Only six women and two people of color are part of MN’s 50 top-paid executives.

Diversity progress stalls at the top of Minnesota companies

The number of women in leadership has stalled at Minnesota public companies, and growth in diversity at the top has slowed. More, Minnesota's behind national norms.

innesota public companies are far behind national averages when it comes to the number of women in leadership roles. In fact, after years of incremental growth, progress stopped over the pandemic.

And while C.H. Robinson's Dave Bozeman became the ninth Black CEO among Fortune 500 companies in June, at the end of 2022 only two people of color are among the highest paid chief executives at Minnesota public companies. Only six were women.

Among all of the state's public companies, 22.7% of executive leaders are women, according to St. Catherine's Minnesota Census of Women in Corporate Leadership. That's up from 15.2% in 2009 but unchanged since 2019, said Diane Fittipaldi, an associate professor of business administration who leads the annual census.

"Minnesota, I think prides itself on being progressive," she said. "And this is just not progress."

Many top public companies had a reckoning in 2020 after George Floyd was murdered by Minneapolis police. As a result, they strengthened diversity, equity and inclusion (DEI) policies. Of late, vocal pushback against DEI measures has emerged, bleeding into the early discourse surrounding the 2024 presidential election, especially after the Supreme Court ruling striking down affirmative action in college admissions.

But Kim Nelson, a former General Mills executive who helps lead a Minnesota effort to diversify board membership, is confident companies will continue to separate noise from substance when it comes to adding diversity at the top simply because of the economics.

Studies from Mercer and other academic and consulting institutions have found that more diverse companies typically have higher profits and cash flow than peer firms with less diverse workforces and leadership teams.

"I think it would be a pretty weak organization or board that didn't stay the course," said Nelson, who sits on the boards of Tate & Lyle, Colgate-Palmolive Co. and Cummins Inc.

Some companies making progress

Despite lagging progress overall, some Minnesota companies like nVent Electric have surpassed national averages for representation.

Half of the board members of nVent – a provider of electrical equipment based in England but run from St. Louis Park with $3 billion a year in revenue – are women. One-fifth are people of color.

And one-third of nVent's executive management team is women, led by Chair and CEO Beth Wozniak. Only one of the nine, though, is a person of color.

"Inclusion and diversity has been important from the very beginning" for the company that has 10,400 employees in 35 countries, said Jon Lammers, the company's general counsel, who heads environment, social and governance (ESG) policies. "Back in 2020 we set goals ... around increasing representation of women in management globally by 20% and increasing representation of racially diverse U.S. professional employees by 25%."

Each member of nVent's executive leadership team has a plan to attract and retain diverse talent. Results are tied to compensation.

That's important, say the experts.

Consulting group McKinsey & Co., which launched its annual study of women in business in 2015, says companies with higher representation of women at the top track metrics, set goals, address bias in hiring and promotion decisions and hold leaders accountable for progress.

"Companies that tend to install those practices tend to do better with women in executive leadership roles," Fittipaldi said.

Minnesota companies are behind national progress in representation of women and people of color. Only 22.7% of the corporate leaders among 78 public companies in the St. Catherine census were women. That lags most national benchmarks including one from McKinsey & Co. that says women account for 26% of positions at the C-Suite level.

While the Minnesota numbers for women did not grow among Fortune 500 companies as a whole, representation of women in the C-suite grew 18%. Since the beginning of this fiscal year, Minnesota companies have added two new women CEOS: Celeste Mastin at H.B. Fuller and Anne Olson at Centerspace.

And while the number of women on Minnesota's corporate boards continue to increase, the 28.2% representation is still behind the national average of 32% for all Fortune 500 companies, Fittipaldi said.

The St. Catherine census uses a narrow definition of executive leadership based on federal reporting rules.

The university found that Minnesota's bigger companies have a higher percentage of women at the top. Of the 17 public companies that had no women among their executive officers, all were among the state's smaller firms.

Using companies' lists of leadership teams, several large companies are making strides in representation:

  • Target's team is 47% women; General Mills' is 41.6%; Best Buy's is 37.5%; and UnitedHealth Group's is 36%.
  • U.S. Bank's leadership team had 47% people of color; General Mills' had 40%; and Medtronic's had 37.5%. According to Harvard, 37% of the U.S. workforce for the 100 largest companies on the Standard & Poor 500 was people of color.

And among boards of directors:

  • Best Buy at 58% has the most female representation. General Mills and nVent have boards that are 50% women.
  • 3M, at 40%, had higher-than-average representation of people of color, with General Mills at 33% and Best Buy at 41%.

Diversity on its board and in the company as a whole is "critical" to Golden Valley-based General Mills' success, said CEO Jeff Harmening in an email.

The food giant's products are stashed in the cupboards of 90% of American homes, so "we are firmly committed to attracting and retaining talent that reflects the diversity of all our consumers," he said.

Growth slowing nationally

An analysis by executive search and consulting firm Spencer Stuart found executive progress outside Minnesota isn't exactly achieving warp speed for women or people of color.

"Due to the persistent issue of low boardroom turnover, the addition of new directors from underrepresented groups has had little impact in the overall diversity of S&P 500 boards," said Julie Hembrock Daum, who leads Spencer Stuart's North American Board Practice.

Female directors among Standard & Poor 500 firms inched to 32% last year from 30% in 2021. The share of directors from racial/ethnic groups stayed flat at 22%.

The latter rose from 17% in 2020, but sits far below the 40% population figure that racial and ethnic groups comprise in society, according to a report from accounting giant Deloitte and the Alliance for Board Diversity.

"At the current pace, it would take the boards of Fortune 500 companies more than two decades for board representation to match the current level of representation of individuals from underrepresented racial and ethnic groups in the population," the report said.

And growth nationally in board diversity has slowed, according to an annual look by executive recruiter Heidrick & Struggles. Forty percent of new seats went to women in 2022, down from 45% the year before; 34% of new seats went to people of color, down from 41%.

In Minnesota, the Minnesota chapter of Women Corporate Directors (WCD) has made a concerted effort to identify, recruit and prepare women of color to become effective corporate board members.

So far, 75 women have gone through the program, and 14 of them were elected to corporate boards in the past three years. Nelson, the former General Mills executive and a member of the WCD chapter, said, "We are meeting our goals, which is to have a real concrete impact."

Nelson also said an evolution in thinking about board makeup — that directors should be made up of more than CEOs and chief financial officers — has allowed for more diversity as well.

Maplewood-based 3M regularly adds new directors "to infuse new ideas and fresh perspectives into the boardroom," 3M spokesman Tim Post said.

The company recently backfilled three of five departing board positions with new appointees holding storied resumes and varied ethnicities. That's helped 3M retain a board that's more inclusive than most – 30% women and 40% people of color.

Diversifying leadership ranks

While its easier to count board members — and Nasdaq-listed companies are now required to show the composition of their boards — it is just as important to chart the progress of women and people of color across the full spectrum of top leadership, said Fittipaldi.

"As a society, [we] are starting to look at board composition really carefully and closely," Fittipaldi said. "But it's time to shift attention to what's going on inside these companies, because that's the proving ground for the next set of board of directors."

U.S. Bank has made progress as far as its diversity in leadership — and it has been intentional, said Elcio Barcelos, the corporation's chief human resource officer.

It has added more stringent diversity guidelines around hiring and leadership training efforts. In 2021, it created the High Impact Development Program, putting women and racially diverse future leaders through intensive an 18-month training and mentorship program.

"The goal is to really tap into leaders that are three or four levels down in the organization and then help develop them so they become management committee ready," Barcelos said.

Seven of the bank's top 15 executives now have various racial backgrounds and global educations spanning Brazil, India, Lebanon and the United States.

Still, "we're not perfect," Barcelos said. The number of women in top management posts at the bank, for example, fell from four to three when Chief Administrative Officer Kate Quinn retired June 30.

So the goal to improve is a "constant journey," Barcelos said. "Ultimately, we'd love the managing committee to reflect our workforce, which is practically at that 50/50 mark" of male and female.