Much has been said about the state of diversity in the Fortune 500, but what about diversity in the boardroom?
Despite some advances in Black representation in the boardroom, disparities remain for Black directors. Ahead, we'll dive into the hurdles Black board members may face, as well some strategies and solutions to creating more diverse and equitable boardrooms.
Let's get started.
The reality of Black representation in the boardroom
The number of Black directors increased after 2020.
The racial reckoning that began in 2020 following the murders of George Floyd, Ahmaud Arbery, and Breonna Taylor led to mass protests, shining a spotlight on the nation's inequities from systemic racism and police brutality to the makeup of businesses and boardrooms. According to the Harvard Law School Forum on Corporate Governance, within one year of the protests, "firms have considerably increased the proportion of board seats held by black directors (from 8.2% to 9.6%)." Most notably, 10.7% of the S&P 500 companies (53 out of 496) reviewed by the Harvard Law School forum "hired at least one black director after the protests (compared to having no black representation on the board before the protests)."
The Harvard Law School forum found that the increase in Black board members was "mostly driven by firms adding new board seats, rather than replacing existing directors." As reduced turnover is one obstacle to advancing board diversity, increasing the number of seats is one proven way to increase diversity in the boardroom.
Still, the number of Black board members lags behind.
Though Black directors have gained more footing in recent years, there's still progress to be made. For starters, 8.7% of Fortune 500 board seats were held by Black board members in 2020, per the sixth edition of the Missing Pieces Report: The Board Diversity Census of Women and Minorities on Fortune 500 boards. A year prior, 37% of S&P 500 firms did not have a Black director, according to Harvard Business Review.
Black Enterprise's Black Boardroom Power 2022, a report surveying diversity at S&P 500 companies, ultimately found that within the S&P 500, "there were 474 Black corporate board members at 421 corporations in 2022 versus 425 Black corporate directors at 399 companies in 2021. The figures for 2022 reveal 85% of the S&P had Black directors, up from 60% in 2016, the first year Black Enterprise reported on board diversity across the entire index." The number of Black women directors also increased, sitting at 185 female directors in 2022, "up 18% from 157 in 2021."
Fewer companies lack at least one Black director, reported Black Enterprise, but "Black representation still hasn’t achieved parity across the entire index, which reports a total of 5,466 directors as of May 2022." In all, there were just "14 Black American board chairs and lead directors in 2022."
Traditional recruitment is an obstacle to diversity.
Findings from Harvard Business Review reveal director recruitment itself as one barrier to achieving diversity in the boardroom. Oftentimes, traditional methods of board recruitment such as tapping personal networks reinforces existing board demographics rather than promoting diversity or representation. As a result, "the internal pipeline to the board is dominated by white executives."
"When you search everywhere for talent, you’re inevitably going to have a stronger team," John W. Rogers, Jr., founder of Ariel Investments, said in a Wall Street Journal interview. "When baseball only recruited white baseball players, lots of gifted, talented future Hall of Famers weren’t allowed to play. The game wasn’t as strong. When you’ve got these great athletes like Hank Aaron and Willie Mays and Jackie Robinson, the game also can be more exciting."
"Your boardroom will be stronger once you bring people together from different socioeconomic backgrounds and races, " Rogers said. "You’re going to have better decision making."
To bring in board members from different backgrounds, take time to reexamine your recruitment strategy to find ways you could incorporate inclusivity into the process. For instance, that could look like working in tandem with an executive recruitment firm specializing in diverse placements or partnering with organizations like Historically Black Colleges and Universities (HBCUs).
Black board members are "recycled" at higher rates.
"Recycle rates" refer to the "rate at which individuals serve on more than one board," as defined by the Missing Pieces Report. According to this report, two out of every five Black board directors "serve on multiple Fortune 500 boards." Though achieving diversity in the boardroom is a worthy goal, it's crucial to be conscientious of overreliance on the diverse board members within our ranks.
Training and development is essential.
As the number of Black directors grows, it's important to be mindful of the fact that, for many, this will be their first time serving in the boardroom. For context, in 2022, 34% of new directors in the S&P 500 were Black, according to Axios.
"To enable their success, companies must provide supportive, inclusive environments," per Harvard Business School's Report on Racial Inclusion in the Boardroom. Of course, training and development—which includes sponsorship and mentorship—are vital for the board as a whole, not just new directors. The takeaway here is that it's not just enough to get Black board members into directorships; it's equally, if not more, important to ensure they have the tools they need to succeed.
Black directors are rarely in leadership roles.
Black board members are less likely to hold board leadership roles, per a survey from Harvard Business Review. Despite having higher levels of education and similar board commitments, Black directors nevertheless are less likely to hold positions like chairperson/lead director or committee chair, HBR found. Such disparities further contribute to lack of Black representation in the boardroom, especially considering that positions like chair of the nomination/governance committee generally manage the board pipeline.
Organizations are building momentum toward diversity.
Though Black representation in the boardroom has a long way to go, there are organizations out there working to create meaningful change in their spheres of influence. Here are just a few organizations you should know about:
- AboveBoard. AboveBoard is an executive platform and community that provides open access to senior leadership opportunities. We empower board candidates through access and transparency while delivering a high-quality, efficient, and affordable process to hiring companies.
- The Black Boardroom Initiative. Led by Perkins Coie, with support from sponsors like Deloitte, Microsoft, and Amazon, The Black Boardroom Initiative "is committed to increasing the percentage of Black executives on corporate boards."
- Catalyst. A global nonprofit, Catalyst works to advance diversity, equity, and inclusion in the workplace so women can advance and thrive. One of Catalyst's goals is to increase the representation of women in corporate leadership.
Diversify your boardroom with AboveBoard
At AboveBoard, we're on a mission to diversify the global executive workforce, including boardrooms, to be representative of the population, creating lasting and meaningful change of the world. Our executive platform and community is centered on access and transparency, offering those who have been historically excluded in the boardroom direct connection with career-enhancing opportunities. By prioritizing excellence and inclusion in the search process, we believe it's possible to transform the landscape of boardroom recruitment.