Ten years ago, the number of Fortune 500 companies being led by a black CEO was seven. Although still low, that was a peak, somewhat of the heyday of black leadership in corporate America. After the announcement that Kenneth Chenault will be stepping down early next year from his position as head of American Express, there will only be three black CEOs left in Fortune 500 companies: Kenneth C. Frazier of Merck & Co, Roger W. Ferguson Jr. of TIAA, and Marvin Ellison of JC Penney. Even more baffling, there are no black women CEOs.
The declining diversity in the leadership in Fortune 500 companies is not exclusive to blacks. Other minority groups that saw a decent rise in inclusion in early to mid 2000s have also experienced a decline in these leadership roles in recent years. In his 2015 paper, The Rise and Fall of Diversity at the Top: The Appointment of Fortune 500 CEOs from 2005 through 2015, Richard L. Zweigenhaft concluded, “…when it comes to the appointments of Fortune 500 CEOs, the bloom certainly seems to be off the rose for African Americans, Asian Americans and Latinos.”
In contrast, black owned businesses have been slowly growing again in the past few years after the blow of the 2008 financial crisis to not just black owned businesses but small businesses in general. Another good news is that black women are now the fastest growing group of entrepreneurs in America. So, who cares about Fortune 500 companies if we’re starting our own businesses, right? Not quite.
Although it feels like a new company is popping up every five minutes, entrepreneurship in general is and has been on a decline for decades now. According to the Kauffman Foundation, “the number of companies less than a year old had declined as a share of all business by nearly 44% between 1978 and 2012.” This has huge implications on our economy, in both black communities and the nation at large. If less and less companies are being created, then innovation slows, less jobs are being created, and older/bigger companies take a bigger chunk of the market.
As bigger companies swallow up smaller businesses or expand to get into markets that would usually be small business territory, then starting our own businesses is not enough. With less black owned businesses in the big picture, more black professionals are ending up in corporate America. That’s why we need better representation in the Fortune 500 companies more than ever. That’s why we need to fight for and find the missing black CEO.