Diversity and Inclusion Incentives Across the F200

How can committees continue to improve their impact on talent planning without “stepping on the toes” of management—recognizing that the administrative responsibility for talent matters is a management activity?

Recognizing both the shrinking of leaders’ tenures and the shifting skill sets needed for future success, many boards are now making succession planning a continual process.

Moving forward, we anticipate that ESG metrics will continue to become more prevalent among S&P 500 companies before hitting an eventual plateau.

While there is building momentum to adopt ESG related incentive metrics, it is important to consider the company’s specific business and talent requirements before doing so.

Human capital management (HCM) disclosure is evolving rapidly, and the proxy is quickly becoming the most prominent area for boards to tell their HCM story.

Nearly 30 percent of companies in the S&P 500 used a diversity, equity, and inclusion (DE&I) metric in executive incentive design last year, and a quarter of these businesses did so for the first time, although metrics focus on representation only, easily achieved goals disconnect from long-term aspirations, and metric definitions are not stress tested.

Boards are now broadening their oversight to capitalize on the criticality of more diverse, equitable and inclusive organizations—and strong organizational culture.

Third article of a three-part series focused on how companies can implement the foundational steps of board-level ESG oversight.