Championing DEI in the Fortune 500: A Chat with Mike C. Kaufmann

I became acquainted with my now friend and colleague Mike C. Kaufmann a few years ago, during his tenure as CEO of Cardinal Health—the 15th largest corporation in the country, nestled between Microsoft at #14 and Chevron Oil at #16 in the Fortune 500. Already a prominent business leader, Mike didn’t necessarily set out to become a DEI advocate, but as racial equity became a bigger and bigger topic of conversation in the corporate world, and he learned more about systemic racism and unconscious bias, he realized how important it was to put the issue front and center. As a result, he made DEI efforts a major focus of his leadership, including instituting a first-ever board of DEI truth-tellers, among many other efforts.

Earlier this month, I interviewed Mike on LinkedIn Live to discuss his experience spearheading DEI initiatives at one of the country’s largest and most successful companies as well as his personal anti-racism journey. (If you missed it, you can watch our full conversation here.)

Here are some highlights from that discussion.

Mike, you spent the bulk of your career in leadership at Cardinal Health, a B2B healthcare services company that is one of the U.S.’s largest distributors of pharmaceuticals and medical supplies as well as a leading global medical products manufacturer. As CEO, you made DEI efforts a major area of focus. When did your journey with DEI as an executive begin?

I've always been a very curious learner, constantly asking "why" and striving for a deeper understanding. About 12 to 14 years ago, when I was at the head of the largest segment of the company but not yet CEO, I had this epiphany: While I cared a lot about people and had a lot of success in my career, I was really just a "caring bystander," as I call it now—not an active ally and advocate engaged in improving the environment and experience for all disadvantaged social groups. So, I made a commitment to become more deeply involved.

I started my journey by learning about equality—and specifically gender equality, for two reasons: (1) I felt that if we couldn’t get it right with 50% of the population, it was going to be incredibly difficult to get it right with the full breadth of social groups, and (2) I knew I needed to develop my knowledge and skills in race-related issues much further first. I formed a group of women to act as an executive committee that would tell me the truth about gender dynamics and issues in the company in a private, safe setting. I also hired an outside coach and dove deep into listening, learning, and actively promoting opportunities for women to advance. I spent a lot of time making sure we were doing that right.

As I began to see the difference we as a company were making in gender equality, I developed the courage and desire to begin spending time in other areas. Over my last three to four years as CEO, I focused on the experience of Black and African American employees and race-related DEI efforts.

I want to underscore here that I do mean we started by focusing on equality, not equity. We eventually got there, but it wasn't until we began working with and learning from you, Robert, in 2020 after the death of George Floyd that we started to understand the difference between equality and equity and focus our efforts on ensuring equity for all groups. Now, equity is the focus across the board.

In truth, though, most companies call their efforts "diversity, equity, and inclusion," but the "equity" piece is missing. For example, they do unconscious bias trainings that apply to all groups (equality) but not trainings focused on specific social groups and their unique disadvantages and experiences (equity). To do DE&I really well, companies must address the disadvantages of each social group differently—through trainings, programs, and policies—in ways that align with their unique needs and experiences. It’s not a one-size-fits-all practice.

It is definitely not! To that point, as part of your work establishing DEI practices and initiatives at Cardinal Health, you created the Cardinal Health Black & African American Racial Equity Cabinet and the DE&I Steering Council. Let’s start with the Racial Equity Cabinet. How did the Cabinet operate and what was the process of creating it?

I’ve always cared about diversity-related topics, and racial equity seems to be one of the most complicated areas to grapple with—for CEOs, individuals, and the country. So, similar to what I did when focusing on gender equality and equity, I worked with the company’s Chief Human Resources Officer and Chief Diversity Officer to identify a group of individuals who’d be able and willing to tell me the truth about the state of diversity, equity, and inclusion in the organization—what was working, what wasn’t working, and how they honestly felt. 

We asked seven people to become part of this cabinet of truth-tellers, and I met with them for one to two hours every month. We’d discuss a lot of topics—some suggested by me, some by them. It was as much a safe space for them to share as it was for me to consult with them and ask, "Should I say this, or this? How would this come across? What do you think about this topic?" 

The first question I asked in the first meeting of the Black & African American Racial Equity Cabinet was, "What should we call it? African American or Black? What about Brown?" People in the group had different opinions, and we had a great debate about how to make the name feel inclusive and right for everyone involved. Then we touched on a whole gamut of topics: privilege, Colin Kaepernick, critical race theory, reparations—you name it. Our discussions really helped me think differently, change my views, and expand my horizons.

I also hired a DEI consultant with experience working with large corporations who was African American to bring an outside perspective and ensure that we were thinking about things broadly. The combination of internal and external truth-tellers, plus reading your book, The Conversation, and spending time learning from you, was super helpful.

Whether forming the group on gender equality, the Racial Equity Cabinet, or the DE&I Steering Council, how did you determine who should be on these boards of truth-tellers? What were some of the criteria you came up with that other executives might want to consider in creating their own DEI board?

If you're going to form a group of truth-tellers, you've got to have at least five people, and I believe it's best to have between seven and nine people. Simply put, there's strength in numbers. These group members need to have a critical mass so that they feel less vulnerable in their positions and more comfortable sharing their opinions and experiences honestly. It helps with the dynamics tremendously. When one person says something, it encourages others to say more and creates a snowball effect.

You also need the individuals you ask to have a certain level of power and position, because you need them to feel empowered speaking truth to the CEO. If you're the CEO and you try to talk to frontline supervisors alone, that's not going to work. The power imbalance is too great—there's too much on the line for them. On our boards, we asked people at the VP level and above.

Both the Black & African American Racial Equity Cabinet and the DE&I Steering Council were created in this way, with people at similar levels of the organization, but the DE&I Steering Council included employees from all social groups, not just African American and Black employees. To have an inclusive, all-encompassing group of DEI truth-tellers, in addition to racial diversity, you need diversity of gender, sexual orientation, age, department, expertise, etc. You need a variety of voices because there is no one right answer to DE&I—no one absolute truth. There are multiple truths, and you need to hear all of them.

And if you can afford it, bringing in an external resource to provide an outside perspective is really helpful too because they're not beholden to you in the same way. It's one more way to level the playing field and lower the likelihood of power differentials playing a role in the level of honesty you get in conversations. For instance, many times, our outside consultant would have me leave and he'd stay with the group to hear if there was anything people were uncomfortable bringing up in front of me. He'd figure out the best way to bring up the issue and make sure that we discussed it with the full group, me included, at the next meeting.

What obstacles or challenges did you encounter when establishing these two bodies and/or other DEI initiatives? I had heard vague rumors that some senior employees left Cardinal Health because they felt that the DEI initiatives constituted an attack on the White male employees. Backlash is inevitable anytime someone tries to create profound and sustainable change. How did you work through those challenges?

You're absolutely right. The challenges came in different ways. Sometimes people were very direct, telling me things they didn't like or were uncomfortable with, or that they simply didn't want to hear about racial bias or inequity. And in a few cases, some people did leave the company. But to be honest, there were very, very few people who left Cardinal because they felt uncomfortable with our focus on DEI. That number was minuscule, and truthfully, it's probably better that those people left.

What was more striking and way more exciting was how many people were attracted to Cardinal Health because of our DEI initiatives—not just diverse individuals, but also White men. I always tracked our turnover statistics compared to those of other companies, and our rates were always similar to or better than those of comparable organizations. In fact, for many areas within Cardinal, we were better than average. Here's a good example: I remember asking the class of roughly 100 interns we had this past year why they came to Cardinal. Well over half of the group said their #1 reason was because they'd heard about all the DEI work we were doing and they wanted to be part of a company that cared about its employees.

It was never about putting any one group or person at an advantage or disadvantage. It was about leveling the playing field and, most importantly, allowing everyone to feel like they could bring 100% of themselves to work every day—that they didn't have to think about whether or not they should talk about who their partner was, or worry about how they styled their hair.

I know that some organizations wrestled with their commitment to DEI during the pandemic. During any crisis, DEI work is typically the first to be let go. Did the pandemic impact your DEI initiatives in any way, and if so, how?

Yes, in fact. It prompted us to examine our DEI initiatives under the lens of equity and make sure that we really were promoting equity and not just equality, as I mentioned before. I did experience a lot of pushback by choosing to continue to emphasize DEI initiatives throughout COVID. Being one of the biggest providers of medical supplies in the country, the pandemic brought significant challenges, which were compounded by the supply chain issues and rising inflation costs. Periodically, people would say to me, "Mike, we have all these other problems. Why do you keep talking about diversity, equity, and inclusion in all your talks?" That was one way of applying pressure—by trying to make me feel like when I talked about DEI it meant I didn't care about the challenges from COVID or the supply chain.

And that's not at all the case; I cared a lot about those issues, too. But you can walk and chew gum at the same time. You need to tend to the other issues and also recognize that no company is better than its employees. And my belief is that when you walk the talk with DE&I and ensure your people know you care, you attract the best, most innovative and creative talent and, by doing so, end up solving the very problems that people are pushing you to spend more time on.

What are some of your proudest achievements or outcomes of the DEI efforts you helped establish and promote?

There are a lot of things I feel really good about. Pay equity is one. We examined pay equity every year. I would personally sit down with our HR team and go through our numbers line by line. Every single year, no matter which social group we were looking at, we were always between the 99% to 101% pay equity ratio. We stopped allowing questions about pay history in the recruiting and interviewing process, and instead started asking about pay expectations. We also administered annual merit increases based on both performance and salary within the pay range, then made promotional salary increases based on market competitiveness and internal equity. The company is committed to continuously assessing its pay practices and making adjustments to ensure it equitably compensates its employees. That's critical to Cardinal's mission of being a truly inclusive company.

I'm also very proud of the efforts of our seven employee resource groups and all the activities they put together, the formation of the boards of truth-tellers, the Black & African American Racial Equity Cabinet and the DE&I Steering Council. I'd meet with the Steering Council monthly, and they'd report on all seven of the employee resource groups we had.

But I think the thing that makes me most proud is certain individual stories. It's when someone would come up to me and say, "Hey Mike, I heard you talking about how women don't raise their hands as often as men do for job opportunities, and I realized that was me. So I went and raised my hand, and I got promoted to VP." Or when a White man would say, "I heard that, and I went back and asked a female colleague who didn't raise her hand for a role if she'd be interested in it, and she said, yes. She's doing a great job." Or when an African American colleague was willing to share their story.

That brings up another important point: It can be a huge burden on colleagues of color when we expect or ask them to share their stories, because they have to share them over and over. But if there are team members of color who volunteer to share their stories, it can be hugely impactful. Hearing a personal story from a Black or minority colleague can make the issue of racial inequity much more real for their White counterparts who oftentimes do not have the context, perspective, or awareness of the experiences of people of color otherwise. When shared voluntarily and in a safe environment, I saw personal storytelling turn many people from caring bystanders to active allies. And that is what makes me most proud: knowing that in some way, either myself or us as a company changed people's lives and perspectives.

How has your social identity as a cis-gender White man positively, or negatively, impacted your ability to advocate for DEI and bring about change?

It's a complicated question. I'll give you some examples. Early on when I got really involved in gender equality, about 12 years ago, I was at a board meeting of a great, well-known organization for women in healthcare. I had a chance to be recognized for my work in this area, and it was very obvious that some of the women were frustrated that a White male was involved in trying to solve issues related to gender equity and equality. The point I made at the time—which is still somewhat true today—is that over 90% of public company CEOs and 80-85% of senior executives were White males. These are the people setting company priorities and allocating budgetary spending. With such lopsided representation of us White men at the top, if you don't involve us in efforts around gender equity and racial equity and let us learn and develop, how are the issues going to get solved?

At the same time, as a White male, people question your motivations for working on equity initiatives: Are you doing it merely to score points? Or because you think it's politically correct? I understand why. We see a lot of people today making a point to demonstrate their support for issues despite not caring about them on a deeper level. So, I think to make it really work as a White male, you can't just address questions once or twice and walk away. You've got to be vulnerable, you've got to be willing to learn, and you've got to stick to it time after time after time, because people are going to doubt you. 

On the flip side, you have to extend the same line of thought in the other direction. One time, I met with the Racial Equity Cabinet for a discussion, and we decided it'd be great to have a session with our African American frontline supervisors and managers to discuss the issues they were having and see if we were getting things right. We invited more than 100 people. Only 15 showed up. Some members of the Cabinet were pretty upset: "How could you [the CEO of the company] give them this immense opportunity and only 15 people show up?"

I could understand it! These supervisors and managers had been told tacitly (and, in some companies, explicitly) for years not to speak up in meetings. They feared they might be criticized or even lose their jobs. And we're supposed to assume that doing this work for just a year or two would erase 200 years of training and conditioning? I told the Cabinet we need to be patient. We needed to have the meeting with the 15 people that came, listen to them speak, address their issues, and hope that when they see that we've addressed their issues, more and more people will develop trust and will feel comfortable coming forward in the future.

Mike, you talked about the backlash you experienced, whether due to the initiatives themselves or to you being a cis-gender White male. You also mentioned how important it was for you to have humility and be able to ask questions about how to approach certain issues, topics, and language appropriately. With some of the current, negative cultural language around advocacy and progressivism (e.g., "woke warrior"), how do you avoid becoming a casualty when people weaponize the very noble deeds that you are trying to achieve?

This is a great question. I've heard from a lot of CEOs that they're scared to start focusing on DEI because they're afraid that if they mess up or make a mistake, they'll get canceled. At the same time, certain groups of people have weaponized terms like "woke" and "critical race theory" and "Black Lives Matter." They've taken these terms, twisted their meanings entirely, and tried to use them as weapons against those trying to make real, positive change.

As far as I'm concerned, if you're going to say I'm "woke" and you mean that I'm trying to become more informed and understand things better, then great. If you ask me about "critical race theory" and you're talking about teaching the truth—Jim Crow laws, redlining, discrimination, convict leasing, etc.—great. But if you're talking about the politicized, bastardized meanings of these words, I'm not talking about those. My goal is to always keep learning, strive to redress inequity, and understand the truth.

This has been such a valuable Conversation. Is there anything you'd like to add? 

One final thought: If you're an executive or leader who's put a lot of effort into DEI initiatives, some people worry about what will happen when you leave your position or organization. The best advice I have for executives is to be transparent—to your employees and to your broader stakeholder groups—about why DEI is both important to you and a business imperative for the organization. When you're transparent about the DEI work you're doing, it widens the focus to not just you but to the whole organization. DEI should be the cornerstone of a corporate culture and the transparency, commitment, education, and goal-setting around it is imperative for the efforts to live on past any leaders leaving the organization.

Thank you for taking the time to share your unique insights and experiences with us, Mike.