A company in Brazil made a controversial move to fight racism. Other CEOs should try it.

CNN

Arick Wierson

Although she's not a household name in the United States, billionaire Luiza Trajano, the richest woman in Brazil, might very well become one soon if her radical new model to confront structural racism takes hold.

Trajano made her fortune with her eponymous Magazine Luiza (or Magalu as it is known) -- Brazil's sprawling 1,000-store department store chain with over 40,000 employees. She recently announced, together with her son, Frederico Trajano, the company's CEO, a bold and highly controversial move: Its coveted trainee program, long considered a major stepping stone into Brazil's corporate world, will now only admit Black Brazilians into its ranks in an effort to upend a system that oftentimes sidelines Brazilians of African heritage from rising up the corporate ladder. 

 

The Magalu announcement quickly reverberated across the Brazilian media landscape. It was a bold move, no doubt, but not one without blowback; there have been calls across social media for a boycott of the company's stores. 

 

To put this move in perspective, the impact of Magalu's new hiring edict in Brazil would be like Goldman Sachs announcing that its prestigious new associate program would only be hiring MBAs of color, or Google retooling its coveted associate product marketing manager program so that it would only accept Black and Brown college graduates. 

 

Of course, such a move in the United States would immediately run afoul of long-established laws stemming from Title VII of the 1964 Civil Rights Act, which set up the EEOC (Equal Employment Opportunity Commission) to adjudicate race-based hiring, firing and promotional grievances. Seminal cases such as Griggs v. Duke Power Co. (1971), McDonnell Douglas Corp. v. Green (1973) and Hazelwood School District v. United States (1977), among many others, served to advance the legal structure through which American companies now deal with matters of race and equity in the workplace. Over time, these lawsuits gave EEO policies more teeth by defining a legal framework for ensuring workplace protections. They also forced companies to rewrite or get rid of unfair employment policies and practices.

 

However, the cruel irony of America's efforts to curb workplace discrimination is that once Title VII forcibly removed race from the hiring equation, it immediately became that much harder to enact programs to address systemic racism in ways that might be beneficial, which is why our country's long attempts at promoting affirmative action programs ultimately failed. Although originally passed to hinder workplace discrimination, race-based recruiting and hiring laws were eventually co-opted by conservatives and used to thwart race from being a factor for creating more diverse and inclusive workplaces, while giving birth to an array of White grievances under the general rubric of 'reverse racism.' 

 

No matter how we got here, the current system is clearly not working; White males still account for the majority of executive positions. Among the CEOs of Fortune 500 companies, only 1% are Black. Even a level down, a recent Stanford Graduate School of Business study examining the makeup of Fortune 100 companies found that just 3% of African Americans held senior-level roles with profit and loss responsibilities -- often seen as stepping stones to the top job. America has a diversity problem, and our largest corporations need to embrace bold new models about how to accelerate social and racial justice within their ranks. 

 

CEOs should start by stripping down America's foundational myth of meritocracy -- the notion that one's ability to get ahead in life is solely a function of the combined strength of their efforts and abilities -- and approach corporate recruiting from a new angle. Instead of relying on a hiring process defined by attending the right schools and interning at prominent companies, CEOs could begin identifying and cultivating talent much earlier in life and according to a new metric: grit. 

 

Several corporate programs, such as Starbucks' College Achievement Plan, have taken steps to make higher education more accessible for employees, but fall short of addressing the social, environmental and economic vectors that impinge upon disadvantaged youths. What if growing up in a low-income, single-parent household, instead of being seen as an impediment to climbing the social ladder, positioned high-potential young teens for corporate-sponsored talent development programs that would support them from junior high, through high school and college and into the sponsor's corporate ranks? Such a program executed at scale would invariably lift up disadvantaged White youths as well, but that would be a feature, not a bug, making the entire initiative less controversial. 

 

Which CEOs will have the requisite combination of vision to truly stand up for racial ju

stice and stick their neck out for meaningful workforce diversity? Perhaps, like Trajano in Brazil, it will be a corporate leader who is unencumbered by risk-averse boards and myopic shareholders who can't be tasked with thinking about anything beyond the quarter ahead. Maybe it needs to be someone like my former boss, Mike Bloomberg, who still owns most of his behemoth media and data company and is beholden to virtually no one. 

 

Or perhaps it will be someone like Microsoft CEO Satya Nadella, who is widely seen as one of the most progressive CEOs on the topic of diversity and inclusion. Or perhaps it could be Amazon's Jeff Bezos, JP Morgan's Jamie Dimon or Zoom's Eric Yuan -- there is no shortage of candidates with the political muscle and dogged perseverance necessary to pull off what Trajano is doing down in Brazil.

Despite the controversy around the decision, the Trajanos are not wavering. "We want to see more Black Brazilians in positions of leadership in Magalu; this diversity will make us a better company, capable of delivering a better return to our shareholders," Frederico Trajano wrote in a recent article.

Forcing diversity, argues Trajano, is in the long-term strategic interests of shareholders. 

 

Trajano's plan is not only to create a powerful stream of more diverse leadership throughout his company's ranks, but to inspire other corporate leaders to follow suit, and in doing so, fast-track the demarginalization of the country's majority Black demographic. Ultimately what happens as a result of the mounting political and public pressure against Magalu remains to be seen. If Magalu stays the course, it could signal a watershed moment in Brazil and could encourage other Brazilian companies to consider similar policies. 

 

"Today the racial make-up of Brazil is over 50% Black and Brown -- it basically looks like what the United States is projected to look like by 2050," observed Frederico Trajano in a recent Zoom interview with me. "American CEOs of large companies would be well-served by looking at what we are doing down here in Brazil on many fronts, including how to ensure that a company's leadership team better reflects the public it serves." 

 

Here in the United States, Americans just elected the first woman of color, Kamala Harris, herself the daughter of Jamaican and Indian immigrants, as vice president, and so the timing of such a bold move by a leader in Corporate America would certainly be fitting. Maybe for once, instead of looking east, west, or at one another for inspiration, American CEOs should look south, and take their cues on racial justice from a bold businesswoman and her son from Brazil.

 

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