BET founder Robert Johnson told CNBC on Monday that he believes companies will take racial inequality more seriously within their workforces, as failure to do so begins to impact their share prices. .
“Companies understand the return on investment capital. They understand the return on equity. They understand the total return for shareholders,” said Johnson in “Closing Bell”. “Link all of these factors to obtaining job opportunities at all levels for black Americans. I think you will see results because that is what companies understand. They respond to financial factors and market conditions.”
Johnson’s comments follow the launch of a new report on the employment of blacks in the United States’ private sector by consulting giant McKinsey & Company. Based on data from 24 companies that together account for 3.7 million workers, the McKinsey report found remarkable disparities in black representation in management functions.
Black Americans represent 12% of the general private sector workforce, but in companies participating in the McKinsey report, they were only 7% of managerial-level employees. Black representation drops to 4% to 5% at the levels of senior manager, vice president and senior vice president, according to the report.
“In the current trajectory, it will take about 95 years for black employees to achieve parity of talent (or 12% representation) at all levels of the private sector,” says the report.
Johnson said, in his view, that the only way for companies to work seriously to address job gaps, especially for senior positions, is to “hold companies accountable for not committing to eliminate” disparities.
“I think there are ways to do that,” said Johnson, who founded Black Entertainment Television in 1980. A little more than two decades later, in 2001, he became America’s first black billionaire when the BET holding company was acquired. via Viacom. He now sits on the board of Discovery and is the founder and president of RLJ Companies.
Johnson said that one way to provide accountability in correcting racial disparities in employment is by setting it as a goal in corporate bylaws.
“Shareholders should hold them accountable for this, once it is in their bylaws,” said Johnson, adding that proxy consulting firms like Institutional Shareholder Services and Glass Lewis could “look at the whole concept of a ‘no’ vote. against companies that are not committed to this type of racial parity or basically closing the employment gap. ”
Johnson said companies of all sizes must also commit to something similar to the NFL’s Rooney Rule, which the league expanded last year in an attempt to improve diversity within its ranks of coaches.
Teams now need to interview at least two foreign minority candidates for coaching jobs, against at least one since it was first adopted in 2003. In addition, the rule has been expanded to require teams to interview at least one minority candidate external coordinator for open positions; there was no diversity mandate covering these functions previously.
NFL franchises can be fined for failing to comply with the Rooney rule, Johnson noted. “I’m not sure if we want to fine companies because they could easily pay the fine,” he warned. “I think there should be some kind of moral equivalent that if you fail to do that, you are chosen and your actions are reported to be failing that, causing certain people who believe in this form of racial equity and racial equality to take their investments in other places. ”
Last year, Nasdaq submitted a proposal to the Securities and Exchange Commission with a focus on improving diversity among corporate boards. The exchange operator’s proposal would require that most companies have at least two different advisers: a woman and an LGBTQ person or a underrepresented minority.
Under the proposal, companies could be removed from the stock exchange if they did not publish the board’s data. In December, at the time the proposal was made public, more than 75% of the nearly 3,200 companies listed on Nasdaq did not meet the requirement, according to the New York Times.
Johnson had previously offered suggestions on how to address the racial wealth gap in the United States. In an interview with CNBC earlier this month, Johnson emphasized the need to foster black entrepreneurship in America through capital allocation programs.
“Black businesses tend to hire black people as a whole, so you create more black businesses, the recovery goes to more black jobs,” said Johnson. “More black jobs means more blacks paying for their own homes, blacks … saving for retirement, blacks investing. In the end result, we take a giant step towards narrowing the huge wealth gap.”
A Citigroup report last year found that racial inequality has cost the US economy $ 16 trillion in the past two decades.