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Exactly a year ago, we decided to publish the gender data on founders at Rock Health. Despite women being the majority of our team and our board, only 30% of our portfolio companies had a female founder (today, we are at almost 34%). Because we’d like to help our portfolio companies access a diverse talent pool, we began the XX in Health initiative nearly four years ago.

The aim of this initiative is to bring women together to network and support one another. The 2,400 members of the group share resources and ideas on LinkedIn and meet regularly across the country. This week we’re hosting a webinar on the topic for both men and women, and next week we’ll host our sixth XX in Health Retreat in NYC.

Today, through this initiative, we are proud to share our third annual report on the state of women in healthcare. Our past reports on this topic have been some of our most popular content, and we encourage you to share this report with your colleagues.

Women are still underrepresented in leadership positions in healthcare.

Despite making up more than half the healthcare workforce, women represent only 21% of executives and 21% of board members at Fortune 500 healthcare companies. Of the 125 women who carry an executive title, only five serve in operating roles as COO or President. And there’s only one woman CEOof a Fortune 500 healthcare company.

Hospital diversity fares slightly better. At Thomson Reuters 100 Top Hospitals, women make up 27% of hospital boards, and 34% of leadership teams. There are 97 women that carry a C-level title at these hospitals and 10 women serve as hospital CEO.

We know from our funding data that women make up only 6% of digital health CEOs funded in the last four years. When we looked at the gender breakdown of the 148 VC firms investing in digital health, we understood why. Women make up only 10% of partners, those responsible for making final investment decisions. In fact, 75 of those firms have ZERO women partners (including Highland Capital, Third Rock, Sequoia, Shasta Ventures). Venture firms with women investment partners are 3X more likely to investin companies with women CEOs. It’s no wonder women CEOs aren’t getting funded.

The problem is real, and the problem matters.

We surveyed over 400 women in the industry to better understand the sentiment around gender discrimination. 96% of the women we surveyed believe gender discrimination still exists. And almost half of them cited gender as one of the biggest hurdles they’ve faced professionally.

Often these are micro-inequities that compound over one’s career. MIT Professor Mary Rowe describes these instances as “apparently small events which are often ephemeral and hard-to-prove, events which are covert, often unintentional, frequently unrecognized by the perpetrator.” But they create work environments which hold women back.

When senior women are scarce in an organization, a vicious cycle of  “second-generation” gender bias kicks in. Researchers describe this bias as barriers that “arise from cultural assumptions and organizational structures, practices, and patterns of interaction that [put] women at a disadvantage.” Fewer women leaders means fewer role models for would-be women leaders. On the flip side, when women who are early in their career see more women in senior leadership positions, it sends the message that they too belong in the C-suite.

The good news is that achieving diverse leadership teams is not just a moral imperative, it’s good for business too.

Having a diverse team creates a positive, virtuous cycle. Companies with women CEOs outperform the stock market, and companies with women on their boards outperform male-only boards by 26 percent. Researchers even estimate that transitioning from a single-gender office to an office evenly split between men and women be associated with a revenue gain of 41%.

Not only do companies with more women in leadership yield better economic returns, recent research also suggests it helps mitigate risk. One study shows that each additional female director reduces the number of a company’s attempted takeover bids by 7.6%. Another study indicates that companies with more women on their board had fewer instances of governance-related scandals such as bribery, corruption, fraud, and shareholder battles.

Let’s get together and support one another.

Empower your colleagues to promote gender equality in the workplace. This month we challenge you to reach out to that mentor, manager, peer, or mentee with whom you’ve been meaning to connect with. Ask her to grab coffee and send us a picture by April 30 so we can share it on the XX in Health website!

This article is an excerpt from Diversity Best Practices' new book, the HR Executive Diversity Primer.

What’s the best way to structure a diversity function? The answer is as individual as companies themselves. Let’s look at three organizations—Sodexo, Johnson & Johnson, and Rockwell Automation—that have established different, yet equally effective, configurations of their diversity offices.

Sodexo, Inc.

With 400,000 employees across the globe (125,000 in North America) and operations in 33,400 sites in 82 countries, Sodexo is among the world’s top 25 employers, as a provider of integrated food services and facilities management. Betsy Silva Hernandez, Sodexo’s senior director for corporate diversity and inclusion, describes the corporate culture as high touch with an orientation toward action. It’s a high-touch culture, because the company is very relationship based and uses the power of influence to drive its diversity efforts. Its action orientation shows up as the company’s business leaders push for quick results, yet they also want the diversity strategy to be customized to their local context.

Silva Hernandez explains how the company’s decentralized structure is reflected in the structure of the diversity office. Depending on the location of a regional market (North America, Europe, Central or South America, and others), the company uses multiple infrastructure models. The decentralized model is further intensified by its French ownership, which brings its own inclusion issues. While the structure has evolved over time, the formal diversity effort began in 2002 with the creation of the company’s diversity leadership council. 

Along with the North American CEO, this council was charged with developing the diversity and inclusion strategy, setting priorities, and providing oversight for the effort. Later the strategy was broadened to include a committee of operational leaders comprised of members from the executive committee and market presidents. Their task was to implement the strategy and embed it throughout the organization by working with the company’s Cross Market Diversity Council (CMDC) and its employee business resource groups (EBRGs). The CMDC and EBRGs provide the grassroots support for inclusion initiatives. According to Silva Hernandez, this structure represents a top-down, middle-out, bottom-up approach to the inclusion strategy.

The efforts of Sodexo’s diversity and inclusion team on behalf of 125,000 North American employees, and influencing 270,000 other employees in locations around the world, are augmented by its EBRG members and other volunteers across the organization. Volunteer impact is monumental. For example, roughly 90 percent of Sodexo’s 25,000 North American managers participate in EBRGs. And the EBRGs are instrumental in how the company delivers its inclusion results. 

Volunteers may provide the much-needed resources to drive the inclusion efforts. However, as Sodexo’s Chief Diversity Officer Rohini Anand explains, the inclusion strategy is also based on the shared services model. The corporation provides and funds support services for the entire corporation, with local operations furnishing additional resources. Yet, even a company as committed to diversity as Sodexo has had to face the realities of a global economy. For two consecutive years, Silva Hernandez has seen the diversity budget cut, while responsibilities have increased. The Sodexo diversity office has had to deliver more with less money.

While Sodexo’s North American diversity strategy is only 10 years old, it is considered a mature, highly regarded function. Companies across the globe use Sodexo as the benchmark they aspire to reach. The company also illustrates the evolving nature of the diversity function.

Initially, Anand reported to the senior vice president of HR. Soon after, diversity was repositioned so that she reported to North American CEO George Chavel, and now she has a bifurcated reporting relationship to both the North American CEO and Global CEO Michel Landel. Although her area no longer reports directly to HR, Anand explains that both areas enjoy a strong partnership. “We’re separate, but we’re strong partners,” she says.

The diversity department has changed in the past and Anand understands that it could change again. “Diversity was a part of HR, then separated from HR, and depending on the needs of the organization, we would certainly recalibrate that relationship,” she said. “Obviously, our effort continues to be a work in progress."

Johnson & Johnson

Johnson & Johnson (J&J) is a global leader in healthcare, consumer products, pharmaceutical products, and medical devices. It’s a 125-year-old company with $65 billion in revenues. J&J’s Smita Pillai, director of global diversity and inclusion, medical devices and diagnostics, explains that J&J’s culture is best considered a hybrid between a lean culture at its headquarters in New Brunswick, N.J., and a more high-touch culture in its 250 operating companies that span 57 countries across the globe.

J&J’s structure also mirrors its hybrid culture, which is decentralized at the regional and local levels but supported by a more-centralized core strategy in its corporate offices. In this way, J&J’s global diversity and inclusion office has the best of both worlds. The central office establishes an overall strategy and provides some independent funding, while the local companies roll out the strategy and allocate funding from their budgets to support diversity initiatives.

According to Pillai, the company’s CDO reports directly to the CEO, and manages six director-level direct reports. With an annual budget of $5 million, the diversity function numbers about 16 employees, including directors and administrative assistants. Pillai said Johnson & Johnson can’t run a global diversity operation with the current structure at the corporate level, so the diversity function works in close partnership with HR and its teams.

While J&J’s office of diversity and inclusion has a well-deserved reputation, internally and externally, as an established leading-edge operation, Pillai recognizes that its structure may evolve as the company adapts to an ever-changing global landscape.

Rockwell Automation

With more than 20,000 employees, revenues of $6.2 billion and operations in 80 countries, Rockwell Automation is a business-to-business firm that is a leading provider of integrated systems for process manufacturing. According to Joan Buccigrossi, director of global inclusion and engagement, the diversity department was deliberately and strategically structured to serve as an inside consultant to the leaders and managers of the company. The responsibility for creating a culture of inclusion rests totally with the company’s leaders, not with HR.

With only two part-time staff members in the diversity office, Buccigrossi operates in a lean culture with a highly matrixed structure that leverages the power of influence across the organization. While she reports to the senior vice president of HR, Buccigrossi explains that her customers are the company’s business and function leaders, who initiate actions and develop the diversity direction. In this way, HR does not set the inclusion agenda or its engagement strategy. That’s done by Rockwell’s leaders and managers. “The danger of housing diversity in HR is that it can make the effort more of an initiative, something being done to leaders, rather than an effort they are intimately involved in,” Buccigrossi said.

“At Rockwell, leaders and managers are change agents.”

As in many firms, HR provides needed metrics, encourages tough conversations, and challenges and supports leaders and managers, Buccigrossi said. It is the department heads and their employees who fund the strategy and take ownership to ensure it succeeds. She cites an example with the North America sales division. The department decided that all managers and employees receive specialized education in order for everyone to become change agents. The department funded the effort and played a key role in the design and implementation of the learning modules. “The education is much more effective than any ‘training’ pushed out from HR would have been” she added.

While Buccigrossi’s diversity function does not have a budget, for real, the company’s functional leaders are prepared to support diversity initiatives from their funds. This arrangement works well for Rockwell. Everyone remembers 2008 and 2009, when the global and national economies were reeling from the fiscal freefall and companies were tightening their belts. In 2009, Rockwell’s diversity office was able to spend significant dollars on inclusion initiatives for employees. How? The business functions believed that such training was valuable and provided the necessary funding.

While Rockwell’s inclusion and engagement (I&E) department is tiny, in reality, the diversity and inclusion team consists of everyone in the company. According to Buccigrossi, all diversity and inclusion work is done by the people in the businesses and functional areas. They created Inclusion Change teams, which are tasked with performing cultural assessments, identifying barriers to inclusion, planning and executing actions to remove those barriers, and measuring results. Rockwell also uses rotational staffing assignments in I&E for up-and-coming and established leaders, although participants keep their day jobs. 

According to Buccigrossi, the consultant approach works well for Rockwell, because it blends in with the company’s culture and structure. This is how everyone works and business objectives are met. As a result, the consultant model reflects the current corporate environment and drives its inclusion strategy.

DiversityInc CEO Luke Visconti recently interviewed Thomas F. Zenty III, CEO of the Cleveland-based hospital system. (University Hospitals is one of the 2012 DiversityInc Top 5 Hospital Systems.) Zenty discussed the dramatic impact of the Affordable Care Act and how the hospital’s diversity efforts in the workplace and the community are helping it survive.

Zenty spoke on this topic at DiversityInc’s event last month, Diversity-Management Best Practices From the Best of the Best. Click here for video of his talk.

Luke Visconti: What is the intersection of solid diversity-management initiatives and the reduction of healthcare disparities?

Thomas F. Zenty III: Many studies have shown that there is a direct correlation between people of diverse backgrounds being willing to seek care and knowing that people who look like them will actually be providing that care. So the intersection between diversity and disparities is rather significant. We want to make certain that we’re doing everything that we can to make sure that people of color will be able to work in our organization, hold positions of leadership—caregivers, clinicians and support staff—in order to make people of all backgrounds, colors and faiths feel comfortable coming to University Hospitals to receive the world-class care that we provide.

Visconti: How is diversity and inclusion a competitive differentiator for a hospital?

Zenty: There is no better way to gain the pulse of what’s happening in the communities that we serve than by having people who live and work in those communities actively engaged with us at every level. From an employee perspective, it’s critically important that we have people of diverse backgrounds who will bring skills, talents, perspective in order to help us to do a better job as we look to achieve our mission. We think it’s critically important for diversity to be well represented across our entire health system at every level, be it gender, religion, race, color. In fact, we’ve recently reached out to the Amish community because one of our hospitals has a very large Amish population, and we realized that we did not have a member of our board who was of Amish descent. As a result, we added a new Amish board member to our hospital, and he’s brought a lot in terms of a better understanding of the Amish community and the healthcare needs of that community.

The point is we need to look into the community to better understand who are the communities that we serve? Who best represents those individuals within those communities that we serve? And how can we engage them at every level, either as employees, as members of the board, as leadership-council members? And we want to make sure that we’re engaging everyone in the communities that we serve.

Visconti: You’re very personally involved in the community. Why?

Zenty: It’s critically important for an organization of our size in a community of this size, as the second-largest private employer in Northeast Ohio, to make certain that we’re going to be focused on diversity at every level within the communities that we serve. Our organizational values include excellence, diversity, integrity, compassion and teamwork. And diversity is one of the key components of the cornerstones of the work that we do every day in taking care of our patients and meeting our mission. As the leader of this organization, it’s critically important for us to be actively engaged in community activities to make certain that we’re not only aware of what’s happening in the community, but play a leadership role in advocating on behalf of many different agenda items. One of the key ones, though, is in the area of diversity in Northeast Ohio.

Visconti: University Hospitals has a 100 on the Corporate Equality Index, the Human Rights Campaign’s index of equality for LGBT people. Why is that important to you?

Zenty: The LGBT community is very important to us for all the other reasons that I stated in all the other populations that we serve. They’re very much a part of our community. We want to make certain that they’re recognized and represented. They have actually recognized us for our work in this regard, which we’re very pleased about.

Visconti: Your chief diversity officer reports directly to you. You also have hands-on interaction with people who are responsible for delivering results in diversity management. How important are these two things?

Zenty: It’s critically important that the chief diversity officer reports to the chief executive officer. Donnie Perkins is our chief diversity officer and does an excellent job in the role. However, it’s also important to note that we have a very close working relationship with Elliott Kellman, who is our chief human resources officer, because so much of what we do in workforce planning and workforce development is structured around the importance of diversity at every level in our organization.

In our organization, we selected the top 24 people from within our health system to be part of an education-and-training program in conjunction with Case Western Reserve School of Business. We’ve engaged 13 physicians and 11 non-physicians who were at senior levels in our organization who we feel have the potential to grow and develop in the years to come within University Hospitals’ health system. They were selected on the basis of their accomplishment. They were selected on the basis of diversity. They were selected on the basis of their ability to grow and develop within our organization. It’s an 18-month program, but we’ve seen great success thus far. One of those individuals has already been promoted to a new senior position that was recently created in our organization.

But at the other end of the spectrum, we’re also concerned that we don’t have enough people of color in our management ranks. So we put together a mentorship program, which will include people at the senior administrative level who will choose people who have promotional capability within our organization, who will be working with each of us to make sure that they will be given the opportunity to grow and develop within our organization in both non-management as well as in management roles, so that we can encourage more people of color to get actively engaged as supervisors, managers, directors, vice presidents.

Visconti: How are you holding your senior team accountable for diversity-and-inclusion results?

Zenty: Our senior team is very actively engaged with Donnie’s leadership in making certain that we are focused on diversity at every level within our organization, looking at the healthcare needs of the people who we serve, making certain that our employees are given equal opportunity for promotion and growth within our health system, making certain that people who are in middle management have opportunities to grow into senior-management roles, and making certain that we are focused on doing everything that we can to prepare the next generation of leader who will be people of color and of diverse backgrounds. Likewise, it’s important to mention that our board has been focused on diversity over the past many years. And I’m pleased to report that the Council on Economic Inclusion has awarded us for two years in a row recognition for the diversity of our board. If we receive it a third year in a row, we’ll go into the Hall of Fame, and we’re hoping that that will be achieved. This actually starts at the top, beginning with our board, and then filters throughout our entire organization.

Visconti: What do you see as the greatest challenge facing University Hospitals? And how does diversity and inclusion factor into the solution?

Zenty: The greatest challenge will be how to address the changes that we’ll be facing under healthcare reform. One of the key things that we will focus on in the area of diversity is to make certain that the 32 million more Americans who will now have access to healthcare insurance that didn’t have it before, that they will be well represented both within the communities that we serve as well as well represented in the patient populations that we care for. We have a number of very strong specialty clinics that will focus on the needs of specific elements within our population. But we want to make certain that as we see this influx of new patients arriving, we clearly understand what their needs will be—which is more than just episodic acute-care needs, but the continuum of care of services that we’ll be able to provide to them in the years to come.

Visconti: I found University Hospitals’ website to be exemplary in its ability to communicate your mission, your values, how diversity ties into all of this, your corporate citizenship, your engagement with the community. Why is it so important to communicate this?

Zenty: University Hospitals really wants to be a leader in the area of diversity. We’ve been in existence since 1866. We’ve been a very active and vibrant part of this community for that same period of time. And we want to make certain that we’re going to be leaders in the area of diversity—to set the example, to set the tone toward diligently making great things happen in the world of diversity, and to make certain that we’re going to focus not only on the needs of our patients, but also on the needs of those within our organization, to make certain that everyone will be able to realize their fullest potential.

by Pamela Babcock - Freelance Witer
for shrm.org

NEW YORK—Getting diversity and inclusion (D&I) “right” requires strong CEO commitment. But an all-white panel of CEOs who recently won diversity leadership awards said the seeds for their passion were planted long before they entered the corporate ranks.

George Borst, president and CEO of Toyota Financial Services, grew up playing stickball in Hollis, Queens, N.Y., while Michael I. Roth, chairman and CEO of Interpublic Group, was raised in nearby Brooklyn. Michael Howard, COO of the Army and Air Force Exchange Service, lived on military bases because his father was in the Air Force.

Meanwhile, John Edwardson, chairman and CEO of CDW, was raised in a small southern Illinois town that had just one African-American couple but later lived in Hyde Park, a diverse area on Chicago’s South Side. And John B. Veihmeyer, chairman and CEO of KPMG, who has five sisters and two daughters, said he has seen first-hand the career challenges the women in his family have faced.

Personal experiences frame you, Veihmeyer told attendees June 8, 2011, at the CEO Diversity Leadership Awards and CEO Forum, held at Columbia University here. “You’re actually in a position now to try to make a difference about something that has probably been important to you your whole life.”

The 2011 CEO Diversity Leadership Awards were presented by Diversity Best Practices, a New York-based membership group for diversity and inclusion practitioners. In addition, the group recognized diversity officers with its annual Diversity Officers Leadership Award (DOLA).

2011 DOLA winners included Herbertina “Tina” Johnson, senior director of diversity for the Army and Air Force Exchange Service; Melissa Donaldson, director of inclusion practices at CDW; Heide Gardner, chief diversity and inclusion officer at Interpublic Group; Kathy Hopinkah Hannan, national managing partner of diversity and corporate responsibility at KPMG and Joe Husman, corporate manager of corporate social responsibility for Toyota Financial Services.

Carol Evans, CEO of Diversity Best Practices and president of Working Mother Media, said the awards recognize CEOs who are “leading the culture” and diversity officers “who not only have the strategy on their shoulders, but also have to make sure that everything gets implemented.”

The Business Case

During the event, several CEOs explained why diversity is a strategic imperative:

Borst said diversity is key to helping mirror the market his company competes in and said Toyota Financial Services makes more loans to African-Americans, Hispanic-Americans, Asian-Americans and women than does any other captive finance company in North America. “By having an organization and a structure that is diverse, we’re better able to understand this market,” he said.

Toyota supports underserved and underprivileged communities, “which unfortunately are dominated, in a lot of cases, by diversity,” Borst noted. This has had a spillover effect with employees: In the most recent annual associate opinion survey, 96 percent said that they thought that Toyota Financial Services was socially responsible, he added.

Instead of what he called “checkbook charity,” Borst said, the company participates in events at Boys & Girls Clubs of East Los Angeles, where associates “can dig in and volunteer and build relationships both with the community and with one another.”

As a professional services firm, KPMG requires intellectual capital that is as diverse as the clients it serves. Veihmeyer said it’s easy to get passionate about diversity because “it’s the right thing to do, for all the right reasons.”

But if that’s all you view it as, you’re not going to succeed, he said.

“We can’t have our diversity initiatives kind of tucked over to the side as some fifth leg to a stool,” he said. “What we have tried to do is to bake diversity into each of those four strategic priorities: quality growth, professionalism and integrity, being an employer of choice, and maintaining a global mind-set,” Veihmeyer explained.

The company can’t afford to fail to attract or retain a single high performer because it doesn’t believe KPMG is “supportive, committed to and totally focused on their success, irrespective of what their background or other needs may be,” Veihmeyer added. That’s why, among other things, the company has a key accounts rotation program that targets ethnically diverse associates to ensure that, early in their careers, they receive the client exposure and broad range of experience needed to succeed.

Roth of Interpublic, an advertising and marketing giant with 41,000 employees in 130 countries, noted that the advertising industry has “historically been terrible when it comes to diversity and inclusion,” pointing to the television show “Mad Men” as an example. His firm’s diversity initiatives are a differentiator in the marketplace because “If we’re not communicating the message correctly for our clients, we lose our clients.”

Edwardson of CDW, an IT products and services provider, said that shortly after he joined the company, he asked about the company’s target market and was told by its advertising agency that it was “white males between the ages of 26 and 42.” A couple of weeks later, he viewed focus group videos and realized quickly that this wasn’t the case. Changes were made and revenue grew. Diversity is “clearly the right thing to do, but it has been darn good business for CDW as well,” he said.

Bringing the Mission to Life

Borst said recent drama—a global recession, product recalls and a tsunami and earthquake in Japan—could have pushed diversity onto the sidelines at Toyota. However, “What we have tried to do is to make sure it stays as one of the important priorities,” he said. “I try to make sure the behavior I’m trying to model is modeled by the rest of the people on the management committee, and it all cascades down,” he said.

The Army and Air Force Exchange Service, which provide goods and services for the Army and Air Force, has about 43,000 employees in 30 countries. Howard said he likes “helping develop the future.” He spends a couple of hours each week with different diverse groups and asks high performers “what can we do to help you?” Howard said they usually have the hard skills—they know how to do the jobs—but they often lack networking or social skills. “They are very eager to learn,” Howard reflected. “I say ‘well I’ve got half an hour,’ and two hours later we’re still talking.”

At CDW, it’s critical to build the pipeline at all levels of the organization, according to Edwardson. “I spent a lot of time with recruiting to make sure that for every single opening that we have that comes up that we have a diverse list of candidates,” he said.

Roth noted just how influential some diversity groups can be. Interpublic’s Women’s Leadership Network, which has about 10,000 participants globally, sponsored an event in June 2011, titled “Beyond Mad Men: Toward Gender Diversity in Creative Roles,” during the Cannes Lions International Festival of Creativity. Roth will host the event, which will be moderated by CNN anchor Soledad O’Brien and feature a panel that includes Martha Stewart. It will focus on the dearth of women in the most senior creative roles and what can be learned from women who have made inroads in advertising, marketing and media.

In the end, organizers emphasized, it’s important to have a partnership between the chief executive and chief diversity officer. Andrés Tapia, president of Diversity Best Practices, said that without an effective diversity leader, “a CEO’s commitment cannot be turned into the strategies, programs, processes and action plans that bring the mission to life.”

In closing, Gardner of Interpublic offered this thought: “What I am learning is: Inclusion is pretty much the same everywhere,” she said. “It’s not just about making diversity counts but about making diversity count. And that holds true wherever you are.”

Pamela Babcock is a freelance writer based in the New York City area.