Report on Whether Company Policies Reinforce Racism in Company Culture

Resolution Text

WHEREAS:

A.O. Smith’s 2020 Corporate Responsibility Report explains that “[d]iversity has been empirically shown to promote creativity and innovation and is a priority within our company, driven by our Chief Executive Officer and with full support from our Leadership Team and Board of Directors”;

While the report describes initiatives on female representation, it is unclear how the company examines Black and Brown representation. The 2020 report does not provide statistics on the company’s racial or ethnic diversity in the workforce or leadership. This stands in contrast to Milwaukee, where A.O. Smith is headquartered, which is a “majority minority” city that was ranked the 6th most diverse large city in 2020. Only 34% of Milwaukee residents identify as non-Hispanic white;[1]

This ignites questions about whether the lack of leadership diversity indicates a systemic challenge at the company;

Author Ibram X. Kendi explains: “every policy in every institution in every community in every nation is producing or sustaining either racial inequity or equity…” existing both in “written and unwritten laws, rules, procedures, processes, regulations, and guidelines that govern people”[2];

Harvard Business Review explains: “[c]ompanies must confront racism at a systemic level – addressing everything from the structural and social mechanics of their own organizations to the role they play in the economy at large”[3];

Corporate culture can include “values, norms, conventions, shared beliefs, customs, traditions, symbols, rituals, knowledge, ideology, identities, and shared mental models.”[4] We believe that long-term value creation could be advanced through analysis of whether and how systemic racism is embedded in company written and unwritten policies, corporate culture, and norms.

RESOLVED: Shareholders request the Board of Directors prepare a report to shareholders analyzing whether written policies or unwritten norms at A.O. Smith reinforce racism in company culture and including any planned remedies.

SUPPORTING STATEMENT: The report should be prepared within one year of the annual meeting, at reasonable cost and excluding proprietary and privileged information. For its analysis, the board is encouraged to consider soliciting outside expertise on racism in company culture in conjunction with eliciting feedback from employees through forms of communication such as focus groups or anonymous employee surveying on indicators of structural racism and its effects. In its discretion, the board may include assessment of whether company policies or unwritten norms:

Yield inequitable outcomes for employees based on race or ethnicity such as patterns of hiring, retention, upward mobility, disciplinary action, allocation of “stretch assignments” (projects intended to develop employee skills and abilities), sponsorship, or usage of benefits;
Consider “cultural fit” rather than capabilities or create “prove it again” biases (wherein employees of color are forced to prove their capabilities repeatedly);
Establish a cultural hierarchy through permitting racial microaggressions (behaviors that stereotype or belittle a minority group), create perceived pressure to code-switch (behavioral adjustments used to navigate interracial interactions), or otherwise suppress cultural identity.

[1] https://www.census.gov/quickfacts/milwaukeecitywisconsin

[2] https://www.penguin.co.uk/articles/2020/june/ibram-x-kendi-definition-of-antiracist.html

[3] https://hbr.org/2020/06/confronting-racism-at-work-a-reading-list

[4] https://ssrn.com/abstract=3946604