In the interview below, Howard Fischer, Founder and CEO of Howard Fischer Associates, talks with Raj Gupta, former Chairman/CEO of Fortune 300 company Rohm and Haas, which was acquired by DowChemical in 2009. He currently serves or has recently served on the boards of well-known companies, including Dupont, Hewlett-Packard, The Vanguard Group, Delphi Automotive, Tyco International, Avantor Performance Materials, Arconic, and Airgas.
The conversation between Howard and Raj focuses on the value of diversity (at the senior executive and board levels).
In addition to the moral, social, and ethical imperatives that we are familiar with, why should corporations care about diversity and devote resources to it?
I find three very compelling reasons why this is such an important topic. First, you want to attract the best talent, irrespective of race, gender, color, or sexual preference, by tapping the largest possible pool of talent.
Diverse talent brings diversity of ideas and thought, which is absolutely essential. There’s plenty of evidence to support the thesis that diversity leads to better decisions and better outcomes.
And finally, diverse talent represents all of your key stakeholders: your suppliers, customers, communities, and investors.
During your career, have you seen evidence that companies that are more diverse are more financially successful than their peers?
I have participated in five truly successful transformations: Rohm and Haas, Tyco, Delphi/Aptive, Avantor, and Vanguard. I have seen firsthand the nature of diverse conversations that lead to superior outcomes. Each of these companies dramatically outperformed its peers and achieved the results the right way as well.
Why do you think so many companies struggle with diversity?
There are two overriding reasons. The first is just a lack of conviction that diverse talent leads to superior results. Unless you really believe something, you just won’t follow up.
And the second one is, we all have a comfort level with people who look like us or went to schools like us, who talk like us, whose interests are similar to ours. This is just a natural tendency. And I think you almost have to make a conscious effort to say that people who are different bring different perspectives, and their different perspectives add value in today’s fast-moving world.
What do you think about companies that say it’s a supply and demand issue – that that there are just too few highly qualified diverse candidates in the marketplace?
It’s always easy to say there is not enough talent. But you have to find talent for positions deeper in the organization because if you’re always looking for a diverse C-level executive, there aren’t enough of them.
But there’s diverse talent just underneath the C-suite and in smaller companies or startups who have energy and ideas. You just need to broaden your ideas about what level you should be hiring.
It also requires a commitment to diversity. Silicon Valley is notorious for not having enough gender and racial diversity. But this isn’t the case at Hewlett-Packard, where Meg Whitman was the CEO.
As they planned to split the company into HP Inc. and Hewlett-Packard Enterprise, they made a very conscious decision to create two of the most diverse boards and leadership teams for the new companies. The Chair of the board at Hewlett-Packard Enterprise is a woman, Pat Russo, and at HP Inc., four of the 12 executive leaders are women, and the board of directors is very diverse. So, it is possible.
What are the two or three most important ingredients for creating diversity success both at the board and at the executive leadership levels?
First, there is the responsibility of the organization to create a level playing field by providing a transparent performance management potential assessment and promotion record.
The second thing is the role of the individual and their willingness to accept honest feedback. If you are a diverse executive, you may misinterpret what you’re being told. It’s important to put preconceptions aside when receiving feedback.
Third-party insight in this process can be helpful as well. Executive coaches and consultants can provide a 360-degree view of executives from inside and outside the company and the people they interact with, like subordinates, peers, superiors, and customers. These third parties can provide feedback based on real data rather than one person’s opinion. I found this approach to be very helpful at Rohm and Haas, as both a participant and as CEO.
At Rohm and Haas, how did you achieve a balance between promoting from within and going outside to bring in new, diverse ideas?
Although Rohm and Haas had a culture based on internal promotion and long tenure, we did have a global workforce that was very diverse. And we gave individuals experiences outside of their own countries and outside of their own functions.
During my time as CEO, I made it our mission to select the best possible person for the position. They could come from acquired companies, Rohm and Haas, or from external candidates.
One of the major obstacles to achieving more diverse representation on the board and in senior leadership roles is the length of time it takes to find a truly diverse slate. The business opportunity costs of leaving that position open work against the good intentions to fill the role with a diverse leader.
At HFA, we have developed a solution for companies who truly want to transform their approach to Succession Planning and diversity recruitment. This grew out of our research for Tyco (now JCI) and Comcast. Traditional executive search is a reactive, single-hire-focused process. To truly move the needle of diversity representation in a major way companies need to shift their succession planning paradigm to a more proactive anticipatory process. Meeting great diverse talent and developing the relationships well before the actual opening presents itself.
What are your thoughts on this?
In the last three or four years, I’ve been involved with at least 12 to 15 director recruitments. We have diligently followed this approach you outlined of planning well ahead. We considered the transition of the board based on demographics, how the business model of the company was changing, and which skills we needed on the board.
We have been very deliberate about building a diverse pool of talent, not just based on open positions, but based on what we think we’ll need two or three years down the road.
Any other last thoughts you would like to share about diversity at either the board or executive levels?
There are some great examples of companies creating diverse leadership and boards. The success record is obvious, but this is the first time I sense there is a deep-rooted conviction on the part of CEOs and the boards to really embrace this idea of a diverse talent pool. I think they’re putting processes in motion and investing the time to do it correctly.
We thank Raj for taking the time to share his thoughts and insight with us. If your company is seeking a more diverse talent pool, call Howard Fischer Associates at 215.568.8363 or email us at: email@example.com.
About Raj Gupta
Raj Gupta is a retired Chairman/CEO of Fortune 300 company Rohm and Haas, which was acquired by DowChemical in 2009. He currently serves or has recently served on the boards of well-known companies, including Dupont, Hewlett-Packard, The Vanguard Group, Delphi Automotive, Tyco International, Avantor Performance Materials, Arconic, and Airgas.
About The HFA Leadership Forum
As a leading executive and board search firm, Howard Fischer Associates works with some of the top companies and senior executives throughout the nation. Our success stems from our belief that exceptional leadership is the most powerful competitive advantage a company can have in the global marketplace. The HFA Leadership Forum features interviews with some of these exceptional leaders, providing insight into their career paths, recommended best practices, and the industry trends that are worth paying attention to. Recent interviews include:
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