Microsoft’s New CEO Means Small Progress In Racial Diversity Among Executives

CREDIT: LeWeb13 on Flickr

Microsoft CEO Satya Nadella

After a five-month search, on Tuesday Microsoft announced that it has named Satya Nadella as its new CEO, replacing Steve Ballmer. Nadella was born in Hyderabad, India, and thus joins an exclusive club: the few non-white executives running America’s largest companies.

His appointment makes him the ninth Asian executive at the helm of a Fortune 500 company, bringing the percentage up to 1.8 percent from 1.6 percent before his appointment, despite the fact that Asians make up more than 5 percent of the country’s population.

Other racial groups don’t fare much better in being represented at the top. There are just six black CEOs in the Fortune 500, accounting for 1.2 percent despite black people making up more than 13 percent of the overall population. There are eight Hispanic CEOs, or 1.6 percent, while Hispanics make up nearly 17 percent of the population. These companies also fare poorly when it comes to gender diversity. Women make up less than 15 percent of Fortune 500 chief executives, while they are half the population, and no progress on increasing their numbers has been made in four years.

Nadella will also increase racial diversity among these companies’ boards, as he will become the tenth member of Microsoft’s. Among Fortune 100 companies, 9.2 percent of board members are black, 4.3 percent are Hispanic, and 2.7 percent are Asian. Women hold less than 17 percent of board seats among Fortune 500 companies and haven’t progressed in eight years. White men dominate, on the other hand, accounting for nearly three-quarters of all board seats.

Some countries have pushed to increase gender diversity on boards through quotas or targets, though few are looking at race. Six European countries have gender quotas for women on boards, with Germany poised to join them, while the United Kingdom has set a 25 percent goal for 2015. Japan has focused on women in the executive suite, aiming to have 30 percent of its CEOs be women by 2020.

The United States does none of these things. The closest it comes is rules that require companies to simply disclose how they take diversity into consideration when they select board members. Yet most companies fail to comply with even this tiny nudge.