In this new article: "Beyond Virtue Signaling: Practical Guidance for Effective Board Oversight of Corporate Diversity and Inclusion Commitments" (Compliance & Enforcement), Fifth Third Bancorp and Fifth Third Bank SVP and Deputy General Counsel, Corporate, Saema Somalya, identifies three action steps for boards to advance corporate diversity and inclusion (D&I):
- Formalize board oversight responsibility for D&I governance at the board and/or committee level in the appropriate governance documents (e.g., corporate governance guidelines, board committee charter)
- Oversee management's development and implementation of a D&I strategic plan that includes metrics (such as pay equity, retention & turnover rates, promotion rates, development spend by key demographics) to support well-considered goals that are regularly tracked and accountability for performance via, e.g., incentive compensation, performance ratings, or other measures.
- Integrate D&I into the executive talent and succession planning process with due consideration for developing and cultivating diversity in the business and finance leadership pipelines, which generate high percentages of CEOs and corporate directors.
As reported last week: "Customer Satisfaction Tops ESG Executive Comp Metrics," based on Semler Brossy's review of ESG metrics being used by the Fortune 200, D&I is the most prevalent "sustainability" metric (as opposed to "operational" metric), most commonly incorporated as part of a discretionary incentive plan framework. The firm expects the use of D&I in incentive plans to increase as a result of the increased focus on racial justice issues.
See also our recent report: "D&I Goals: Executive Compensation" and watch for the forthcoming Society/Deloitte Board Practices Quarterly, which benchmarked - among other racial diversity, equity, and inclusion topics - allocation of board oversight among the board and/or its standing committees. Access additional resources on our Racial Equality & Diversity and Human Capital/Workforce Management pages. This post first appeared in the weekly Society Alert!