Why Are There So Few Minorities Represented in the Corporate World?

By: *Kayla Butz

Category: Minorities in the Corporate World

Why Are There So Few Minorities Represented In the Corporate World?

This blog seeks to answer the question, why are there so few minorities represented in the corporate world? According to the Boston Consulting Group, “[m]arked and measurable progress has been made in minority business development” since the topic first came into the spotlight to the U.S. Department of Commerce through reports conducted in the 1980s by The New Strategy for Minority Businesses and Minority Business Enterprise Development. However, the report goes on to say, the next step is “moving from presence to prominence” on growing larger and self-sustaining minority businesses.[1]

Not everything is positive in regards to corporate diversity. Many people have speculated as to the reasons why there are fewer women and minorities in the corporate world. Law professor, Randolph McLaughlin, has commented on this issue. His observations, while working with clients, were that minority executives were given less responsibilities than their white counterparts and were also paid less.[2]  This could be one reason as to the rise in minorities and female workers leaving their jobs in the corporate world.  In addition,  study published in the Journal of Applied Psychology revealed that, “women quit more than men; African Americans, Hispanics and Asian Americans quit more than whites; and that minority women quit more than both whites and men of their own ethnicity.”[3]  The study also explains that minority workers are new to the corporate world and “are struggling disproportionately with newcomer challenges of adapting to a new workplace.”[4]  Ultimately, these are just speculations because the study focused on who left and not why they left the workplace.

Despite this disparaging phenomenon, there are companies that have been successful in fostering diversity in the workplace. Fortune 500 did an article on the 50 best companies for minorities.[5]  The companies that made the list, “are firms that make an effort not only to hire minorities but also to retain them and promote them through the ranks.”[6]  In addition to interacting with minority communities, these companies make management accountable for diversity efforts. This may be why they have not experienced the high turnover rates as other companies. Ultimately, companies that are best for minorities “are really those in which people of color feel that they belong–at all levels–everyday.”[7]

For a continued diverse workforce, there needs to be a match in diversity among management ranks.[8]  One way to foster the growth of diverse management among companies is to encourage minority business development. A minority business is one that is at least 51 percent owned and controlled by members of minority groups.[9]  While the growth in minority businesses has been dramatic, the total number of businesses still leaves minorities underrepresented in this area.[10]  The reason for the expanse of minority businesses can be attributed to federal government legislation programs.[11] Besides the growing minority population, the importance of expanding minority businesses includes the fostering of economic development.[12] The Boston Group’s report indicates that minority-owned businesses could serve as a powerful infrastructure for inner-city economies, which ultimately will contribute to the overall economic growth of the United States.[13]

The benefits for creating a more diverse corporate world are clear. The problem is making that happen. Even though there have been improvements made, “history takes time.”[14]  As the federal government continues to pass legislation that promotes businesses and companies owned by minorities, like those listed in the Fortune 500, which continue to work to diversify their firms, the scarcity of minorities in the corporate world will no longer exist.

The opinions expressed herein are strictly those of the author and do not necessarily reflect the opinions of the Widener Journal of Law, Economics & Race.


*Kayla Butz is a staff member on the Widener Journal of Law of Economics & Race. To Learn more about Kayla Butz click here to visit her page.

[1] The New Agenda for Minority Business Development. Boston Consulting Group, (June 2005), http://www.kauffman.org/uploadedfiles/minority_entrep_62805_report.pdf
[2] Farrokh Hormozi & Randolph McLaughlin, Minorities Gain in Corporate World, THE JOURNAL NEWS (April 28, 2011), http://pressroom.blogs.pace.edu/2011/04/28/minorities-gain-in-corporate-world-lohud-com/.
[3] W.P. Carey, Women and Minorities’ High Quit Rates Make Corporate Diversity Difficult (April 27, 2007), http://knowwpcarey.com/wpc/25/Engaged-in-the-Totality-of-the-Profession-Conference-Leadership/1343/
[4] Id. at 3.
[5] Id. at 3
[6] Id.
[7] Id.
[8] Id.
[9] New, supra note 1, at 5.
[10] Id.
[11] Id. at 7.
[12] Id.
[13] Id.
[14] Daniels, supra note 5.

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