PhillyInc: Area CEOs discuss need for diversity

Posted: June 06, 2011

The Urban League of Philadelphia has been shining the light on the economic inequalities facing African Americans in the city for several years now.

Most recently, it has zeroed in on the lack of diversity in the boardrooms of many of the region's biggest companies.

The impetus for the push, Urban League president and chief executive officer Patricia A. Coulter told me, was a panel discussion about leadership on civic issues she had read about in The Inquirer in 2003.

What struck Coulter was when the six-member panel turned to the topic of race and seemed to agree that you can't have a discussion about it in Philadelphia. "It's generally going to be pretty short, it's going to be very delicate, and you're just going to move on to something else quickly," said then-City Councilman Michael Nutter, according to an edited transcript that ran Sept. 14, 2003.

That was a big problem, Coulter said, and she was determined the nonprofit Urban League would change things by collecting and publishing data and by bringing CEOs together to talk about diversity.

Judging by the discussion at its third CEO Symposium, which I attended in the Center City offices of KPMG L.L.P. Friday morning, the Urban League has lengthened the conversation considerably and attracted the attention of some of Philadelphia's biggest and best-known companies.

The panel was an A-list of corporate leaders:

Kenneth C. Frazier, president and CEO of Merck & Co. Inc., who grew up in North Philadelphia and became the first African American to lead a major pharmaceutical company.

Lynn L. Elsenhans, chairman and CEO of Sunoco Inc., who came to the city three years ago from Houston - the first woman to run a major oil company.

Dennis R. Glass, the current president and CEO of Radnor-based Lincoln National, one of only two corporations locally with two black board members.

Harold L. Yoh III, chairman and CEO of Day & Zimmermann Inc., the privately held engineering and construction firm that employs 24,000 people worldwide.

To a man and woman, they did not try to explain away the dismal numbers contained in the Urban League's survey, released in December, showing that, of the 678 members of the boards of 78 of the region's largest corporations, only 30 were African Americans.

All agreed that when blacks account for about 42 percent of the city's population and 20 percent of the region's, area corporations should be doing better at attracting qualified black board members than the current 4 percent representation. In contrast, about 7 percent of the board seats of Fortune 500 companies are held by blacks.

To some extent, the CEOs described a chicken-and-egg problem. Is the low level of black representation on boards a result of educational and economic imbalances that reduce the number of blacks in senior business positions, and thus lead to a small pool of candidates? Or are the candidates there, but largely white, male boards make familiar, comfortable choices?

Glass saw it as a leadership failure. The chief executive must put someone in charge of diversity initiatives and hold managers accountable for expanding the culture of an organization, he said.

And he meant diversity of all types. Glass said one of Lincoln National's black board members is a small businessman who provides a perspective that is sorely missing from most Fortune 500 boards: that of the entrepreneur grappling with profitability issues and customer concerns. (He didn't name him, but that would be Eric G. Johnson, who runs Baldwin Richardson Foods Co., a Frankfort, Ill., company with $130 million in annual sales and more than 200 employees.)

Frazier said boards can fall into groupthink when the members have so much in common with one another that their unanimity leads to management and organizational inefficiency. Without the critical independent thinking provided by board members who come from diverse backgrounds, CEOs "lose the opportunity to get reality-tested," Frazier said.

"It's surprising to me that people won't take more risk," said Elsenhans, referring to the power CEOs have to champion diversity in the workplace and the boardroom. But she said it needs to be done in a "sustainable" manner, recognizing the balance needed by CEOs to maintain support from existing board members while pushing for change.

In the end, Coulter asked, "How do we take the next step?" and there were no answers to that question volunteered immediately.

But you can be sure that Coulter and the Urban League will keep asking it.


Contact Mike Armstrong

at 215-854-2980 or marmstrong@phillynews.com. Read his blog, "PhillyInc," at www.phillyinc.biz.

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