For the past two years, my phone has been ringing with calls from corporate and not-for-profit executives and their board members seeking advice on how to diversify their leadership and boards. The George Floyd killing prompted many organisations to double down on their commitment to reflect the communities they purport to serve.
Why are they calling me? I suspect it’s because I’m a Black man who has served as CEO of my region’s largest not-for-profit organisation and currently I’m Chair and CEO of our region’s second-largest privately held bank.
Inside the diversity vacuum
Many corporations are acutely aware their boards lack diversity and of the message this sends to the public. At Fortune 500 companies, 82.5 per cent of board members are white, according to the ‘Missing Pieces Report: A Board Diversity Census of Women and Minorities on Fortune 500 Boards’. Only 8.7 per cent are Black, 4.6 per cent are Asian/Pacific Islander and 4.1 per cent are Hispanic/Latino.
The diversity gap has become so pressing that in August last year, the US Securities and Exchange Commission voted to approve new listing rules approved by Nasdaq to advance board diversity. The rules will require annual disclosure related to the diversity of companies’ boards, and if they do not have at least two diverse directors on their boards, they must disclose the reason publicly. Under the rule, Nasdaq will also offer companies a complimentary board recruiting service to advance diversity. A tiered compliance period will begin in August 2023.
Meanwhile, in the not-for-profit sector, boards continue to be stubbornly and overwhelmingly white, with 27 per cent of boards surveyed by not-for-profit BoardSource reporting they did not have a single person of colour.
I think the interest in diversifying corporate and not-for-profit boards is sincere. Yet, as I’m hearing from the executives who call me, we’re in the middle of a paralysing moment when leaders tasked with this assignment realise that they don’t know many diverse people.
This is not a criticism; it is human nature to seek familiarity and predictability. Most of us tend to associate mainly with people who look and think like us. My advice to every not-for-profit leader or ally who wants to change these statistics is to fish in a different lake. If you want to attract diverse board members, it’s time to build relationships in new ways.
Most effective way to diversify
To diversify your candidate pool, you might consider reaching out to the many chambers of commerce or organisations focused on helping diverse business owners thrive, such as the local or national divisions of the Hispanic, Asian American and Black Chambers or the National Minority Supplier Development Councilin the US. Most regions have networking groups specifically for supporting women in their careers, and they can also be a great source of referrals for highly qualified candidates. In addition, consider subscribing to and advertising in publications focused on multicultural communities.
Local organisations with deep roots in diverse communities can also help you make connections. Midwest BankCentre just hosted an annual gathering to connect potential diverse board candidates and other executives with not-for-profit and corporate boards that are seeking to broaden their applicant pool.
Over the course of the past few years, I’ve been sharing opportunities for board leadership with diverse candidates in my network informally; this event, which we will hold annually, will formalise the matchmaking process. Creating a pool of people who can serve as potential board members is an ongoing process.
“I came to realise that board contribution isn’t simply about what you know. It’s also about the viewpoint and lived experiences you bring to the table, and the questions that you ask to help management round out their thinking.”
Providing training for new board members is also important, so they feel comfortable sharing their perspectives. For my entire adult life I have moved between circles that don’t generally intersect. I was in my early 20s when I served on my first not-for-profit board. I was almost always the youngest in the room, and my background as a kid who grew up in poverty and spent more than a decade in the foster care system was starkly different from my fellow board members.
During those early years, it was a chore to build the confidence to utter a word. But I came to realise that board contribution isn’t simply about what you know. It’s also about the viewpoint and lived experiences you bring to the table, and the questions that you ask to help management round out their thinking.
I found my rhythm through the realisation that every board member brings a unique perspective. It’s in the intersection of ideas that better solutions invariably surface. I would have reached that point earlier with more training in what it means to be a board member.
For the longer-term, I would also recommend a collective rethinking of the criteria corporations use for board selection. Many corporate boards require that candidates have corporate profit and loss responsibility; however, this puts many potential board members out of the running because they work in companies that rarely promote women or people of colour to positions that would give them this experience.
Expanding the criteria to include other types of related experience, such as an executive position at a not-for-profit or membership on a not-for-profit board could help to diversify corporate boards. Not-for-profit boards often function as a training ground and pipeline for paid, corporate boards.
Efforts like these take time but there are many rewards. I’ve seen firsthand the benefits of a diverse leadership team and executive board. The bank’s executive team is 66 per cent diverse across racial and gender lines, but also diverse in terms of background, age, experience and thought. Our board is 50 per cent diverse and reflects our values, the communities we serve, and the strategy that is important to the future of the bank.
I believe that this diversity brings a perspective to the table that helps push us forward and challenges the way we serve clients and go to market, positively impacting our bottom line. These same principles apply to not-for-profits, helping them better serve their constituents and cast a wider net for both volunteers and donors.
If the pipeline in your company or not-for-profit isn’t diverse or your network lacks diversity, now is the perfect time to look outside your normal spheres. I believe we all have a role to play in increasing diverse leadership and fostering shared prosperity.
Orvin Kimbrough is Chairman and CEO of Rising Bank, a division of Midwest BankCentre, The Accidental Banker and a member of YPO.