEOs has risen from 23 to 55 in that timeframe. The number of Black CEOs has also almost doubled from 6 in 2014 to 11 in 2024, albeit at much smaller numbers.

This chart shows the number of companies with ethnically and racially diverse CEOs from 2014 to 2024:

Boardrooms

And what about the boardrooms that help steer these enormously influential companies? Racial and ethnic minority populations are somewhat better represented, although in most cases, they still bear little resemblance to the customers served by these companies. Of course, the addition of new directors from underrepresented groups is hampered by persistently low boardroom turnover.

The 2024 S&P 500 New Director and Diversity Snapshot from Spencer Stuart, a leadership consulting firm based in Chicago, looked at the latest proxy statements from 489 companies filed between May 1, 2023, and April 30, 2024. According to the report:

• 58% of the new directors appointed are diverse, defined as individuals who self-identify as female and/or underrepresented minorities (including Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, or two or more races or ethnicities), and/or LGBTQ+. This decreased from 67% in 2023 to 72% in 2022.
• 42% of new directors were women, a slight decrease from 46% in 2023 but a 40% increase over the past decade.
• While diversity overall has increased, the number of new directors who self-identify as underrepresented minorities has dropped to 26% in 2024 from 36% in 2023.

Also note that there has been an increase in the transparency of diversity reporting. Nearly all S&P 500 boards (99%) disclose their gender balance, and 99% disclose their composition relating to underrepresented minorities. And 58% of boards disclosed a Rooney Rule-type commitment to include diverse candidates in their searches, indicating a strong focus on enhancing diversity in board recruitment processes.

Smaller Companies

At smaller companies, members of racial and ethnic minority groups are more likely to be in key leadership positions. Still, the data here again suggests a long way to go before America reaches something resembling racial equity.

In 2024, the U.S. Bureau of Labor Statistics reported that Latinx/Hispanic individuals held 6.1% of chief executive positions across the economy. Black executives also accounted for 6.1% of these roles. Asian American executives, representing 6.4% of top leadership positions, now slightly exceed their proportion of the U.S. population, marking a shift from previous years where their representation was closer to their demographic share.

The Elusive Quest for Diversity

For diversity advocates, there are some recent signs of progress at the boardroom level, in no small part due to the national discussion of racial disparities in the wake of Floyd’s murder in 2020 and the rise of the Black Lives Matter movement. 

For example, a group of Silicon Valley leaders launched The Board Challenge, which calls for companies to appoint a Black director within the next year. And Institutional Shareholder Services, an influential advisory firm, announced that its research reports would start calling out large companies “that lack racial and ethnic diversity.”

Efforts like these seem to be bearing fruit. The recruiting platform BoardProspects reported that companies in the Russell 3000 index named 130 Black directors in the five months following Floyd’s death. In the five months prior, they only hired 38.

The question is whether such progress will be sustained over time. While changing the look of boardrooms is important and challenging, tackling the lack of minority leadership in the C-suite is an even bigger hurdle. Experts say most companies simply lack a strong pipeline that delivers Black, Latinx/Hispanic, and Asian American executives to top leadership positions.

Or perhaps companies just don’t look hard enough. “There is no shortage of minority candidates who can compete for these jobs,” Dick Parsons, former CEO of Time Warner and chairman of Citigroup, told USA Today. “It’s not that they get overlooked. They don’t get looked period.”

Minority group members who find employment at top firms report pervasive biases hindering their advancement. For example, a recent survey by McKinsey & Co. found that minority employees were more likely to report being excluded from social activities with co-workers or having to correct false assumptions that colleagues made about their personal lives.

Business Benefits of Diverse Leadership

Greater equity does more than keep stakeholders happy—it can also improve the bottom line, according to a body of research on the subject. For example, a separate analysis by McKinsey found that companies in the top quartile for gender diversity on executive teams were 25% more likely to achieve above-average profitability, and those in the top quartile for ethnic and cultural diversity outperformed their peers by 36% in profitability.

Additionally, a study by Boston Consulting Group concluded that greater minority representation at the top also leads to more innovation. Companies with above-average diversity in their management teams generated significantly more income from products launched within the past three years than less diversified companies. “People with different backgrounds and experiences often see the same problem in different ways and come up with different solutions, increasing the odds that one of those solutions will be a hit,” the authors noted.

How Many Women Are Fortune 500 CEOs?

The number of women running businesses on the Fortune 500 list hit 52 in 2024. Some view the 69-year-old Fortune 500 list as a barometer for leadership diversity in the country’s largest companies. While 52 is a record, it still means that just over 10% of Fortune 500 companies have women at the helm.

Does Diversity Help Companies?

Yes, the benefits of a diverse workforce are increasingly recognized and supported by recent findings. Companies with diverse executive teams are more likely to outperform their less diverse peers in terms of profitability and demonstrate higher levels of innovation and employee satisfaction. Workplaces that are committed to diversity and inclusion also experience lower turnover rates and are better positioned to attract top talent.

What Is Diversity, Equity, and Inclusion?

Diversity, equity, and inclusion (abbreviated as DE&I or DEI) refers to programs and policies that encourage participation and representation from diverse groups. DEI aims to hire a diverse workforce, give workers a voice, and include workers in business happenings.

Specifically, diversity refers to the numerous ways that people differ, such as race, ethnicity, nationality, age, gender identity, physical ability, mental ability, socioeconomic status, experience, and education (among others). Equity means creating a level playing field through fair access and opportunities. Inclusion is the extent to which team members feel a sense of belonging and value within an organization.

The Bottom Line

Corporate leadership in America is gradually evolving towards greater diversity and inclusion, though challenges remain. In recent years, there has been a notable increase in the representation of women and racially or ethnically diverse individuals in top executive positions. This shift is seen in the growing number of women CEOs leading Fortune 500 companies, tying an all-time high of 52 in 2024 (reached in 2023), or just over 10% of all companies.

The representation of underrepresented minorities in boardrooms has seen some progress, albeit at a slower pace. The 2024 S&P 500 New Director and Diversity Snapshot from Spencer Stuart highlights that 56% of new directors appointed are diverse, a decrease from previous years but still indicative of a broader trend towards inclusivity.

Companies have become increasingly aware of the business benefits of diversity, as it has been shown to improve retention and reduce the costs associated with employee turnover. Businesses are focused not just on hiring but also on creating inclusive environments where all employees feel valued.