By Trevon James, Research Fellow, The Board Challenge
The Board Challenge hosted a second fireside chat on Clubhouse, the invitation-only social networking platform. After addressing the real story behind the recruitment of Black corporate directors in our inaugural discussion, the speakers on June 9 explored what’s driving the movement to increase board diversity and challenged the myth that America lacks enough board-ready African Americans.
Guy Primus, co-founder of The Board Challenge and CEO of Valence, facilitated the conversation with Radina Russell, senior managing director at Teneo and Rhonda Mims, chief legal and external affairs officer at ICMA Retirement Corporation.
These three influential board diversity advocates are forging effective coalitions dedicated to making change and taking immediate action. Russell is a founding board member of the Board Diversity Action Alliance (BDAA) and helped build the Executive Leadership Council’s early efforts to increase board diversity. The ELC has been a primary source of new Black directors in private and public companies over the past several years.
Mims chairs the Thirty Percent Coalition, a forum of public and private companies, professional services firms, institutional investors, government officials and major advocacy groups working together to increase diversity in corporate boardrooms. She also serves on the board of Athena Alliance Inc., which focuses on preparing women for board positions.
Just days before the Clubhouse event, the Alliance for Board Diversity and Deloitte published the second Missing Pieces Report, which revealed that Black directors held 8.7% (510) Fortune 500 board seats in 2020, up from 8.6% (486) in 2018. Since July 2020, 32% of new board members appointed in the S&P 500 are Black. Also, the BoardProspects report issued in March 2021 revealed that 5.4% of the 27,000 total board members for Russell 3000 companies are Black.
While these developments are encouraging, the speakers agreed that we have a long way to go to reach parity on corporate boards.
Public pressure; impressive talent pipelines
What’s turbocharging the board diversity movement? For starters, there’s no shortage of Black boardroom talent.
Before delving in the Black talent pipeline myths, all three speakers underscored the importance of the Black Lives Matter social and racial justice movement along with the protests surrounding the murder of Geroge Floyd in 2020 as catalysts for the surge in appointments of Black directors across public and private companies.
Equally as important, new laws requiring public companies operating in states like California and Washington to diversify their boards are already showing results. According to CNBC, the California mandate has prompted more than a dozen companies to sign pledges and prioritize the appointments of minority board members. Plus, new proposed Nasdaq rules mandating board diversity of companies listed on the world’s largest electronic exchange are signaling to companies that change is on the horizon.
Although the transformation of a boardroom’s diversity should be organic, it needs a strong push at the outset, Russell explained. Investors, corporate governance agencies and the media are turning words into action by working together to build awareness and advocate for change. As a result, more corporations are feeling the pressure to deliver on the diversity pledges made at the height of last year’s unrest. One year later, tracking the progress on these promises in tech and other industries shows mixed results.
Mims acknowledged that although many leaders reject quotas and want to make sure people are qualified before they serve on a board, legislative mandates open doors for underrepresented candidates. She suggested that organic progress takes time, and these initiatives and mandates are helpful for the time being, largely in part because of the momentum they generate.
Russell believes board diversity initiatives must be strategic to be effective. Bringing on any diverse director is not enough. Companies must clearly identify what they are looking for in terms of roles to be filled and skill sets needed to meet their goals.
Still, despite the recent flurry of elections and appointments of experienced Black executives, entrepreneurs and investors to America’s largest companies and hottest tech firms, the pipeline myth surrounding the lack of board-ready Black talent prevails.
That’s why conversations like this fireside chat are so important, Mims said. Demystifying the corporate board recruitment process and clarifying credentials helps Black professionals understand what’s required to serve on a board.
The fact that more Black professionals – especially younger women and men with deep investment, consulting and tech backgrounds – are stepping up to express interest in board positions has helped build a diverse pipeline.
“We can’t be afraid to be vocal about our aspirations,” Primus said.