Time for Diversity in the Boardroom
As we witness the inauguration of the first African American President of the U.S., it may come as a surprise to learn that diversity statistics for the boards of the Fortune 100 have remained virtually unchanged in the past four years. Carl Brooks is president and CEO of the Executive Leadership Council (ELC), an organization made up of more than 400 African American senior executives at Fortune 500 companies. He spoke with me recently about boardroom diversity issues. Excerpts of our conversation follow:
What kind of numbers have you been seeing recently on diversity in U.S. boardrooms?
In 2004, the Alliance for Board Diversity was established through an affiliation of the Executive Leadership Council, Catalyst, LEAP (Leadership Education for Asian Pacifics) and the HACR (Hispanic Association on Corporate Responsibility). Since that time, the alliance has been tracking the composition of the boards of directors of Fortune 100 companies. In 2004, the majority of Fortune 100 board members (72%) were white American men; 28% of board seats were held by women and minorities. We have seen virtually no change in those figures since 2004. If we look at African Americans, specifically, and broaden our scope to the Fortune 500, in 2004 there were 260 African Americans serving on the boards of Fortune 500 companies and last year there were 278.
What do you believe has constrained progress in this area? Are there simply not enough well-qualified executives from minority groups who want to serve on corporate boards today?
In the past, there were two reasons typically cited for the lack of board invitations being extended to minorities. The first was that there simply weren't enough members of minorities serving as senior executives of major corporations. At the ELC, our membership is comprised of 460 of the most powerful African American executives in Corporate America, all of whom are either direct reports of the CEO or within three levels of the CEO at Fortune 500 companies.
I can't think of a single industry in which our membership doesn't have expertise. Even those two or three levels below the CEO are serving in very sophisticated decision-making roles in complex organizations that would make many of them ideal candidates to serve on the boards of midcap public companies, if not yet the larger Fortune 500s.
The second was that board candidates needed corporate governance training. We affiliated with the Kellogg School and the National Association of Corporate Directors to provide director training to our members. Over 250 of them have now obtained a formal certificate from completing these programs. So, we currently have a database of virtually hundreds of extremely well-qualified and well-trained senior African American executives of Fortune 500s that are essentially "boardroom ready."
I've heard nominating committee chairs admit that they are typically most comfortable putting forward the names of people they know—or know of—as board candidates. Do you see this as a factor?
The decision to nominate someone to a board of directors is an important decision—as is the decision to accept that board seat. Obviously, it can be a somewhat easier decision if the candidate happens to be an individual that you or other people on the board have gotten to know or have worked with over the years. The problem with this approach, however, is that it limits your talent pool for board members. Often, you're not taking advantage of the opportunity to bring extremely well-qualified people onto your board who may be outside your circle of acquaintance.
Developing a level of comfort with board candidates is nonetheless very important. Both the nominating committee and the CEO need to be able to confidently support any new director's nomination and the candidate needs to feel comfortable, as well—particularly in this age of increased director's liability and reputational risk. This is why we provide opportunities for CEOs to meet some of our members informally through CEO Summits and other similar events. This also allows ELC members to get to know them—and determine where they see a good "fit" in terms of a prospective working relationship.
If I'm the chair of a nominating committee and I'm looking for a well-qualified African American board member, how can I explore whether any of ELC's members might be potential candidates?
Send us an e-mail to email@example.com or call us at (703) 706-5200. We'll discuss the background, skills, and experience that you're specifically seeking in a new director and then search our database. We'll get back to you with three or four candidates that we see as the best "fit" and discuss next steps.
There's only one caution we'd add to any of our inquiries: The candidates we will offer you are really top-notch, so we only want serious inquiries, not people compiling a long list of 20 or 25 names. Our people are "short-list" candidates that are best accessed if you are either focusing on a diverse search or after you have already culled your "longer list" down to one or two other candidates.