Creative Strategies for Building Next-Generation, Diverse Leadership

Philosopher Pierre Teilhard de Chardin once said, “The future belongs to those who give the next generation reason to hope.” Could this be one of the secrets to preparing future generations of leaders for success?

McKinsey’s latest diversity report reveals that companies in the top quartile for ethnic and gender diversity are more likely to outperform their peers in terms of profitability. On the other hand, companies in the bottom quartile for both are 66% less likely to outperform on average – a huge jump from a moderate 27% in 2020, and a sign that a lack of diversity could be getting increasingly expensive.

Patrizia Ghiazza, a partner at Signium Italy, believes that more and more organizations are changing their strategies to align with leadership diversity goals. “Increasing diversity at the C-suite level plays a key role in determining corporate performance. Furthermore, companies with inclusive and diverse management teams have shown a greater capacity for innovation than those with less diversity. Many companies are setting measurable goals and putting both leadership and workforce diversity strategies into motion. It’s no longer just the right thing to do; it makes business sense.”

Leadership Career Trends – Discover the Roots of Our Leaders

To discover effective strategies to increase diversity in leadership, it is important to understand the current landscape of leadership positions.

Leadership has become outdated

Between 1980 and 2001, management positions were gradually taken over by younger people. Surprisingly, since 2001, the situation has reversed – probably because people are healthier later in life. On the one hand, retaining mature leaders can be beneficial, because they bring with them a wealth of knowledge and company culture, as well as decades of skills and industry experience.

But this dynamic can also prevent young people from advancing in an organization. The next generation of aspiring leaders may feel they need to look elsewhere to advance into leadership roles.

Progress for women in leadership positions still lags behind

McKinsey’s 2021 report on women in the workforce highlights strong evidence that companies with greater gender diversity are 25% more likely to outperform their competitors financially. Yet only 38% of companies have set gender diversity goals for their leadership teams.

Newer findings suggest that unequal pay, differing expectations and a “broken ladder” continue to prevent women from advancing into management roles at the same rate as their male colleagues.

There are more and more leaders from outside the country

The globalization of business is becoming increasingly evident in corporate leadership structures. In 2022, 45% of CEOs at Fortune Global 500 companies came from countries outside the company’s headquarters.

“Traditionally, organizations could only recruit leaders who lived close by, geographically, and therefore had the same cultural background,” Ghiazza says. “The alternative was to find and transfer foreign executives at great expense. Technology and globalization now allow organizations to appoint the best in the world in their industry. We should remember that when a company appoints a leader from outside its own country, it also brings in global experience, a new culture, and a new way of thinking that can create positive change. That’s where the greatest value of diversity lies.”

The number of people in management positions is decreasing

According to a study of Fortune 100 companies conducted by SHRM, 44% of senior executives in 1980 were “lifers.” That means they enjoyed a long-term career with the same company and moved up through the ranks. Today, only 19% are “lifers,” while more than 26% of executive positions are filled through external executive searches.

Evidence also shows that those promoted to leadership positions within an organization have an average tenure of about 12 years, with previous experience elsewhere of about 15 years. Ghiazza comments: “This should show companies that their future generations of leaders may not even be in their sights. With time and development, those who are currently in leadership positions could be at the helm of a company within a decade or two.”

Ethnic Diversity in the C-Suite Remains Critically Low

C-suite diversity isn’t just about social justice; it’s essential to business success. Research from Boston Consulting Group shows that companies with more diverse C-suite executives enjoy a 19% increase in innovation-related revenue.

Yet, according to Fortune.com, only 1.6% of CEO positions in the Fortune 500 are held by black people. The same is true for other ethnic groups, with Hispanic or Latino people holding just 4% of C-suite positions. These numbers underscore the urgent need for structural changes to promote ethnic diversity at the executive level.

Cross-industry experience providing a diverse range of skills

Historically, industry knowledge was considered highly specialized, and management rarely changed sectors. Today, management typically has extensive experience in two or three different industries.

Today, having cross-industry experience is seen as invaluable. This trend reflects a growing desire among boards to bring fresh perspectives to the complexities of the global business landscape. Sectors such as technology and healthcare are at the forefront, where transferable skills help drive innovation and navigate stringent governance regulations

Starbucks – The Power of Diversity in Leadership in Action

One organization that leveraged diverse leadership to survive challenging times was Starbucks. In 2017, Rosaline Brewer was named COO of the global company. She was one of the few African American women in executive positions at a Fortune 500 company and was tasked with improving operational efficiency and fostering an inclusive culture.

In response to several public incidents that highlighted discrimination issues, Brewer implemented comprehensive training programs to address unconscious bias among employees and led a high-impact training initiative on racial bias. Other Brewer efforts included improving the company’s digital ordering system, expanding the Starbucks Rewards program and promoting community-oriented store designs that reflect local cultures.

Under her leadership, Starbucks saw significant growth in digital sales and improved employee satisfaction and retention rates through expanded benefits and internal career development programs. Brewer’s work not only strengthened customer relationships with diverse communities, but also enhanced Starbucks’ reputation as a socially responsible brand.

“Having diverse leadership isn’t just about meeting regulatory requirements or being politically correct,” Ghiazza says. “It’s about harnessing the full range of human potential to achieve success and create a more equitable society.”

Four Strategies for Identifying and Developing Diverse, Next-Generation Leaders

Identify your inner leadership potential

Identifying potential next-generation leaders involves assessing employees against key performance indicators and potential assessment tools to identify high-potential employees. Achieving diversity at the supervisory and management levels is typically easier than at the C-Suite level—by exploring the potential in these pools, companies can begin developing tomorrow’s diverse leaders today.

Ghiazza offers some advice: “In addition to industry knowledge and skills, organizations should focus on traits like resilience, adaptability, and emotional intelligence. Just as smoke often leads to fire, these traits will help you find natural leaders.”

Find out what matters to next-generation leaders

As bestselling author and communicator Andy Stanley once said, “The next generation of leaders are those who would rather challenge what needs to be changed and pay the price, rather than remain silent and die inside.”

The next generation of leaders—typically millennials and Gen Z—have different priorities than previous generations. They value alignment with organizational values, career development opportunities, work-life balance, an inclusive culture, technological advancement, corporate social responsibility, and collaboration.

To attract and develop such leaders, organizations can showcase their mission and social impact by taking several practical steps:

Modernizing job descriptions to reflect company values and purpose
Using social media to share cultural knowledge
Hosting virtual open houses for candidates who ask honest questions
Empowering Current Employees as Company Culture Ambassadors
Collecting continuous feedback throughout the recruitment process

Remove barriers to entry and/or advancement

To ensure equal opportunities for next-generation candidates, organizations can improve their recruiting and career advancement practices.

Recruitment:

Use blind recruitment to minimize bias.
Tailor job descriptions to be inclusive and reflect your company’s commitment to diversity.
Standardize interviews with diverse groups and ensure that recruiters receive bias avoidance training.
Improving implementation through mentoring programs and cultural competency training.

Career advancement:

Formalize workplace support policies that include creating employee resource groups.
Promote work-life balance and offer comprehensive benefits such as parental leave and mental health support.
Conduct regular internal reviews to drive improvements.
Collaborate with communities to build a diverse talent pool.

“Diversity is about discovering what exceptional people have to offer,” Ghiazza says. “If you want to find the best leadership talent for your industry, you have to make sure that everyone who is qualified feels fair and secure. Whoever – regardless of gender, ethnicity, age, sexual orientation, ability or religion.”

Promote mentoring and networking

Mentoring opportunities offer personalized guidance to all aspiring leaders, helping younger professionals build skills and confidence while gaining visibility. Networking broadens opportunities by connecting individuals with industry leaders and cultivating relationships that support career advancement. The larger each individual’s network, the stronger the connections the organization as a whole will have, especially with diverse team members and their communities.

Giving the next generation a reason to hope

By providing equal and fair opportunities to people from diverse backgrounds, those with a passion for leadership can enter their industry with the hope of reaching their full potential. This should no longer be seen as a burden for organizations, but as an opportunity to leverage the natural gifts and skills of diverse leaders.

“In decades past, people associated titles like ‘CEO’ with tyranny and domineering leadership,” Ghiazza says. “It was also something that previously marginalized people couldn’t even dream of. A Black woman as CEO of a Fortune 500 company? Never… What a time to be alive! With some planning and thoughtful strategies, the impossible is now not only possible, but necessary!”