The 7th annual SAIS conference on board diversity was framed around two questions: do we need a national campaign to drive boardroom diversity in the US? And if so, should that campaign include a national target?
As has been the case in the past, participants from countries that have used targets (or quotas) to increase board diversity expressed strong support for the idea of a national goal, suggesting that it was necessary in order to get the issue of boardroom diversity “on the table” in the US. Those who were opposed to a national target argued that the business community is best positioned to drive solutions to the diversity challenge.
Do We Need a National Campaign for Board Diversity?
Kicking off the conversation was a discussion regarding the business case for diversity and why it hadn’t had more impact in the US.
- Brande Stelling, Catalyst VP, quoted Ron Parker of the Executive Leadership Council, saying that the business case has provided the justification for diversity, but not the motivation. Stellings argued that a national campaign is needed to make board diversity a “kitchen table” topic of conversation.
- Tom Quaadman of the US Chamber of Commerce believes that the Chamber’s support of Carolyn Maloney’s (D-NY) Gender Diversity in Corporate Leadership Act is an indication that the business community is now paying attention to the issue of diversity, and businesses are best positioned to drive solutions.
- Ron Parker (Executive Leadership Council) was perhaps the most optimistic regarding change, suggesting that the transparency (and availability) of data and the use of social media by consumers will contribute to growing diversity at the senior leadership level.
- Professor Jeffrey Sonnenfeld (Yale School of Management) was less optimistic than Parker, pointing out that social media can be extremely harsh on women leaders. He also reiterated the concerns of some that targets would lead to tokenism or an artificial ceiling for diversity.
- Quaadman shared his concern that targets could get in the way of a board fulfilling its fiduciary responsibilities, while other panel members (Stellings and others) pointed out that businesses establish target/metrics for everything else they do; why the same shouldn’t be true of diversity?
The Campaign Begins at the Top
Peter Grauer, Chairman at Bloomberg and chair of the 30% Club in the US was one of a number of speakers who talked about the influence of women in his life as a driving force behind his work on gender diversity. Grauer shared that the 60 companies in the 30% Club have moved from 22 to 28% for non-executive women board members, and he expressed his belief that targets are very important for driving change. (Grauer has an aspirational goal of having women hold 30% of the 900 top leadership positions at Bloomberg by 2020.)
Grauer also believes:
- The diversity problem is not the pipeline – it’s an issue of focus.
- The institutional investor community should play a bigger role in driving leadership diversity and could be much more proactive.
- Part of the problem in the US may be the lack of term limits on boards.
McKinsey & Co. Pre-Release Report
McKinsey & Co. provided a pre-release summary of their upcoming report, Inspiration to Action: Women on Boards 2016. The report, due this fall, is based on interviews with companies that are exceling at gender diversity to try to identify what had made a difference in these organizations. The themes: it requires changing mindsets and changing behaviors. A final note: companies don’t sacrifice anything to insist on diverse candidates.
Advice from the Campaign Trail
This year’s CEO panel including the following comments:
- We need to start now in changing the mindset of younger people (regarding diversity).
- We have to address the issue of having currently serving executives serve on boards, both in terms of seeking board candidates who are still working (vs. retired) and with companies that won’t allow their senior executives to serve on outside boards. One panelist noted that he worked for a company that actually wanted their senior execs to serve on an outside board, viewing it as a tool for professional development.
- Leaders have to actively promote and sponsor diverse candidates, reaching down into organization and investing in talent. Board search experts should know who those high potential candidates are – should be casting a wider, deeper net.
- Japan is a resource for talented women with board potential – many can’t find opportunities in their own country.
- Women board members should serve on nominating committees; their presence alone can heighten sensitivity to developing a gender-diverse slate.
- California Insurance Commission – has addressed supplier and governing board diversity at the state level; is now a member of a multi-state coalition that will report later this year on results from a survey of insurance companies operating in their states.
The Diversity Campaign in Canada
Monica Kowal, Vice Chair of the Ontario Securities Commission discussed their recent move to increase gender diversity requirements from listed companies. Based on recommendations from Catalyst in their Gender Diversity on Boards in Canada: Recommendations for Accelerating Progress, OSC wants all TSX-listed companies to set gender diversity targets by the end of 2017 and achieve them in three to five years. OSC has also indicated that if sufficient progress isn’t made to achieve the 30% goal, the government will consider more stringent legislative or regulatory approaches.
Global Competition – Lessons from Successful Campaigns Abroad
From the UK:
- Push is now on to increase diversity among senior executives and expanding the focus to the FTSE 350
- Wilson believes gender-balanced boards are the new norm; she doesn’t expect board profiles to regress.
- Conversation is no longer focused on why, but how.
- Wilson reiterated her support for setting a target – said you need to bring together stakeholders; reward action, not pledges; engage search firms and the media; and tackle bias.
- Progress has picked up in last 18 months (they publish quarterly updates). Goal is 30% by 2018.
- 40% of new appointments going to women since beginning of 2016
- Is using network mapping to identify connections for new board appointments.
Jacqueline Sheppard, Chair at Emera, discussed the company’s own internal requirement that the board be at least 25% female, which it has had for many years. She said that doing so puts the issue on the table and treats it as a business issue. Having a policy in place helps shift the thinking of the board, made it a part of governance conversation. She also dismissed the suggestion that a requirement would negatively affect merit.