Even though diversity, equity and inclusion are widely discussed topics nowadays, there has been more conversation than there has been action in many companies. This lack of action has led to a frustrating delay in diversity, particularly in the C-suite and the board room. Oftentimes it requires boards of directors to step out of their comfort zones and to stop relying on their traditional ways of recruiting prospective directors and being more intentional about finding directors from underrepresented groups such as females or minority talent.
Boardroom diversity is being delayed for several reasons, but three of the biggest hurdles specifically preventing it from happening are boardroom biases, desired director skillsets, and lack of commitment to developing and advancing the next generation of corporate directors. Failure to recognize boardroom biases and see beyond the board’s own networks precludes having more diverse voices in the boardroom. Boards tend to rely on their own personal networks to identify candidates. You absolutely must change the way in which you are recruiting or you’re going to continue to have a homogeneous group of individuals. Attracting diverse candidates entails a different approach. You need to cast a wider net. Boards should work with external search firms that have a demonstrated commitment to identifying diverse talent. And they should hold these recruiting firms accountable for providing an entire slate of well-qualified diverse candidates. I realize that some directors may be offended by this mandate but, it’s no different from what’s been done in the past when the majority of director slates consisted of all white men.
Secondly, the traditional profile of a corporate director has historically been a sitting or former CEO. Because the C-suite is still very much white male, it severely limits the pool of qualified diverse candidates. Boards need to look beyond the corner office and C-suite level experience — and purposely consider candidates who bring diverse perspectives and backgrounds into the boardroom. Creating a board skills matrix that illustrates the board’s current skills and needs, rather than the candidate’s title, helps identify the board’s skill gaps based on the company’s future strategy and will significantly broaden the candidate pool.
Finally, some corporations do not permit their executives to join external boards because they are concerned about perceived conflicts of interest and/or that it could detract them from their current role and responsibilities. I believe the benefits of allowing a senior executive to serve on one external board far outweigh the potential costs. Being on another company’s board can involve overseeing the implementation of a new strategy or acquisition, succession planning, digital transformation, innovation, etc. which provides the executive with professional growth opportunities. Boards encourage collaboration, the sharing of new ideas, and deliberating different points of view. This in turn helps to sharpen the executive’s diplomatic skills, making him/her a more effective leader in his/her day job.
Although these barriers are slowing down the pace and progression to more diverse boards, I acknowledge that improvements have been made in the right direction. Today, boards recognize the value of boardroom diversity, including how more diverse boards are linked to better overall performance. They realize that the status quo is no longer acceptable because the pressure for change is coming from all sides. Business leaders, investors, activists, proxy advisory firms, asset managers, stock exchanges, and regulators are all pushing for America’s boardrooms to be more diverse.
The good news is that boards are committed to implementing change. Several corporate boards have made the strategic decision to increase the size of their board to achieve greater gender and ethnic diversity. They have also taken proactive steps such as evaluating their onboarding process to ensure that these diverse board members are properly integrated and included into the board’s activities.
***
About Maryann: Experienced Corporate Director Maryann Bruce is passionate about creating more diverse and inclusive boards. She vehemently believes that having a diverse and inclusive board helps reduce risk, challenges group think, drives profits, and sets an excellent example for the rest of the company.
