Companies ‘sharing’ executives to fulfil diversity quotas
What’s happening? Some Fortune 500 company boards are “recycling” board members to fulfil diversity quotas, according to a report by Deloitte and the Alliance for Board Diversity. Rather than bringing in fresh talent with different “skills, backgrounds and perspectives”, companies are drawing on the same pool of individuals, the report notes. Over one-third of board members of colour and two out of every five Black members held seats on more than one Fortune 500 board in 2020, according to the research. (Axios)
Some context – Corporate diversity, particularly at the board level, is an issue that has been put under the spotlight in the last year, following the Black Lives Matter (BLM) protests across the world. While efforts from regulatory bodies, shareholders and consumers have pushed for increased corporate diversity over the last decade, BLM has forced those efforts to accelerate.
There is also a growing understanding of the value of diversity. Diverse leadership breeds diversity of creative, strategic thought and improved representation at a high level can be a catalyst for improved representation and inclusion for companies across the workforce.
Left unchecked, poor diversity practices can pose a high risk to businesses. In May, web software firm Basecamp saw the mass exit of a third of its employees after it failed to engage in diversity conversations with staff.
Why does this matter? Diversity is more than just a set of tick boxes about protected characteristics of the people you want to hire, it’s also about challenging status quo notions of who to hire. Companies’ “overreliance” on the same pool of candidates shows that opportunity is not being made for other potential candidates.
Hiring from a limited pool not only reduces opportunities for others to enter board level roles, but it narrows the expertise and diversity of thought that these boards offer.
Bring in the nerds! Traditionally, boards have prioritised financial knowledge or business management when recruiting, neglecting experts with knowledge of larger global risks. A recent concern for corporates has been the absence of this diverse expertise at an executive and board level, leaving them exposed to concerns such as poor diversity and inclusion, climate change, the clean energy transition and technological adoption, without any experts qualified to advise them on such issues.
As the report notes, “women and minority board members currently are more likely than white men to bring experience with corporate sustainability and socially responsible investing, government, sales and marketing, and technology in the workplace to their boards.”