Nike Admits To Diversity Shortcomings

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In a memo sent internally to Nike’s employees, Monique Matheson, EVP, global human resources, Nike Inc., said Nike  “has failed to gain traction” in hiring and promoting more women and minorities to senior-level positions.

“While we’ve spoken about this many times, and tried different ways to achieve change, we have failed to gain traction—and our hiring and promotion decisions are not changing senior-level representation as quickly as we have wanted,” Matheson continued in the memo sent out Wednesday. The memo was attained by the Wall Street Journal and CNBC.

The memo followed the resignation of Trevor Edwards, Nike Brand president, and the firing of Jayme Martin, VP and general manager of global categories for Nike Brand, in mid-March due to workplace complaints.

Nike said at the time of the dismissals that it was conducting a review of the company’s human-resources systems and practices for elevating internal complaints.

Matheson further noted in her memo that that only 29 percent of the company’s vice presidents are women. This is despite Nike ‘s global workforce being basically split between 52 percent men and 48 percent women, Matheson said in an e-mail to Reuters.

Matheson also said that in the U.S. only 16 percent of its vice presidents are non-white.

Globally, Nike has 74,000 employees, including several hundred vice presidents, according to reports.

The memo, according to CNBC, also revealed that in the U.K., men earned 10 percent more in hourly pay than women who work in the wholesale division and also earn on average 3 percent more than women working in retail. U.K. companies with more than 250 employees are required to disclose gender pay.

Nike attributed the average pay disparity to having fewer U.K. women in higher-paying senior-level positions.

To improve representation across senior levels, changes are being made in the hiring and promotions processes. Nike will look to “remove bias from critical moments of the hiring process” in part through blind resume reviews and eliminating the need to require past salary histories. In May, Nike will begin training “to ensure all managers are clear on expectations–when and how they are compelled to act,” and start mandatory “unconscious bias” training programs for all employees, according to the Journal. Reuters also said Nike will be investing in a diversity sourcing team.

According to the Journal, current and former Nike employees have noted that “culture problems have persisted at the company for years, and the human resources department has been unhelpful or in some cases disrespectful to employees seeking to remedy workplace complaints.”

The article reports that David Ayre, Nike’s former head of human resources, was subject to two internal investigations “pertaining to allegations he created a hostile environment” before he left.

Matheson succeeded Ayre in July 2017 following his retirement. A 20-year veteran of Nike, she had most recently served as VP, chief talent and diversity officer, overseeing all aspects of Talent Management and Diversity and Inclusion.

On its third-quarter conference call on March 22, Mark Parker, chairman, president and CEO, Nike, started his presentation by offering some brief comments on the dismissals.

“I’d first like to acknowledge the changes we made last week to further evolve our culture and restructure our leadership. We became aware of some behavioral issues that are inconsistent with Nike’s values of inclusivity, respect and empowerment.

“I’m committed to ensure that we have an environment where every Nike employee can have a positive experience and reach their full potential.”

With Edward’s retirement in August following a period as a consultant, Parker committed to serve as chairman, president and CEO beyond 2020. Parker concluded, “We have a deep leadership bench at Nike and I’m confident that our restructured leadership team will continue to strengthen our culture and drive the Consumer Direct Offense.”

The exit of Edwards and Martin has been blamed on the #MeToo movement started by allegations against movie producer Harvey Weinstein that has put the spotlight on sexual harassment in the workplace. According to a Wall Street Journal report from March, Martin and Edwards “protected male subordinates who engaged in behavior that was demeaning to female colleagues” and “their lieutenants bullied people who weren’t in their group … such as women and individuals from foreign countries.”

At least publicly, the #MeToo movement has largely impacted Hollywood, but its effects are being felt elsewhere.

At retail, the other major incident was also at a company in the active-lifestyle space: Lululemon. The yoga-themed retailer’s former CEO, Laurent Potdevin, resigned in early March due to an inappropriate relationship with a female designer and accusations of favoritism. In a similar message as Nike, Glenn Murphy, Lululemon’s executive chairman, said, “Culture is at the core of Lululemon, and it is the responsibility of leaders to set the right tone in our organization.”

The fact that both Nike and Lululemon earned the biggest #MeToo headlines in the retail space is likely a coincidence, although in both cases complaints about a “boys’ club” culture have been written. On Glassdoor, both companies have a high rating, with Nike at 4.0 out of 5 and Lululemon at 4.1.

But Nike is far from the only company challenged by diversity issues. Silicon Valley and the tech industry sector have been making headlines in the last few years for sexual harassment and gender discrimination. They’ve also been called out for lack of black and Hispanic representation.

But diversity has been a challenge across corporate America.

An often-quoted McKinsey study released in 2015 showed that companies in the top quartile for gender or racial and ethnic diversity are more likely to have returns above the median for their industry. Companies in the bottom quartile are less likely to achieve above-average results.

The belief is that more inclusive teams that better reflect the make-up of American consumers better connect with and serve consumers. Diversity also tends to prompt fresh ideas.

Yet the same study shows that women account for 16 percent of the members of executive teams in the U.S., and 97 percent of senior leadership teams in the U.S. have a demographic makeup that fails to reflect the country as a whole.

A session on diversity at this year’s NRF Show in New York City with a panel including the CEOs of JC Penney, Best Buy and Clorox indicated that while scorecards, mandates and greater commitments from the c-suite have helped expand diversity over the last several decades, creating environments that help everybody “fit in” remains a challenge. This is in part due to conscious and sub-conscious biases.

Best Buy’s Hubert Joly said creating environments “where people can be their true selves” is critical because “that’s where the magic is.”

Ironically, Nike’s new memo indicating its stepped-up efforts around diversity came after it bragged about its diversity efforts in 2016. In May 2016, Nike said that for the first time its ethnic minorities made up a slight majority of the company’s U.S staff.

Of the 15,326 members of the U.S. staff in fiscal year 2015, 48 percent identified themselves as white. Black/African American employees made up 21 percent of Nike’s staff in the U.S., while Hispanic/Latino workers were 18 percent. Asians were 7 percent of the domestic employee base. Pacific Islanders, American Indians and individuals that reported two or more races made up the rest.

Nike said in a statement at the time, “To serve every athlete individually and completely, across hundreds of countries where we do business, we need teams that reflect the diversity of our consumers and a culture of inclusivity that respects the communities in which we live and work.”

Photo courtesy Nike

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