While both women and racial minorities continue to be underrepresented in corporate board rooms, it's the latter that continues to be left out the most, with women of color faring the worst.
It's a trend apparent in both Northeast Ohio and the country as a whole. Without more thoughtful and intentional approaches to diversity, equity and inclusion, it's an issue that will continue to go unaddressed to the potential detriment of company bottom lines and marginalized groups seeking equity in society.
"Our ability to continue to make progress on inclusion, diversity and equity is central to our success. We know that an inclusive environment and diverse organization strengthens our company by helping us to build a sense of shared culture to attract top talent to enable every employee to reach their full potential," said Jill Penrose, chief people and administrative officer for The J.M. Smucker Co., acknowledging these efforts must incorporate the board of directors.
Most companies seem to outwardly endorse a similar perspective. Yet there remains a long road to achieving racial equity in the board room with seemingly little change made over the years.
Among 60 public companies in Northeast Ohio, there is an average of two women per board of directors. But there are just 1.8 minorities on average among 27 of these 60 that provided details for racial representation on their boards when asked by Crain's.
For Fred Nance, global managing partner with Squire Patton Boggs and a director on the board at RPM International Inc., an adverse inference can be made in the absence of data from more than half the local companies surveyed by Crain's.
In other words, it's reasonable to assume the stats look relatively bad (or not representative of diversity, in this case), otherwise the figures may have been supplied. Therefore, the average of 1.8 racial minorities per company board is likely more generous than reality across the full group.
Nance called both the reluctance among companies to disclose their racial makeups, and the figures derived from those that did, equally disappointing.
"It's embarrassing. It's unfortunate. And it needs to change," he said.
Women of color are the least represented group in the board room. But it's not due to a dearth of qualified candidates, said Cassandra Chandler, founder and CEO of Vigeo Alliance, a group that advises companies on corporate efforts related to D&I.
"It's because they are not looking," said Chandler, who sits on the board of trustees for Loyola University, New Orleans. "These people are out there. They're just not always being targeted or trained up to the next role."
Companies, executives and search committees often rely on their own networks for identifying board members, a myopic approach that intrinsically limits a pool of candidates, said Diana Bilimoria, KeyBank professor and chair of the Department of Organizational Behavior at the Weatherhead School of Management. This is why board diversity needs to be approached more intentionally, she said, and one reason why advances there have been so slow.
Meanwhile, women of color tend to be expected to jump through additional hoops than white, male counterparts, like securing a pricey board training certificate from a university, Chandler said. This reflects the "twice as good" concept and contributes to hurdles some diverse people face in the corporate world.
"We have to be more deliberate, more thoughtful in matters of D&I and ask, 'Are the things we are doing sustainable?'" Chandler said. "Or will we wake up another 10, 15 years from now and see the same problems we've been having for a lifetime?"
<a href="/people/what-theyre-saying-about-board-diversity" target="_blank"> More: What they're saying about board diversity</a>
According to an analysis by Brett Miller, head of data solutions for Institutional Shareholder Services ESG division, across the Russell 3000 Index, about 12% of directors and 13% of directorships are racially diverse. The latter figure refers to board seats and is higher because of some diverse directors sitting on multiple boards.
Among 36 Russell 3000 companies in the Cleveland-Elyria MSA, 11.2% of directors and 10.9% of directorships are diverse.
Though representation among both groups remains dismal on corporate boards, the stats show that gender diversity has been prioritized more than racial parity in recent years.
A lack of board diversity is the fault of companies and how they go about seeking board candidates, experts say, which goes back to how the status quo tends to work against modern diversity initiatives.
Smucker's has been working in recent years to improve racial diversity and equity in both the workforce and the board room. Penrose said this is a company value, yet one that has become an elevated priority following a listening tour across the company that centered on promoting a culture of diversity and inclusion. Following that, Smucker's has since joined the Stop Hate for Profit campaign, made Juneteenth a paid holiday and mandated unconscious bias training.
Events like the Black Lives Matter movement and the surrounding protests in 2020 have brought a finer point to why racial equity among directors is important.
"Certainly with given events more recently, there is an increased focus on this," Penrose said. "But we have become more intentional, as many companies have, and I think that will have positive outcomes for individuals and the organization."
The Smucker's board of 12 directors includes five women and three minorities (one is a Black woman). That's about the high-water mark for companies based in Northeast Ohio. In terms of building a diverse board, Penrose said the company intends to do even more.
Smucker's has been trending this way in recognition that a more diverse company is a better company, Penrose said. This is backed up by a litany of studies over the years. For the board, an age limit of 72 was established for directors to support turnover and create opportunities to fill seats with diverse hires.
Investors are looking for diverse companies, too, said Jeannette Knudsen, chief legal and compliance officer and secretary for Smucker's, and are increasingly pressuring large companies to disclose that information. That's something mandated in California following Gov. Gavin Newsom's signing in September of a law requiring public companies based there have diverse boards by January 2023.
Considering the political landscape in the traditionally red Buckeye State, Nance is skeptical anything like that will be legislated in Ohio anytime soon. However, forward-thinking companies recognize that what's playing out in the Golden State could set an example others follow.
Marcia Moreno, president of AmMore Consulting in Cleveland, helps businesses build more diverse and inclusive companies with the Latinx workforce in mind and advocates for Hispanic representation on company boards. Companies will ignore this to their peril, she said.
According to ISS ESG, U.S. Latinos composed just 2.2% of board seats for companies in the Russell 3000 and less than 4% of seats in the Fortune 500. Yet Hispanics are on track to represent 25% of U.S. residents by 2045, when whites are projected to fall below a 50% majority of the population.
"This is where Latinos are not being taken fully advantage of. This is an important voice that's being left off the table," Moreno said. "Sooner or later, this is going to impact the bottom line."
Yet many companies can't get out of their own way.
Despite a lot of lip service paid to diversity and inclusion, PwC's 2020 Annual Corporate Directors Survey found that just 34% of male directors "strongly agreed" that diversity enhanced board performance (down from 40% in 2018), compared with 80% of women (up from 73% in 2018).
Of course, the overwhelming majority of male directors are white.
"When you ask the question why is it taking so long for corporate boards to become more diverse," Nance said, "there's most of the answer."
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A seat at the table, but barely: Racial diversity in board rooms remains woefully poor - Crain's Cleveland Business
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