10 ways corporations can and should help achieve racial equity

So many people are blinded to the ways that racism is built into society and the economy. US corporations, in particular, face many challenges.

In the wake of the killing of George Floyd in Minneapolis, many corporations tweeted statements of concern and support for the black community.

That’s a start, but what is needed at this moment is action. We cannot pretend that most major corporations in the US — and their shareholders — have not benefited from the structural racism, intentional inequality and indifference to suffering that is behind the current protests.

Corporate America and the Business Roundtable have an obligation to go beyond tweets and quotes by committing to an agenda that will advance racial equity in meaningful ways. Some changes cost virtually nothing; others may create short-term costs. But research has shown that the changes that cost money create shared value and lead to greater long-term corporate profitability and a more prosperous, equitable and sustainable society. Now is the time to reset expectations for a new and better “normal” to which we can eventually return.

Here are 10 commitments that US corporations should make that will help achieve racial equity.

Commit to anti-racism personnel policies and racial-equity training

Adopt a no-tolerance-for-racism policy similar to investment firm Franklin Templeton’s, which led to its swift termination of Amy Cooper after her altercation with Christian Cooper, an African-American bird-watcher, in New York’s Central Park. And to back those policies, provide racial-equity training for all employees — from the chief executive and board to the workers. White privilege has blinded so many of us to understanding the ways that racism is built into our society, economy and our lives. Change must start with learning, and resources are plentiful.

Commit to pay equity

There is no excuse for disparities in the wages paid to people of colour. Conduct a wage-equity audit and make the adjustments needed to achieve fair and equitable pay. PayPal, for example, makes adjustments throughout the year to maintain equity. Studies have shown that closing the racial pay gap would increase US gross domestic product by 14 per cent, or more than $2 trillion.

Give employees a voice

Ensure representation of hourly employees, women and people of colour in all employment policy decisions. Consider employee representation on your board — it’s a legal requirement in Germany and is one reason its economy recovered more strongly from the Great Recession than America’s and has weathered the COVID-19 pandemic with only 4 per cent unemployment.

Full participation in democracy

Make the US election day a paid holiday. Help your employees to vote by registering them at work.

Lobby for good

It’s no secret that corporate lobbying shapes many of our laws. Commit at least 50 per cent of lobbying expenditures to drafting and supporting bills that would improve conditions for communities of colour by increasing access to quality education and training, rebuilding infrastructure, protecting consumers, ending racial oppression, rebuilding the safety net, achieving criminal justice reform and making police more accountable. The people mostly affected by these deficits can best define the problems and necessary solutions. And if your business model relies on immigrants who live, work and pay taxes in the US, you owe it to them to stand up for their rights and support a path to citizenship.

Commit to paying a living wage

The national minimum wage hasn’t been raised in a decade and has not nearly kept up with inflation. This has had a disproportionately adverse effect on black workers, who must routinely hold several jobs just to survive. States that have raised minimum wages to $15 an hour have seen their economies grow and thrive. It’s not as expensive as you may think. Research has shown that the companies that pay well, offer good benefits and treat their hourly employees with respect are more profitable. Walmart Inc raised entry-level worker wages to $12 an hour and saw productivity rise while turnover fell, generating a net increase in corporate earnings.

Eliminate last-minute variable shift scheduling that denies employees a 40-hour work week and disrupts their lives. The Gap Inc found store sales increased 7 per cent when it instituted stable scheduling with two weeks’ notice.

Paid parental and sick leave

Most women of colour cannot afford to take significant periods of unpaid leave from their jobs when they have a child. The absence of paid sick leave is an even larger problem and one of the reasons people of colour have been disproportionately exposed to the coronavirus. Providing paid parental and sick leave to all employees can help businesses support thriving and productive workforces.

Commit to full healthcare coverage for all employees and support national healthcare

Corporations spend twice as much providing employees with healthcare as they pay in taxes. It puts US businesses at a global competitive disadvantage, consumes money that might have gone to higher wages and is causing employers to offload more and more healthcare costs on employees. Ensure that a living wage ends up in employees’ pockets by lowering their contribution. And support national healthcare coverage, which would reduce the burden on corporations and guarantee that those without insurance — many of them people of colour — are covered.

Employee emergency-relief fund or low-cost loan program

Nearly 40 per cent of Americans — disproportionately people of colour — lack the savings to cover even a $US400 ($582) emergency expense. And that was before COVID-19 destroyed the fragile economic balance that millions of employees struggle to maintain.

When there’s an emergency, a few hundred dollars advanced by the employer can be life-changing for employees. Also consider paying wages weekly instead of biweekly — many employees cannot last two weeks between pay cheques — or use PayActiv, which lets employees access money they have earned before payday.

Democratise employment applications

Eliminate the box for “felony conviction” on job application forms, which disproportionately excludes people of colour. Eliminate testing for marijuana use and other drugs if not required by law or the nature of the job.

Join companies such as EY, Google and Whole Foods that no longer require a college degree for jobs that don’t need higher education. Develop programs to hire, train, mentor and advance black youth without high school degrees, who face the highest rates of unemployment yet have been proven to be productive and loyal employees when supported through effective management programs such as those documented by Talent Rewire.

These commitments are within the power of every company. Any of them will make a difference. How many commitments can your company make?

Mark R. Kramer is a senior lecturer at Harvard Business School and a co-founder and a managing director of FSG, a global social-impact consulting firm.

©2020 Harvard Business Review/Distributed by the New York Times Syndicate