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The Value Gap: PwC’s chairman wants to tackle systemic racism — and push corporate America not to ‘pass the buck’

The Value Gap is a MarketWatch Q&A series with business leaders, academics, policy makers and activists on reducing racial and social inequalities.

Tim Ryan did not expect to become a leading voice in corporate America’s push for racial equality, diversity and inclusion when he first started putting together a plan for a coalition of business leaders dedicated to the subject in 2016.

Five years later, some 2,300 chief executives have signed on to Ryan’s CEO Action for Diversity and Inclusion business commitment, pledging to work together to help end systemic racism and commit to ensuring diversity and inclusion in the workplace. The group is now the biggest such organization in the U.S. and has created a unit specifically dedicated to racial equity.

Ryan, a 52-year-old Boston native, senior partner and chairman of PwC U.S., says the idea for the group came about after an employee asked why the firm was not more vocal in discussing some of the fatal shootings of Black men by police officers in 2016, including those of Philando Castile and Alton Sterling.

Ryan promptly organized what would soon be formalized as a “Day of Understanding,” when the entire firm would stop work and discuss race, a topic he acknowledges is difficult and uncomfortable. At the end of that event, another Black employee asked him to take the matter even further and lobby other companies to do the same.

By 2017, Ryan had persuaded 150 companies to commit to the cause and agree to share best practices.

In 2018, the issue took on even more urgency when a PwC accountant, Botham Jean, was killed by an off-duty police officer in his own home, after she said she mistook it for her own apartment and thought he was a burglar. Ryan spoke at Jean’s funeral.

Then came the events of May 25, 2020, when George Floyd, an unarmed 46-year-old Black man, was murdered during an arrest when Derek Chauvin, a white Minneapolis police officer, knelt on his neck for 9 minutes and 29 seconds. Floyd’s killing while three other officers looked on and stopped passersby from intervening led to millions of Americans protesting against police brutality and racism and brought fresh momentum to the Black Lives Matter movement.

Ryan agrees that tacking racism and diversity requires going right back to the very basics of the beginning of life to address poverty, educational opportunity, healthcare, public safety and access to technology, and includes giving serious thought to issues such as election and police reform.

It’s not enough to say “the system is broken” — decision makers must also focus on what can be changed and then set about changing it, he said.

CEOs who sign on make a pledge committing themselves to four specific actions: 1) make their workplaces areas of openness and trust to have difficult conversations about diversity and inclusion; 2) implement and expand unconscious bias training to help people understand and acknowledge their blind spots; 3) share best practices with each other and help other companies share stories of success and failure; and 4) share concrete inclusion and diversity plans with their own boards, or governing bodies, to ensure diversity, equity and inclusion (DEI) issues are prioritized.

The interview has been edited for length and clarity:

MarketWatch: After the summer of protests over the murder of George Floyd, did CEO Action experience a dramatic increase in the number of CEOs signing up to take the pledge?

Ryan: There was about a doubling in numbers in the subsequent months. So we’re at 2,300 signatories now, and we were around 1,000 prior to Memorial Day weekend 2020. So there was a big jump.

MarketWatch: One thing I noticed looking at the list is that some big tech names — Facebook
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Google
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and Amazon
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— haven’t signed on. I don’t expect you to comment on those companies, but would you prefer that everyone pulled together instead of going it alone? Is that important?

Ryan: I would answer that by saying that for 20 years, PwC has been on this journey. That’s when we appointed our first DEI officer. And five years ago is when we started to create CEO Action. And we just moved this massively up the priority list; we really doubled, tripled, quadrupled down. And what’s so clear is that every single day, we are learning — every single day.

So it’s not necessarily what I prefer. I don’t know how somebody can go it alone and be their best. There’s so much uncharted territory. And we have so many resources on our site that can be used.

[Editor’s note: Apple declined to comment, but referred MarketWatch to its DEI policy. Facebook, Google parent Alphabet, and Amazon did not respond to requests for comment.]

“‘[T]here’s a massive gap between supply and demand of workers, and that’s putting pressure on wages, which I think is a good thing. It’s happening through natural forces and I hope those gains hold.’”

MarketWatch: I spoke to a Black Lives Matter activist who said that the biggest factor determining racial inequality is poverty. Has CEO Action given thought to pushing for higher wages? We had a report recently that showed that if Walmart were to raise its hourly wage by $5, it would drastically improve the physical health of its workers, not just their financial health. Is it time for companies to think differently about pay and profits and to think about making a sacrifice to make the world better?

Ryan: When we started back in 2016, the reason we chose the name is that what we were hearing was that the system was broken. A lot of CEOs and executives were saying it about poverty, education, healthcare, and it was all true. But then we said, “Well, there’s a lot we can do within our own four walls.” … Yes, the system needs massive improvement, but we can’t pass the buck.

Now on the question of wages: What is happening now, by coincidence, wages are on the rise as the balance of power has shifted. There are more jobs than there are people. We had an aging population for a couple of decades in the United States, but we cut off immigration both at the high end and the low end, and as a result, there’s a massive gap between supply and demand of workers, and that’s putting pressure on wages, which I think is a good thing. It’s happening through natural forces and I hope those gains hold.

Read more: U.S. wages are soaring, but high inflation is not leaving workers much better off

MarketWatch: Can you tell us how CEO Action for Racial Equity came about?

Ryan: We heard from a couple of hundred of the CEOs in that early group asking, “Is there more we can do?” And so we spent a couple of months talking about what would “more” look like. And that’s when we landed on CEO Action for Racial Equity, thinking that 100 of our companies would tackle public policy. We just celebrated our one-year anniversary on Oct. 1.

What we did was we invited any company that was part of our membership to contribute one or more employees for a two-year fellowship to work full-time on public policy and systemic racism. We thought of it as a startup. On Oct. 1 of 2020, we onboarded just under 300 people virtually. And that group has been working on public policy with the goal of ending systemic racism in areas of public health, public safety, finances and education.

And honestly, we were naive. We were innocent about what it takes to do public policy. We spent six months just bumping around, and then in the last six months we’ve really hit our stride, and we’ve been working at the federal, state and city level to help drive this. We have 30 fellows from PwC in that group; we gave 30 employees the chance to do something very different for two years. The man who used to head my tax business, a $5 billion business, is full-time CEO of that business. That gives you a sense of the talent that we put behind it.

The infrastructure bill that is now sitting somewhere in Congress, that team has provided — and I don’t want to overstate or understate it — but they are providing meaningful input into that bill to close the digital divide. There is 40-something billion that is dedicated in that bill to get broadband access to underserved communities, primarily minorities. So you can begin to fix the system. And that’s just one example.

So that’s where we’re trying to take on the system issues, knowing we’re just one important piece of the ecosystem. We had no idea what we were getting into. But all these people gave up two years of their careers, stepped away from their companies. And by the way, we have senior people and junior people. We have social media people, project managers, public policy people, lawyers, research experts. We have all these capabilities, and we put them together in teams, and we’re going after these issues.

There are 20 CEOs who are on the governing body giving their time. There are people like Procter and Gamble
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MassMutual, really great leaders who are giving their time. They help us with their public policy people to understand who you go talk to, who you share research with. And then we obviously found out the rules of lobbying, which we naively thought we wouldn’t need to know.

MarketWatch: Do you plan to renew that program?

Ryan: We will know in about six to eight more months, when we ask the 125 companies who have contributed one or more employee, “Are you willing to re-up?” Because all they’re doing is giving up the employee and paying their wages, and we at PwC pay all the other costs. I can’t predict what 125 CEOs are gonna say, but I feel pretty good about it.

“‘Now, with this war for talent, companies that are willing to pivot and change their mindset to treating employees with the respect they deserve — they’re gonna win the war for talent.’”

MarketWatch: How do you measure the success of the program and address accountability? Do you follow up with companies to see if they’ve done what they promised?

Ryan: Let me give you a little bit of a long-winded answer, because I think it’s the goal and the strategy that are important. If I go back to 2016, when the idea for this came together, it took nine months to really flesh it out and we launched in June of 2017. At the time, we were talking about a topic that was voluntary. Nobody was requiring you to join. There was a topic [racial inequality] and we all knew we weren’t where we needed to be, and we were all uncomfortable with it. But it was voluntary.

So we asked companies to come together, knowing we had that kind of headwind. And what I’m proud about is we got companies in the boat. We got over those hurdles and we got all of us in the boat.

We debated very candidly before we launched, but decided that if you immediately went to “accountable, accountable,” you wouldn’t have got people to join — and we were trying to make the world better! So on the second anniversary, in 2019, we felt comfortable enough to add the fourth pledge.

We had made unconscious bias training available for everybody, because we know that’s what everybody needs. We shared our unconscious bias training for free on the website. Then we added “make the workplace safe” by having these “Days of Understanding” and sharing best practices. We didn’t ask anyone for money until two years in, when we felt comfortable enough to say another requirement is we need you to commit to an annual fee, which is reviewed at least annually by the board.

We weren’t sure if we would lose some companies. Because now you’re asking your CEO to sit with his or her board, and to put it down on paper. But we didn’t lose anybody. And now as we go into our fifth year, it’s this constant raising of the bar. You set a low bar so we can all get the boat. You raise the bar a little with a DEI plan.

Now we’re debating what the next step is, but what we don’t want to do is alienate people and have them say, “You know what, it’s too hard, I’m out.” It’s that balance. So how do we know we got it right? Here’s how: Next month, we’re gonna have 1,300 CEOs and executives come together in our annual CEO summit. That’s amazing! And they wouldn’t show up if they weren’t getting something out of it.

MarketWatch: How will the pandemic-induced changes in how we work help CEO Action? I’m thinking in terms of how a more flexible work life would be great for people with disabilities, for women, for mothers.

Ryan: As I travel and talk to CEOs across the country, I feel there were three phases of the pandemic, starting with most of us just thinking this would be temporary and then it will go back to business as usual. But as it wore on, many CEOs said, “Well, I still want to go back to a culture of development of talent, and for that you have to be together.”

Then some began to hear from their employees that they liked the flexibility of working from home. They would say, “I like work, but I like some of this flexibility,” so you start to see views begin to diverge. And I think clearly, when you look at the war for talent, many employees are saying, “Look, if I don’t get the flexibility, some of these good things that came out of a pandemic, because it’s been a horrible pandemic … if I don’t get some of these things, I’m going to choose with my feet.”

I think there is massive opportunity for businesses that are willing to try new things and to let go of the old norms. PwC announced three weeks ago, we gave every single one of our 55,000 people in the U.S. the option of choosing whether they want to work full-time in an office or virtually.

We’re the only professional services firm and one of the few major companies to have done that. Our thinking was, we need to start treating our employees like retailers treat their customers. What we want is happy, productive and healthy employees, and I know when they are that way they’re going to do great things for our clients.

If a customer wants to buy at the store, retail has got to offer that. If a customer wants to drive to the store and pick up outside, they have to do that. And if they want to buy online, they’ve got to do that.

Now, with this war for talent, companies that are willing to pivot and change their mindset to treating employees with the respect they deserve — they’re gonna win the war for talent. And you can widen the net and reach people you couldn’t get to before and give them opportunities — people who it was hard for you to reach, given that you have many clients saying, “I’m located on the West Coast, I don’t have access.”

If you break down these walls, you have a whole new opportunity to bring on new and more diverse people, and I’m excited about that. Yes, there are challenges with development. Yes, there are challenges with culture. But what’s the alternative?

MarketWatch: Do you ever get frustrated by some of the things happening in the world? It feels like it’s one step forward, one step back. Change is so slow.

Ryan: Yeah, I’m not gonna lie, I get discouraged from time to time. But you have to keep going forward with what you believe is right. Unfortunately, we live in a divided world in so many different ways right now. But I do believe we’re one or two special people away from coming together.

And while I get discouraged when I pick up my newspaper or news feed, I do see both good and bad — and we have just got to keep moving forward.

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