Philosophical author Pierre Teilhard de Chardin once said, “The future belongs to those who give the next generation reason for hope.” Could this be one of the secrets to setting future generations of leaders up for success?

McKinsey’s most recent report on diversity revealed that companies in the top quartile for ethnic and gender diversity are more likely to outperform their peers in terms of profitability. On the flip side, those in the bottom quartile for both are 66% less likely to outperform on average – this is a giant leap from a moderate 27% in 2020 and indicates that a lack of diversity may be getting more expensive.

Patrizia Ghiazza, Partner at Signium Italy, believes that more organizations are shifting their strategies to align with leadership diversity objectives. “Enhancing diversity in C-suite levels plays a critical role in determining corporate performance. In addition, companies with inclusive and diverse management teams have shown greater ability to innovate than those with less diversity. Many companies are establishing measurable goals and setting the wheels in motion on both leadership and workforce diversity strategies.  It’s no longer just the right thing to do; it makes business sense.”

C-suite career trends – understanding our leaders’ roots

To uncover effective strategies that drive leadership diversity, it’s important to understand the current C-Suite landscape.

Leadership has gotten older

Between 1980 and 2001, senior roles were gradually filled by younger people. Surprisingly, this has reversed since 2001 – possibly due to people’s better health in later life. On one hand, retaining mature leaders can be beneficial, as they bring with them a wealth of company knowledge and culture, as well as decades of skills and industry experience.

However, this dynamic can also stall younger people from making progress in an organization. The next generation of aspiring leaders may feel that to progress into senior roles, they must seek opportunities elsewhere.

Progress for women in C-suite roles continues to lag

McKinsey’s 2021 report on Women in the Workforce highlights strong evidence that companies with higher gender diversity are 25% more likely to achieve better financial performance than their competitors. Despite this, only 38% of companies have established gender diversity targets for their executive teams.

More recent findings suggest that unequal pay, contrasting expectations, and ‘the broken rung’ continue to hinder women from progressing to senior roles at the same pace as their male equals.

Non-native leaders are on the rise

Business globalization is becoming more evident in corporate leadership structures. In 2022, 45% of CEOs in Fortune Global 500 companies were from countries outside of company headquarters.

“Traditionally, organizations could only recruit leaders who lived nearby, geographically, and therefore also had the same cultural background,” says Ghiazza. “The alternative was to find and relocate foreign executives at great cost. Technology and globalization now enable organizations to appoint the world’s very best in their industry. We should remember that when a company appoints a non-native leader, they’re also bringing in global experience, a new culture, and a new way of thinking that can create positive change. That’s where the greatest value of diversity lies.”

C-suite ‘lifers’ are in decline

According to a study of Fortune 100 companies, conducted by SHRM, 44% of senior executives in 1980 were “lifers”. This means that they had enjoyed long-term careers at the same company and climbed the corporate ladder. Now, only 19% are ‘lifers’ while more than 26% of senior roles are filled via external executive searches.

Evidence also shows that those who are promoted to senior roles from within an organization have an average tenure of about 12 years, with previous experience elsewhere of around 15 years. Ghiazza comments: “This should show companies that their future generations of leaders may not even be in their sights. With some time and development, those who are being placed in management positions today may be seated at the helm of the company within a decade or two.”

Ethnic diversity at the C-suite level remains critically low

Ethnic diversity among C-suite executives is not just about social justice; it’s essential for business success. Research from Boston Consulting Group indicates that companies with more diverse leadership enjoy a 19% boost in revenue linked to innovation.

However, according to Fortune.com, only 1.6% of Fortune 500 CEO roles are filled by Black people. The situation is similar for other ethnicities, with Hispanic or Latino individuals occupying just 4% of C-suite positions. These figures highlight the urgent need for changes in structure to promote ethnic diversity at the executive level.

Cross-industry experience for skills diversity

Historically, industry knowledge was regarded as highly specialized and executives rarely changed sectors. Nowadays, top executives typically have extensive experience in two to three different industries.

Today, having cross-industry experience is seen as invaluable. This trend reflects boards’ increasing desire for fresh perspectives to tackle the complexities of a global business landscape. Sectors like technology and healthcare are at the forefront, where transferable skills help drive innovation and navigate stringent governance regulations

Starbucks – The power of leadership diversity in action

One organization that harnessed leadership diversity to endure challenging times was Starbucks. In 2017, Rosaline Brewer was appointed COO of the international company. She was one of the few African American women in senior leadership roles within Fortune 500 companies and was tasked with improving operational efficiency and fostering an inclusive culture.

In response to several public incidents highlighting issues of discrimination, Brewer implemented comprehensive training programs to address unconscious bias among employees and led a high-impact racial bias training initiative. Brewer’s other efforts included enhancing the digital ordering system, expanding the Starbucks Rewards program, and promoting community-focused store designs that reflect local cultures.

Under her leadership, Starbucks saw substantial growth in digital sales and improvements in employee satisfaction and retention rates due to enhanced benefits and internal career development programs. Brewer’s work not only strengthened customer relations with diverse communities but also reinforced Starbucks’ reputation as a socially responsible brand.

“Having diverse leadership isn’t just about meeting regulatory requirements or being politically correct,” says Ghiazza. “It’s about using the full range of human potential to achieve success and create a fairer society.”

Four strategies for identifying and developing diverse next-gen leaders

Identify leadership potential internally

Identifying potential next-generation leaders involves evaluating employees based on key performance indicators and potential assessment tools to identify high-potential employees. Achieving diversity at supervisory and management levels is typically easier than at the C-Suite level – by exploring the potential within those pools, companies can begin developing tomorrow’s diverse leaders, today.

Ghiazza offers some advice: “Over and above industry knowledge and skill, organizations should focus on traits such as resilience, adaptability and emotional intelligence. In the same way that smoke often leads you to a fire, these characteristics will help you find natural leaders.”

Know what matters to next-generation leaders

In the words of Andy Stanley, best-selling author and communicator, “Next-generation leaders are those who would rather challenge what needs to change and pay the price than remain silent and die on the inside.”

The next generation of leaders – usually millennials and Gen Z – have different priorities than previous generations. They value alignment with organizational values, opportunities for career growth, work-life balance, an inclusive culture, technological advancement, corporate social responsibility, and collaboration.

To attract and develop these leaders, organizations can showcase their mission and societal impact via some practical steps:

• Revamping job descriptions to reflect company values and purpose
• Engaging on social media to share cultural insights
• Hosting virtual open houses for candidates with sincere questions
• Empowering current employees as ambassadors of the company culture
• Gathering continuous feedback throughout the recruitment process

Remove barriers to entry and/or advancement

To facilitate an equal playing field for next-generation candidates, organizations can enhance recruitment and career advancement practices.

Recruitment:

• Use blind recruitment to minimize bias.
• Adjust job descriptions to be inclusive and reflect the company’s commitment to diversity.
• Standardize job interviews with diverse panels, and ensure hiring executives undergo bias training.
• Improve onboarding through mentorship programs and cultural competence training.

Career advancement:

• Formalize supportive workplace policies that include creating employee resource groups.
• Promote work-life balance and offer inclusive benefits, such as parental leave and mental health support.
• Conduct regular internal surveys to drive improvement.
• Engage with community partnerships to help build a diverse talent pipeline.

“Diversity is about discovering what unique people can offer,” says Ghiazza. “If you want to find the best leadership talent for your industry, you must make it feel fair and safe for anyone who’s qualified to apply. Anyone – regardless of gender, ethnicity, age, sexual orientation, ability or religion.”

Promote mentorship and networking

Mentorship opportunities offer personalized guidance to all aspiring leaders by helping younger professionals build skills and confidence while gaining visibility. Networking expands opportunities by connecting individuals with industry leaders and fostering relationships that support career advancement. The greater each individual’s network, the stronger associations an organization will have as a whole, especially with diverse team members and their communities.

Giving the next generation a reason for hope

By ensuring equal and fair opportunities are available to people from all walks of life, those with a flair for leadership may enter their industry with the hope of reaching their fullest potential. For organizations, this should no longer be considered a burden, but an opportunity to take advantage of the natural gifts and skills of diverse leaders.

“In decades past, people have associated titles like ‘CEO’ with tyranny and domineering leadership,” says Ghiazza. “It was also something that previously marginalized people could never dream of achieving. A Black woman being the CEO of a Fortune 500 company? Never… What a time to be alive! With some planning and intentional strategies, the impossible is now not only possible but imperative!”

www.signium.com