Corporate boards increasingly recognize the value of having diverse perspectives and backgrounds around the board table for fostering business continuity, spurring innovation and driving long-term value creation. In the past year, U.S. boards have prioritized increasing racial and ethnic diversity, recruiting directors of color at an unprecedented rate.
Spencer Stuart’s annual study of board diversity found that nearly half — 47% — of new S&P 500 directors are from historically underrepresented racial and ethnic groups, including Black/African American, Asian, Hispanic/Latino/a, American Indian/Alaska native or multiracial directors, and 43% are women. One-third (33%) of all new independent directors are Black/African American, three times more than in 2020 (11%) and the most since we began tracking this data in 2008.
Boards have already shown that they can make sustained progress on diversity when it comes to increasing the representation of women. Thirty percent of all S&P 500 directors today are women, nearly double the representation a decade ago. While most directors would concede that there is still work to do, boards have made real progress in this area. We’re confident that boards will continue to enhance their racial and ethnic diversity in the coming years as they have done with gender diversity.
In fact, S&P 500 nominating/governance committee chairs responding to our recent survey said adding to the racial and ethnic diversity of their boards will be a top director recruiting priority for the next three years. In addition, many boards are disclosing more information about the diversity of their composition, and 193 S&P 500 companies (39%) included a statement in their proxy committing to diverse slates when considering new directors, an increase from 24% in 2020. Forward-looking boards will go further; they will embrace a refreshment mindset and establish an intentional and ongoing process for evaluating whether they have the right expertise in the boardroom, reducing reliance on director retirements for needed turnover.
Our firm is proud of our role in helping boards enhance their diversity and attract strong directors from historically underrepresented groups. We have helped place more than 3,000 women on corporate boards globally and over 1,000 people of color. But we know that making progress on diversity is a journey, one that will take consistent effort by all of us.
Advancing diversity, equity and inclusion isn’t just about recruiting new people to the board, it is also about creating a board culture that welcomes diverse perspectives and vigorous debate and equips all new directors to fully participate in the work of the board. Because directors are coming to the board with varying degrees of boardroom experience, it’s more important than ever to define and manage a board culture that fosters respectful and healthy debate and enables directors to come together to make decisions.
Directors tell us that one of their most uncomfortable positions is when they find themselves disagreeing with other board members on an issue. This is especially true for new directors, who lack perspective on the board’s history and other important context. This makes knowing when to raise questions or push for more information all the more difficult.
In addition to creating an environment that encourages all directors to contribute, boards can establish a robust onboarding process that helps new directors get up to speed quickly on the business context and issues facing the board. A board mentor, in particular, can provide perspective on boardroom interactions, explain the board’s written and unwritten rules, help with meeting preparation, and debrief and act as a sounding board between
meetings. New directors also “own” their onboarding experience and should request the information they need to quickly get up to speed. They should make it a point to meet one-on-one with other members of the board to understand their key concerns and what drives them.
High-functioning boards will do all of these things: ensure they have the right set of diverse skills and perspectives, effectively integrate new directors and create a culture that encourages the full participation of all directors.
This article was originally published in Savoy.