October 20, 2021 – Recent political and social events have triggered a tipping point for wider representation from across society on companies’ boards and in their leadership teams. Now the times are truly changing, as companies come to see the shortcomings of hiring and appointing leaders and executives from the same socioeconomic background and ethnic origin, according to a recent article from BoardEx’s Michael Abrahams.
“Companies benefit in several ways from having diverse boards and leadership teams that reflect the gender, ethnicities and attributes of their employees, customers, suppliers and wider society,” the report article said. “A key outcome is better decision-making, informed by the experiences and inputs of people from widely differing backgrounds. A company that embraces diversity in everything from leadership to the way it does business also gives its current and future talent, suppliers and other stakeholders confidence that it is committed to nurturing long-lasting and mutually beneficial relationships.”
What’s more, as awareness of companies’ societal contribution and impacts continues to grow, the benefits of senior management diversity are becoming increasingly clear too. Advisors, potential employees and investors are increasingly seeking to work with companies whose senior leadership reflects wider society. For example, institutional investors are zeroing in on a lack of board diversity as a negative risk factor when making their investment decisions.
As organizations across the globe create change, adopt more joined-up Diversity & Inclusion (‘D&I’) responses and look to hire more diverse leaders, who they hire and where they sit is important.
Join our panel of experts on October 21, 2021 at 11:00 am EDT as they discuss trends in board-level and executive recruiting and how gender, age, skills and job function impact the likelihood of securing a spot at the top.
The conversation will explore:
- Are board chairs are key to opening the boardroom door to new diverse board members?
- The representation of women in corporate leadership is coming under increasing scrutiny as stakeholders demand a greater degree of commitment to progress on gender equity – are Nominations Committees actually listening and doing their job?
- The window of opportunity for board appointments is longer for qualified men than it is for qualified women in both the US and the UK. What does this mean for boards, the board chair and the reality of succession planning?
- What are the roles of “power” vs “influence” within the leadership team and how does that ultimately impact hiring decisions down the line?
How will these trends influence your board and inform board appointment needs in the future?
Until recently, the main focus in terms of board diversity for many organizations was on gender balance, its profile elevated by government support for a more equal balance. Clear information from data providers such as BoardEx has also helped raise visibility and increase transparency of gender balance through global reports on gender diversity and leadership diversity. Despite significant progress in this area, there is still further to go – globally, 27 percent of women are on the boards of public companies while 19 percent of women hold leadership roles across companies listed on 26 major indexes. The needle is starting to move in the right direction. However, diversity, equity and inclusion in companies remains a problem.
The success in improving gender diversity at board levels has demonstrated what is possible when governments, regulators, investors and companies work together. Now the attention is moving to ethnicity, according to the BoardEx report. “The groundswell for action to make boards more ethnically diverse has been growing in recent years – and 2020 has marked a tipping-point, with California and the United Kingdom leading the way on legislation and guidance among the advanced economies,” it said. In September 2020, California passed a law requiring companies to install one director by the end of 2021 from underrepresented communities, including individuals who identify as black, Hispanic, Latino, gay, lesbian, bisexual or transgender. Meanwhile, the Parker Review in the U.K. has led to similar targets for FTSE 350 companies. The Black Lives Matter protests and other events in wider society have also reinforced the momentum for change.
How BoardEx is Helping
For some months, we at BoardEx have been making changes to our data collection and capture to provide information that indicates diverse boards. They are doing this is by making smart use of its existing wealth of data and relationships.
For over 20 years, BoardEx has been collecting data about senior business leaders – their roles, career history and outside interests. This data now covers more than 1.5 million people, and is used constantly by banks, corporates, consultancies and executive search firms to advise incumbent leaders as well as assess potential board and non-board candidates. The information BoardEx have collected includes senior people’s publicly disclosed membership of more than 2,600 different associations that actively champion diversity in various industries, and of awards they have received from those organizations.
BoardEx’s clients are seeking ways to help their own clients improve ethnic and other forms of diversity within their own organizations and report on their progress with this change. The BoardEx Diversity Network brings together our assets to highlight champions, allies and advocates of specific ethnicities in leadership roles, through their association with organizations that seek to promote greater minority opportunity and balance. This intelligence will help BoardEx clients both to find diverse, underrepresented talent and also to drive positive change – with a particular focus initially on the North America and the U.K. markets.
What defines the BoardEx Diversity Network is recording publicly disclosed information of a person’s membership of organizations such as the National Association for the Advancement of Colored People or The Latin American Corporate Counsel Association. These memberships, and the awards such organizations make, indicate advocacy for and affiliation with different diversity and inclusion groups.
BoardEx is combining this information with the data they have been collecting for the last 20 years to bring you the BoardEx Diversity Network. Through research BoardEx has built up a network of over 18,000 individuals who have these associations or awards, and they will continue to develop and grow this network through our ongoing data collection. Of these individuals, 14,000 have board or leadership team experience.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media