By: Trevon James

October 18, 2021

On Sept. 30, The Board Challenge participated in two critical national board diversity discussions.

First, Charlotte Laurent-Ottomane of Thirty Percent Coalition interviewed Les Brun, a prominent Black corporate director, and Guy Primus, The Board Challenge co-founder and CEO of Valence. The conversation covered misperceptions, challenges and common roadblocks that business leaders face when considering diversifying their boards. (The Coalition is a cross-sector business group advocating for board diversity in public and private companies).

That evening, Fishbowl hosted a lively discussion on the need for boards to recruit more women and other business leaders from ethnic and LGBTQ+ communities. Moderated by Primus, speakers included Shannon Gordon (CEO of theBoardlist) John Kuo (program lead for Ascend 10×25, an AAPI board diversity organization) and Fabrice Houdart (managing director at Out Leadership). Fishbowl is a fast-growing social network where professionals connect and get helpful advice from colleagues and coworkers.

Addressing the Tension

Although The Board Challenge has focused on adding more Black directors to corporate boards, we champion board diversity across the spectrum – and for good reason. According to the 2021 Missing Pieces Report of 5,880 corporate directors in the Fortune 500, 510 are Black (5.1%), 240 are Latinx (4.1%), 270 are Asain American/Pacific Islander (4.6%), and 4,853 are White (82.5%). The Russell 3000 currently has roughly 26,952 corporate directors, and just 5.4% of them are Black.

“Board diversity is not just about women, not just about black, brown, or LGBTQ,” Primus said. “Diversity of thought leads to a diversity of possibility.” Still, a PwC survey of 900 board directors found that 24% of directors don’t believe racial diversity has an impact on diversity of thought within boardrooms. This lack of understanding prompted speakers from both events to recommend that boards rethink their recruiting strategy by moving beyond white male CEOs and their professional network.

But this will take some time, according to the Heidrick and Struggles 2021 Board Monitor report:

Board diversity has a long way to go because the reality is that 50% of new board members are former CEOs, along with 21% being current or former CFOs in 2019. If people of color aren’t reaching the CEO or CFO level, how can they join boards?

Fortunately, new regulations and state legislation continues to underscore board diversity as a business imperative. Legislators in California and 11 other states including Maryland, Illinois, and New York, have passed or are debating rules that support board diversity. On Aug. 6, the SEC approved Nasdaq’s new rules aimed at advancing diversity on corporate boards and wider transparency around board composition. And as Primus is quick to point out: “Lack of board diversity is not a pipeline problem. It’s a perception challenge.”

However, despite the mandates, there is tension in the idea of mandating diversity initiatives, according to Kuo: “[Right now] it’s a check the box thing. We need to get to a point where boards actually want to embrace some diversity – and understand that diversity and the different points of view and cultural experiences that are brought by diverse members to the board table, bring value not only to the board, but to the company.”

For companies to go beyond tokenism and box checking, corporate leaders must believe that diversity improves corporate performance. Research shows that board strategists believe a homogenous board can be detrimental to companies looking to grow and expand. Bloomberg Law notes that “companies with a market capitalization of more than $10 billion and with women on their boards outperform comparable businesses with all-male boards by 26% worldwide over a period of six years.”

“[Recognizing] that data supports that outcomes are better with a more diverse board – and starting that at the top with public company boards and driving that down through private company boards more broadly – is really how we will begin to solve that problem going forward,” Brun said.

Navigating Power Effectively

Still, the overwhelming empirical evidence, legislation and regulation may not necessarily smooth the road ahead for board diversity advocates like Houdart. “Power never really concedes power without a demand,” he said.

Gordon and theBoardlist are hopeful that advocating for diversity can build awareness around this dilemma and sway reluctant leaders to rethink their objections.

“[Allyship] is about figuring out how to give power away and create opportunities for others,” Gordon said. “That is actually what extends your power in ways that you cannot do simply as an individual.”