Tackling the systemic gap in Corporate Canada's recruitment of Black students
Ask companies if they want to increase board diversity, and a majority will say yes. Ask them how, and things get murkier.
While greater diversity on boards is a priority among organizations, a new survey released this week finds few are willing to take actions likely to change their demographic makeup. Tactics that help recruit and hire non-White and non-male directors are highly unpopular among executives surveyed by the New York Stock Exchange and Diligent, which sells collaborative software to boards.
Over half said they have diversity plans, but most don't have policies in place that will do much to broaden board makeup. Only 3 per cent said their companies had quotas for directors of a certain race or gender, and the mandates ranked as the least likely step firms would take to achieve their goals. Other diversity initiatives were just as rare. Less than 10 per cent of respondents said their companies require diverse slates of candidates for new seats, set term limits, or ask long-tenured directors to resign.
“There is a high level of willingness among CEO’s to add more diversity to their board—today more than ever before,” said Brian Stafford, the chief executive officer of Diligent. “But practically speaking it is challenging.”
Boards have been under pressure from investors and legislatures to increase racial and gender diversity in recent years. California requires public companies based in the state have women and minorities on their boards. Addressing systemic racism in the U.S. has led organizations this year to commit to adding more Black directors. Women hold a little more than a quarter of board seats on the S&P 500, and some of the biggest companies still lack a single Black director.
Diligent’s survey confirmed that board diversity is a priority among executives, but it also suggests that change will be slow without outside pressure. More than 80 per cent of executives surveyed said their organizations had plans to increase diversity or would have one soon. But most only pointed to broad steps to deliver on that promise, and many rejected specific actions that can lead to more women and minority directors. Although quotas such as those mandated by California and Norway are widely opposed, they have led to an uptick in female directors.
Among all suggested reforms, executives rated transparency as most likely to be adopted by their companies. About 14 per cent said their firms were already releasing data on board makeup. Around a quarter of the S&P 500 also share their workforce demographics publicly.
Executives acknowledged progress has been slow and uneven. “The reality is that boards are looking for people who have had previous board experience,” one said. “This criterion is a conundrum since historically board members haven’t been diverse.”