Corporate Board Diversity: How to Make Boardrooms of America Look Like America

Board Diversity: What is it & why does it matter?

Corporate boards are not only an inaccurate depiction of the numerous ethnic backgrounds that make up America; they also highlight the lack of diversity that impacts local communities and the bottom line of many companies. 

Research shows that board diversity matters; companies are more effective and more innovative when they reflect the diverse perspectives of their stakeholders. Racial diversity in the boardroom also ensures that minorities are represented when important decisions are being made that directly impact their communities.

So, let’s start with the basics:

What is board diversity? 

Peer-reviewed research defines board diversity as a reflection of a company’s stakeholders—their employees, customers, and suppliers. Understanding who these people are and the diversity they represent is the first step in identifying if a board accurately captures the diversity of its stakeholders. Often, they do not, and this impacts many important aspects of running a successful business.

Why is board diversity important? 

Decisions that impact local communities and society, in general, are made in boardrooms. Underrepresented groups need a seat at the table to help promote a more equitable future and to ensure their perspectives are heard and shared. During the podcast episode, Jerusha explains: “[T]he boardroom…[is] where strategic decisions are being made in terms of capital investments, employees; this is really where [the] rubber meets the road that could change the lives of millions of people who look like me.” In the fashion industry, for example, underrepresented groups are often left out of the decision-making, which impacts accessibility of sustainable clothing options. With a seat at the table, this issue can be rectified.

To help correct past injustices, boards should consider reevaluating their practices relating to diversity. In his interview, John explained: “What we’ve done is we bankrupted [Black] families for generations because of the economic injustice. If we’re going to create real access and opportunity and wealth creation for Black families over time, business needs to lead the way.” Therefore, board diversity isn’t only a measure of a company’s stakeholders but also aids in creating a more equitable future for all Americans.

What are the benefits of having a diverse board? 

When a board more accurately depicts its stakeholders, it also improves overall operations, as companies can address changes more readily. An article in the Harvard Business Review reported: “A demographically diverse board may help a company identify and respond to market shifts and changes in consumer expectations more effectively than a homogenous board.” This means that a company’s financial performance is directly related to its boardroom diversity.

During the podcast, John discusses how diverse boards perform better. This is supported by other research, including a recent article in Nature, which examines how corporate board diversity impacts effectiveness and innovation. Diverse boards are more equitable and improve the company’s general functioning, making them more adaptable and poised for true leadership—a win-win if ever there was one.

Acting sustainably is not just the right thing to do; sustainability and the consideration of large-scale impacts are also approaches that will enable your company to develop more robustly. Treating your workers with dignity will ensure they are invested in their job and improve their performance. Participating in sustainable sourcing practices maintains your access to materials and helps you control your prices. Creating desirable and high-quality products maximizes your marketing appeal, while campaigns that uplift will inspire marginalized communities. The list goes on!

What are the challenges to creating a diverse board?

Many factors contribute to the lack of diversity in America’s boardrooms, including the broader issue of systemic racism. Immediately actionable challenges identified by Jerusha, John, and other organizations tackling this issue include:

• Leadership Pipeline: People often cite the candidate pool as a reason behind a homogenous board of directors. However, Take Your Seat has identified that the real issue is a networking gap and not a lack of experienced, qualified candidates. “We’ve been ready to be ready, a lot of us for a long time. We’re looking at the idea that the boards need to be ready,” Jerusha clarified during the interview.
• Networking Gap: Board members are typically appointed as part of a network. Furthermore, networks are often dominated by white people, and there hasn’t been much pressure to change that side of the selection process. John expounds during the podcast: “We don’t have a pipeline issue…we have literally tens of thousands of highly qualified Black executives…By creating Take Your Seat, we’re solving the network problem.”
• Awareness: Just like in many businesses, a silo mentality often exists, where there is reluctance to discuss boardroom diversity. To remedy this, corporate leadership is required to develop a unified vision for the company. The Board Challenge asks board members to pledge to add a Black director to their board of directors. It aims to increase general awareness and to drive accountability for increased board diversity.
• Tokenism: Including symbolic representations of diversity among board members is irrelevant. As explained in the Minority Inclusion Project, “Tokenism is one of many tools of systemic racism and it undermines our merit, dehumanizes us, and places the unwarranted burden of community representation on one person.” When striving for board diversity, it’s important to recognize the underlying reasons for doing so, which should stem from a commitment to equity and inclusion and not to simply check a box.

How do we create diverse boards?

A diverse board is one that accurately reflects its stakeholders. While ethnic and gender diversity are two components of a diverse board of directors, another characteristic of an effective board, as reiterated in the Harvard Business Review, is cognitive diversity—people who also possess different perspectives and knowledge. It is important that all types of diversity are represented.

So, how do we do this? As Jerusha and John explain during the podcast, the steps to creating board diversity start with the following:

Step 1: Recognize the need to create more diverse boards. Consider who your stakeholders are and evaluate if they are accurately represented on your board.

Step 2: Review your bylaws or other operating agreements and consider how a board member is selected. Ensure that diversity is considered as part of your selection process and is incorporated in the overall vision for the company. 

Step 3: Expand your network and increase engagement: “We want everyone, allies, we want Black professionals, we want executive search firms, we want HR directors, we want anyone and everyone who’s interested in this issue,” an excited Jerusha asserts during the interview. “We have built the largest directory of Black professional talent that currently exists.” 

Through their network, Take Your Seat unites ethnically and cognitively diverse people who are interested in becoming board members. Expanding your network to include people with more diverse backgrounds will connect you with candidates who may be a good fit for your board. At the end of this post, you will find resources to help you discover Ways You Can Take Action!

Creating true diversity through inclusivity

Diversity doesn’t always mean inclusivity, and creating an inclusive board culture is vital to the success of this effort. John expands on this during the podcast: “It’s what we call board health. And board health is that notion that you create an inclusive environment, in and around the board table, that you’re not necessarily diverse, just by having, you know, a token woman or a token Black member, that’s not true diversity, we have to create true inclusivity.”

Historically, gender diversity has often overshadowed racial and ethnic diversity, as Jerusha explains during the interview: “In the past, when people and organizations and companies have gone to bat for diversity, it’s meant gender diversity, and then that gender diversity has turned into the placement of white women on boards.” Broadening the meaning of diversity through inclusivity efforts can help even this playing field.

While diversity and inclusivity are related and often discussed together, developing a real culture of inclusivity, along with diversity, is key. Diversity describes the characteristics of the people involved, while inclusivity describes how well those different backgrounds and perspectives are accepted and welcomed by the company. A board of directors may be interested in increasing diversity, but if a culture of inclusivity is not also developed, those diverse voices may never be heard. Creating an inclusive board culture may begin by clarifying what inclusion means and then aligning that with the company’s mission and strategic vision to help promote inclusivity throughout the entire company.