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.
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. 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.
2020: A Tipping-Point for Ethnic Diversity on Boards
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% of women are on the boards of public companies while 19% 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. 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.
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 UK 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. The way we are doing this is by making smart use of our existing wealth of data and relationships.
For over 20 years, we have been collecting data about senior business leaders – their roles, career history and outside interests. This data now covers more than 1.4 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 we 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.
Our 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 indicate both those individuals in a minority, and those individuals who have indicated they are allies by joining organizations that seek to promote greater minority opportunity and balance. This intelligence will help our clients both to find talent from minority ethnic backgrounds and also to drive positive change – with a particular focus initially on the North America and the UK 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.
We are combining this information with the data we have been collecting for the last 20 years to bring you the BoardEx Diversity Network. Through our research we’ve built up a network of over 17,000 individuals who have these associations or awards, and we will continue to develop and grow this network through our ongoing data collection. Of these individuals, 13,500 have board or leadership team experience.
Our Mission Statement
Our mission with the BoardEx Diversity Network is three-fold – grounded in our belief that action on organizations’ leadership diversity speaks louder than words, and that the time for action is now. The three key aspects of our mission are:
First, support and collaborate with diversity associations to help raise awareness for groups who are historically underrepresented.
Second, empower companies to discover and connect with talented executives from different ethnicities to build leadership teams, C-suites and boards that reflect their customers and wider society.
Third, make it easier to analyze diversity trends in organizations and create transparency and accountability around different diversity attributes.
Using BoardEx, our customers can search across all individuals connected with all ethnicity associations in the platform or look at associations focused on specific ethnicities. Also, where we display boards of directors and senior managers for a company, we use our network of ethnicity and cultural associations to identify individuals who are members of these associations, helping to show a company’s investment in diversity, equity and inclusion.
What Success Will Look Like
One change we’re already starting to see is greater interest in wider diversity and inclusion. We at BoardEx won’t make this happen on our own, but our clients can make it happen, and we can enable them to do so. We are very optimistic that by the middle of this decade we will see much greater diversity and inclusion on boards and at leadership levels throughout the corporate world. In turn, we expect this to be mirrored at all levels of the organization. We look forward to sharing this important mission with you.