Photo Credit: Stocksy, Haobin Ye
By Lindsey Galloway
The corporate boards of America are about to get more diverse – at least a little, that is. In August 2021, the SEC approved the new Nasdaq Board Diversity Rule, which requires all companies listed on their exchange to disclose board-level diversity statistics. And if a company doesn’t have at least one woman and one member who identifies as non-white or LGBTQIA+ on their board? The offending company has to issue a statement explaining why.
As this long-needed push for board diversity intensifies, too many companies are still paying lip-service to representation, without making substantive change. Companies may say they prioritize board diversity, without fostering the needed culture of inclusion that enables real change. For example, one recent study found that women CEOs were likely to have a shorter tenure if the company publicly heralded her hire — showcasing that the louder a company may be about their diversity hires can reveal a lack of internal cultural support for fostering a truly inclusive environment.
Some companies also feel like they’ve achieved their diversity initiatives by checking a single box — like appointing a single white woman to the board — instead of looking at a more holistic, long-term picture.
These types of performative diversity actions may make a company look good in a press release or other short-term outcomes, but to make lasting changes, companies need to take these initiatives seriously and create the environments necessary to give real power and influence to everyone seated around the table.
Still Sad Numbers
While Fortune 500 companies have made notable progress on the gender diversity of their corporate boards, racial diversity still has a long way to go. According to the Missing Pieces Report published by the Alliance for Board Diversity in collaboration with Deloitte, white women gained 209 board seats from 2018 to 2020. Non-white women only gained a collective 72 seats, and non-white men have seen no substantive increase in representation since 2010. Black men actually lost five seats from 2018 to 2020. And still, more than 60% of all board seats are held by white men.
Diving into this type of data is the first step to uncovering where corporate efforts are succeeding, and where they’re falling short. "Data drives accountability," said Janet Foutty, Deloitte US Executive Chair. "Boards must disaggregate data, which means to look beyond the numbers and ask meaningful questions to find the root causes of a lack of diversity and equity."
Rethinking the Language
A sole focus on diversity is not enough, say experts. Instead, boards should also strive for a culture of inclusion, where all voices matter, dissent is valued, and insights are properly integrated.
"Inclusion is not a byproduct of diversity. Most organizations 'meet' their diversity requirements, but many fall short when it comes to inclusion," said Gail Rudolph, author of the forthcoming book Power Up Power Down: How to Reclaim Control and Make Every Situation a Win/Win. "Organizations must strive to foster an atmosphere of belonging, one where each person is seen, heard, and valued for the uniqueness they offer."
Board chairs can have an impact on fostering an inclusive environment by structuring meetings with equity at the forefront. "Make a point to go around the room and ask for each person’s opinion, or use an hourglass to appropriate the same amount of time for each person to speak," said Rudolph. Conducting anonymous post-meeting evaluations with questions about inclusion can also help monitor long-term progress.
Real Representation Can Happen
However, it’s still very much in the hands of those with existing power to advocate for changes. Jeff Ray, CEO of video platform and software company Brightcove, pushed to diversify the Brightcove corporate board years ago. Today, five of its nine board members are women, two are non-white people, and one is LGBTQIA+.
"He came in and said, it does not serve us well to have a board filled with white guys. This isn’t what our customer base looks like, and this isn’t what our employee base looks like," said Diane Hessan, a Brightcove board member, as well as a member of various other boards. But appointing new board members was more than just checking a box. "We had to ask, who will enrich our conversations and who is at the level that their experience and qualifications will make a big difference?"
Hessan emphasizes that there is not a pipeline problem, and finds herself frustrated when she hears people say they’re going to hire the most qualified person regardless of race or gender. "If your board is all white guys, the most qualified person to add is not going to be a white guy in 2021. It’s just not," she said. "There are so many organizations who can help in every city in the country," like 50/50 Women on Boards, Athena for women in STEM, and Boston-based The Last Mile. "There is someone who has lists of women, for instance, who are board-ready and are outrageously qualified."
That said, Hessan does caution that it does take time for any new board member, regardless of gender, race, or age, to become acquainted with a new company and its inner and outer workings. So influence naturally takes some time.
With increasing regulation and social pressure, diversity will continue to be at the forefront of corporate governance. Companies that prioritize inclusion and equity at the board level will be the ones that best serve and represent their executives, their employees, and their customers.