In 2018, California enacted a law requiring publicly traded firms in the state to place at least one woman on their board of directors by the end of 2019. By the time that year closed, 126 California public companies added 138 women to their previously all-male boards. At least 11 other states have enacted or are considering similar board diversity legislation. However, despite the increased focus on gender diversity, a recent report showed that only 24 board seats out of 5,670 in the Fortune 500 are occupied by directors who identify as LGBTQ+. Among these seats, only two LGBTQ+ persons of color (both men) are included. Out of the entire Fortune 500, only nine companies explicitly include LGBTQ+ leaders in their board diversity policy. Further, the Latino Corporate Directors Association shows that, currently, 75% of Fortune 1000 companies lack a single Latinx director on their board. In September 2020, Governor Newsom signed a new law that requires companies headquartered in California to have at least one board member from an underrepresented community by the end of next year and at least two or three – depending on the board’s size – by the end of 2022. Bridge Partners published what follows in 2007 (yes, 13 years ago, we sometimes find it kind of deflating too):
Sadly, the statistics speak for themselves – in 2007, US public boards still lack diversity of gender, ethnicity and international exposure. The “excuse” is usually a poorly conceived one of supply and demand, but the reality is that diversity challenges on boards are likely related to unwillingness to look outside the traditional pool of candidates.
We continued with some advice to Nominating/Governance Committees, which remains applicable today, to all boards—public, private and nonprofit:
A Nominating Committee should take into account that qualified but often overlooked candidates may be found in a wide variety of organizations and sectors. A proactive search and outreach to potential candidates in a variety of areas should then be undertaken. In addition to the traditional corporate environment, these areas should include non-profit organizations, government, academia, private businesses, international environments, and non-CEO functions.
How to put the theory into practice:
1. Develop a standardized assessment protocol – one that is consistent in assessing the skill-sets, experience and appropriate fit of potential qualified board candidates.
2. Spend time identifying gaps or specific needs on the board – identify skill-sets that may lie outside the traditional pools of candidates.
3. Build a consultative relationship with a search firm in advance of your board need, develop a dialog with the search firm that allows them to understand “what works” in your company environment. In the past CEO’s made initial contact with potential board members but today it is more effective and appropriate to engage the services of experts.
4. Reach out to, and form alliances with, organizations or groups that represent the interests of women and minorities, or have an international focus.
5. Review/update recruiting process periodically.
6. Build a relationship with potential board candidates, over a period of time, to allow both parties to gain a full understanding of cultural and skill-set fit.
If there’s any new advice we can provide, perhaps it’s to make the same points in a different way. Changing a board’s composition requires intent and action, but it doesn’t necessarily require radical change in order to see tangible results. Instead of approaching the search for you next board member with concerns about the challenges in finding someone of a different stripe who also “fits,” turn it around and think about how to seek out people who bring qualities, experiences and expertise that are additive to what’s currently in place. Thinking in terms of what someone can bring instead of what they lack puts things into a positive light. And such a perspective change just might open the aperture enough for your organization to see a whole new range of prospective board members.
