How Diverse Boards Can Help Close the Wealth Gap
February 1, 2021441 views0 comments
As the founder of one of the country’s oldest minority-led investment firms, John W. Rogers Jr. has spent his career pushing for greater diversity across different industries that historically have been impenetrable for people of color.
That’s why he’s concerned about the wealth gap between whites and Blacks in America, which is widening despite decades of progress. In 2016, white families had about 10 times the wealth of Black families, according to research from the Federal Reserve Bank of St. Louis. Alarmingly, the chasm between white and Black college graduates has become more profound over time. From 1989 to 1998, the median educated Black family had 31 cents for every $1 a white educated family had. From 2010 to 2016, that amount fell to 17 cents for every $1.
“People have just no idea how much worse off we are. We’re losing out on the key economic opportunities and the parts of the economy where the wealth is being created today, primarily Wall Street and Silicon Valley,” Rogers said. “We are still continuing to try to work in yesterday’s industries. And in tomorrow’s industries, where the real opportunity is, we continue to be locked out. It almost reminds me of baseball in 1940.”
Rogers, who is founder, chairman and co-CEO of Chicago-based Ariel Investments, joined Wharton management professor Stephanie Creary for her Leading Diversity at Work podcast series. (Listen to the podcast at the top of this page. You can find more episodes here.) Creary, and identity and diversity scholar, met Rogers while conducting research on the diversity of boards of directors. The two recently collaborated on an article that offers a framework for boards to advance racial justice.
The framework builds off Rogers’ own corporate call to action — the 3 P’s — that he shares at the yearly Black Corporate Directors Conference. The letters stand for philanthropy — corporate giving to causes that advance civil rights and economic justice; people — structuring executives’ compensation to ensure they are recruiting, training and promoting people of color into top leadership roles; and purchasing – contracting with minority-led firms on everything from janitorial services to accounting to legal representation to technology.
Creary and Rogers fold these principles into several broader recommendations, including getting more African Americans on boards of directors. To avoid tokenism, they said, make sure that person understands structural racism and is committed to diversity, equity and inclusion.
“There’s an underlying assumption that every Black person is going to be a proponent for ending systemic racism. What we’re saying is, that’s not necessarily the case,” Creary said. “If you’re looking for somebody who is going to help you support your commitments that you’ve made around ending systemic racism or promoting racial justice, then you’re really looking for someone who has a track record for doing this work.”
Rogers, who has served on numerous corporate boards including McDonald’s, Nike and The New York Times Company, agreed. He advocates for an inclusive board culture where minority members are seen, heard and valued for their unique perspectives, and he exhorted Black business leaders to speak up without fear.
“There are still a lot of people, especially in our community, because of the way that we came to this country, who are uncomfortable making white people uncomfortable. And they’ve gotten ahead by making white people comfortable,” he said. “I think that we have to celebrate those that are willing to speak out and speak up, and we have to be able to challenge those that don’t.”
Drawing Inspiration from Others
While Rogers has certainly been outspoken throughout his own career, he pointed to Mellody Hobson, co-CEO at Ariel, as a source of inspiration. She’s never shied away from using her voice, and that has served her well, he said. Hobson is highly visible in the press, lends her expertise to numerous boards and causes, and in 2015 was named among the “100 Most Influential People” by Time magazine.
Rogers’ noted that his sense of purpose and commitment come from his mother, Jewel Lafontant, who was the first Black woman to graduate from the University of Chicago’s law school in 1946 and to become deputy solicitor general of the United States and to argue a case in the Supreme Court. (His father, John W. Rogers Sr., was a member of the Tuskegee Airmen during World War II). She was a pioneer who had to fight against discrimination, sexism and marginalization for the duration of career. Despite her accomplishments, Lafontant couldn’t get access to the more lucrative opportunities controlled by her white, male counterparts, Rogers said.
“If my Mom had gone into catering, she would have had 90% market share from all these white guys. But because she wanted to be their lawyer, they couldn’t conceive of her being smart enough and thoughtful enough to do that,” he said. “That was morally wrong and economically unfair.”
Rogers said there’s a “modern Jim Crow” in America, where well-educated, successful Black people are still kept out of the C-suite because of entrenched biases. Among the CEOs of Fortune 500 companies, less than 1% are Black, and Black people hold just 3% of senior or executive positions in companies with more than 100 employees. Rogers said he’d like to see more research conducted on why.
“We somehow get weeded out fairly quickly in the pecking order, and it’s because these major white institutions are not treating us fairly. They don’t respect our intellect, our work habits, our imagination, our thoughtfulness,” said Rogers, who served as co-chair of President Barack Obama’s Inaugural Committee and is a current board member on the Barack Obama Foundation.
Rogers said he will continue to push for greater diversity on boards, a subject that he and Hobson always advocate for in their conversations with corporate managers. And he will continue to call on Black leaders to pay it forward.
“We have to fight for each other once we get into these leadership roles and get into the board roles. If we don’t, the economic divide will just get larger and larger,” he said. “You can be doing all the right things with your charitable work. But if all the economic opportunities are going to white men, the wealth gap is going to grow larger and larger.”