Board Diversity Slipping: Is It Time to Name and Shame?
By Melissa J. Anderson (New York City)
Released last week, the 2010 Alliance for Board Diversity Census revealed some discouraging news. Despite the efforts of many organizations to highlight the importance of board diversity, despite the overwhelming business case for diversity of thought in the boardroom, and despite the high-level push for shareholder education on the value of diverse boards, today we have less diverse boards than we did six years ago.
Many people anticipated that the effects of the global recession would illuminate the fact that business as usual isn’t working. But, according to the ABD Census, boards have gotten whiter and more male.
As Janell Ross wrote in the Huffington Post last week, “The pattern raises questions about corporate America’s commitment to diversifying corporate boards and the efficacy of decades-long efforts by advocacy groups to reshape them.”
Despite the best efforts of outspoken organizations, companies continue to keep women and minorities out of the boardroom. And while ABD does highlight those companies that have achieved relatively high levels of diversity (although only a handful of Fortune 500 company managed a diversity level of 50% or more), it also published a list of 37 “stale, male, and pale” Fortune 500 companies that are failing the diversity imperative abysmally – with zero female or ethnically diverse board directors.
Most board diversity advocacy efforts have been focused on the carrot – explaining what companies can gain by improving leadership diversity (studies show that board diversity improves business). But what the report seems to show is that it’s time for the stick – naming and shaming those companies that stubbornly refuse to elect anyone but white men to the board.
Board Diversity Not Keeping Pace with National Diversity
For diversity champions, it’s hard to find much good news in the report. While women make up half the population of the United States, they are no where near fifty percent of board seats. But that’s not all.
According to the ABD, diversity has increased in the US since the last report in 2004.
“Together, African-Americans, Asian Pacific Islanders, and Hispanics represented 33.7 percent of the total 2010 U.S. population. In the last ten years, growth for all three groups has significantly outpaced that of whites.”
Yet at the same time, diversity has decreased in the boardroom since then. The report continues:
“The number of board seats remained relatively flat between 2004 and 2010, with only 16 seats added. Significantly, white men gained 32 board seats, while African-American men lost 42 seats. Although women gained 16 board seats, their increase of 1.1 percentage points was not appreciable.”
CEO of Catalyst and chairman of the ABD Ilene Lang said, “Six years after the first ABD Census, not much has changed.” She continued, “White men continue to dominate corporate boards and have, in fact, increased their presence since 2004. More diverse boards, on average, are linked with better financial performance.”
Naming and Shaming
According to the ABD, which consists of Catalyst, The Executive Leadership Council, The Hispanic Association on Corporate Responsibility, and Leadership Education for Asian Pacifics, Inc.:
“We urge corporations to act now and join with ABD in our mission “to enhance shareholder value by promoting inclusion of women and minorities on corporate boards.” With so much at stake – particularly in an uncertain and sluggish recovery – diversity at the top can help ensure the sustainability of our businesses and economy.”
The report makes it clear that the need to increase boardroom diversity is urgent – and it shouldn’t be approached as an issue of tokenism. As Lucy P. Marcus recently explained:
“The merits of diversity are clear. If you wish to represent competently all aspects of your business environment—from customers to investors, and from employees to the communities in which companies are located— and build a prosperous business, your board should strive to achieve the same level of diversity.”
But perhaps the proactive argument for diversity isn’t enough. Perhaps what is needed is to brand those companies with zero boardroom diversity as a holdouts against progressive industry practices, who are stubbornly deflecting societal and economic calls for change.
Want to know who these 37 out-of-touch curmudgeons are? Some of the companies on the list may surprise you:
HCA
CHS
Plains All American Pipeline
Tesoro
L-3 Communications
National Oilwell Varco
Liberty Global
First Data
XTO Energy
Ichan Enterprises
Chesapeake Energy
Shaw Group
Kinder Morgan
Pilgrim’s Pride
WellCare Health Plans
Charter Communications
Affiliated Computer Services
Sonic Automotive
Virgin Media
Fidelity National Financial
Global Partners
CC Media Holdings
Emcor Group
Energy Transfer Equity
Reliance Steel & Aluminum
Cameron International
Nash-Finch
Core-Mark Holding
Holly
EOG Resources
General Cable
American Financial Group
Spectrum Group International
Con-way
Frontier Oil
Live Nation Entertainment
Blockbuster
I usually tell my kids not to rat on their friends but outing this list of companies seems like a morally defensible pursuit; and something we can derive a guilty pleasure from that won’t make our conscience suffer. I say go for it!
As a long-time diversity advocate and current president of The InterOrganization Network (ION), I applaud the corporations that promote gender equality, but have never publicly admonished specific companies with zero boardroom diversity. Years of research from various organizations like ION and Catalyst prove that corporate boardroom tradition is hard to break. While it is tempting to resort to a more assertive approach, we feel it is just as important to continue to equip investors and shareholders with the tools they need to increase the number of women in leadership positions at the companies in which they invest their dollars.