Diversity at Nike

Nike, one of the world’s largest athletic footwear and apparel brands, has long been known for its innovative products and successful marketing campaigns. In recent years, the company has also gained attention for its efforts to promote diversity and inclusion in the workplace. From increasing the representation of women and people of colour in leadership positions to launching initiatives aimed at addressing systemic racism, Nike has made significant strides in building a more inclusive and equitable organisation.

It was the autumn of 1968 in Mexico City. Track and field athletes Tommy Smith, Peter Norman and John Carlos had just finished their 200m race and had emerged the top three podium finishers. During the medal ceremony that followed, the two American athletes – Tommy Smith and John Carlos – took the podium wearing black socks but no shoes, to symbolise poverty among the blacks. As The Star-Spangled Banner played, the two Americans raised a fist with black gloves on, and their heads bowed.

The next day, the stunning gesture of solidarity – dubbed the Black Power Salute – was all over the world’s media, and most of the coverage was uncharitable to the two athletes. However, one thing was clear – the world of sports had taken a giant step towards taking a stand, towards equality, towards diversity, towards inclusivity. The statement reinforced something that was always known, but still needed to be pointed out – that sports has a magic that is capable of transcending boundaries of society, and culture.

The desire to move our bodies – to run, to jump, to throw – and to push our physical limits is a primal one in each one of us. The reason why sports is so universal is that it takes this innate desire to move, and combines it with something that allows us to be socially connected with others. Naturally, it would appear that inclusivity would be ingrained in sports. However, in reality, the sporting world has not always been very welcoming of diverse people. Much of that has changed progressively over the decades, but there is still some way to go.

Deeply connected with sports is the business of sporting goods. If sports is inclusive, so should be the brands that sell sport footwear, apparels, and other sporting equipment. Through their marketing communications, sport goods brands should speak to diverse groups of people, while taking care to not alienate any potentially engaged audience groups. Such inclusivity in marketing communications cannot be in isolation, they must be driven top-down within a company starting from the corporate mission.

Diversity and inclusion have become increasingly important issues for companies in recent years, and sporting giant Nike is no exception. When the Black Power Salute was happening in Mexico City, Nike was a fledgling 4-year old organisation. So, Nike’s journey towards inclusivity and diversity has run parallel to the transformation in the world of sport itself.

As a global brand that caters to a diverse consumer base, Nike recognizes that diversity and inclusion are essential components of their success. And at Nike, the culture of inclusiveness and diversity starts with their mission statement. Nike states it’s mission beautifully:

Our mission: Bring inspiration and innovation to every athlete* in the world.
*If you have a body, you are an athlete

At Nike, the commitment to diversity and inclusion is so strong that the compensation of their top executives is tied to meeting diversity and inclusion goals. In 2021, Nike announced that their executive compensation would be tied to the organisation meeting their 2025 goals. Nike calls them the targets that would bring their purpose to life by 2025. They have defined 29 targets that are focussed on people, planet, and play.

For diversity, by 2025, Nike aims at having a global corporate workforce (not including retail store and warehouse staff) consisting of 50% women, and 45% women in leadership positions. In the USA they aim to have 35% representation of ethnic and racial minorities in the US corporate workforce, and 30% ethnic and racial minorities at Director level and above.

By 2025, Nike aims to be in the top quartile among benchmarked companies for inclusion. Some of the statements that employees are to evaluate for inclusion benchmarking are: “All employees, regardless of their differences, are treated fairly”; “My manager supports inclusion and diversity in the workplace”; “NIKE, Inc. is committed to diversity and inclusion in the workplace.”

Beyond employees, Nike’s diversity goals for 2025 also encompass their strategic suppliers – the finished good suppliers that represent about 80% of Nike’s footwear and apparel production – and the diversity in their workforce. By 2025, Nike requires that every single one of their strategic suppliers have increased career access and upward mobility for women employees that are employed with them. Not just that, Nike plans to spend upwards of $ 1 billion with suppliers in America that are majority owned by a person who comes from an ethnic minority, or is differently-abled, or belongs to LGBTQ, or is a veteran.

To help their executives take these steps effectively, Nike aims to have all of their Vice-Presidents be certified on inclusive leadership. In the five-year period ending in 2025, they aim to double their spend on professional development for women in their global workforce.

Nike does a good job keeping the public informed of the progress with their 2025 plans. Their website has a dashboard showing key metrics to measure their progress in diversity, equity, and inclusion. As of FY21, they have 43% women in leadership positions, a mere 2% short of the target. The target of spending $1 billion with diverse suppliers is relatively lagging behind, at only about $197 million being spent.

Metrics aside, the fact that they are making a conscious effort to inculcate diversity in their corporate culture is praiseworthy. Nike’s President and CEO, John Donahoe, wrote in his last year’s impact letter: “Fifty years ago, our journey began with a dream to serve athletes. As we grew, so did our belief in Nike’s role and opportunity for impact in the world. When we advocated for women’s right to compete on sport’s biggest stages, we saw the difference our voice could make. And as our society reckoned with racial injustice, we understood our responsibility to act—in our communities, and inside Nike.”

In 2020, following the killing of George Floyd by the police in Minnesota, Nike renewed their diversity pledge. Not just that, it announced a $140 million commitment by Nike and Michael Jordan to support businesses that educate Black Americans. John Donahoe, in his 2021 letter, wrote: “Our brand would not be what it is today without the powerful contributions of Black athletes and Black culture.”

However, just a few years before Nike announced their 2025 goals, the picture was quite the opposite. In 2018, four women employees, with more joining later, of Nike filed a class action lawsuit against the company alleging that they violated American laws guaranteeing equal pay, and also fostered a “boys’ culture” work culture that allowed sexual harassment. In November that year, a judge decided against certifying the lawsuit as a class-action. Nike’s response was swift – besides an apology from the then CEO Mark Parker, there was a leadership shake-up that included the Nike Brand President Trevor Edwards who resigned.

Trevor Edwards, Nike’s number two executive, wielded disproportionate power across all areas of the business and often helped certain people rise through the ranks. Informally, within the organisation, these beneficiaries of Trevor’s favours were called FOT – Friends of Trevor.

Some said Nike’s claims of diversity, including their marketing campaigns promoting racial equality rang hollow because of these disturbing revelations about the company’s internal work culture. After the killing of George Floyd, John Donahoe who took over from Mark Parker in 2020, wrote: “While we strive to help shape a better society, our most important priority is to get our own house in order.”

Later the same year, Nike found itself in hot water of a different kind in Japan, with its advert showing racial discrimination in the country. The backlash was swift, but it was not because Nike fell short of what it was preaching. It was because, culturally, Japan is not open to talking about sensitive issues such as racism, and definitely not accustomed to hearing it from a foreign brand. Netizens remarked that Nike had blown up the scale of such racism, and made it appear as though such discrimination was rampant in Japan when it was not the case.

Thousands of miles away from the plush corporate headquarters of Nike at Oregon in USA, in Laixi City in China, a Nike contractor was accused of forcing hundreds of young Uyghur women to work in the Taekwang factory to produce Nike sneakers. The factory, one of Nike’s largest suppliers of footwear, was a partner of the Chinese government’s forced-labour programme. The Uyghur workers who were employed at the factory could not return to their homes in Xinjiang. They were forced to slave away working on shoes through the day, and at night they had to attend “patriotic” reeducation classes.

Back in the 1990s, consumers worldwide ran a global boycott Nike campaign because the company denied any responsibility for ethical malpractices that its subcontractors indulged in in the factories. The campaign forced Nike to change its ways and become more transparent about the labour practices in their factories, and in 2008 Nike was accredited by the Fair Labor Association. Despite the strides they have made in this area over the decades, as the Taekwang factory horror story shows, there is still a long way to go for complete transparency and fair labour practices.
Diversity Wins – the third report in a series investigating the business case for diversity by McKinsey reaffirms what has been known for some years now – diversity and inclusion are not just good things, but they make tangible business sense as well. The report, published in May 2020, said that “the most diverse companies” were “more likely than ever to outperform non-diverse companies on profitability.” Among sporting good giants, besides Nike, Puma has made great progress towards diversity and inclusivity while Adidas lags behind. According to the latest financials, though Nike, Puma, and Adidas earn similar gross margins of 44.6%, 46.1%, and 47.5% respectively, their net margins vary considerably – 11.5%, 4.48%, and 2.72% respectively. Surely, a laser focus on diversity and inclusion is paying off for Nike.