Through our commitment to elevate diverse voices, we asked Barb Smoot, President & CEO of Women for Economic and Leadership Development, to share her thoughts on a topic of importance to her — the lack of Black women’s leadership on for-profit boards.
From nonprofit boards to corporate boards, diversity matters. But the state of diversity on for-profit boards is worse than we imagined, and public corporations that lack diverse leadership may miss opportunities to connect with the communities they serve.
Companies that prioritize adding Black directors, especially Black women, to their boards are paving the way for the betterment of our society. Thank you, Barb, for bringing this important issue to light.
— Mollard Consulting
Just 30 minutes prior to my writing this article, I heard from a Black woman whose name I submitted for a private company board seat that she was not selected. She manages the types of premier, successful brands that they listed as a requirement. She has profit and loss experience from managing multi-billion-dollar high performing businesses. Her qualifications checked every single box but one — she doesn’t have the title of CEO.
It is time for boards to stop placing a disproportionate value on the CEO role as a qualifier to have a seat on a for-profit company board. We all know what the numbers are in terms of Black women in the CEO role of large for-profit companies. Yet, the skills that these women bring to the table are often times equivalent to CEO experience. Are boards filled with CEOs immune to sub-par performance, governance failure, huge market misses and missteps? Not trying to call any of them out here…
The very same companies who say that they want ethnic diversity on their boards are also quite narrow in defining what they are looking for. They often provide a long list of characteristics that, quite frankly, can be argued that many of their existing board members don’t even meet. These companies fail to see that using the CEO role as the only proxy to “prove” board readiness largely eliminates top female Black talent. We know that these women can add value to boards with the breadth of board-ready experience they bring with them.
According to research shared in the August 2020 Harvard Business Review article Why Do Boards Have So Few Black Directors?, 37% of S&P 500 firms had no Black board members in 2019 and Black directors comprised just 4.1% of Russell 3000 board members. Additionally, research conducted by the Institutional Shareholder Services’ ESG division as reported the September 2020 New York Times article Diversity Push Barely Budges Corporate Boards to 12.5%, Survey Finds highlighted that just 12.5% of board directors of the 3,000 largest publicly traded companies were from underrepresented ethnic and racial groups. Black directors were 4%, with Black women making up just 1.5% of the more than 20,000 directors in the survey.
Yet, these groups make up 40% of the US population.
The tomes of business cases out there that demonstrate the benefits of diverse boards have not singularly been enough to move the needle. We applaud the companies that have been proactive and leading the way in adding Black directors, especially Black women, to their boards.
We must pay attention to the indicated actions that have needed to occur to encourage others to do the same. NASDAQ filed a proposal in December with the SEC to adopt new listing rules related to board diversity and disclosure with repercussions for failure to comply. In 2018, California enacted SB 826 to require public companies to have at least one woman on their boards, which dramatically moved the needle. Last fall, California’s governor signed AB 979 requiring at least one director from an underrepresented community (racial/ethnic diversity or LGBTQ+) on public board by the end of 2021 with additional requirements for larger boards occurring in 2022.
Whatever it takes to move that needle, it is time for our boardrooms to be more representative of the diverse quilt of people who make up this nation. It’s time to get stitching!
Article by: Barb Smoot, President & CEO, WELD Columbus
