Diversity, Equity, And Inclusion And Boards Of Directors

Unlocking potential with DEI

The benefits of diversity and inclusion to groups and organizations are well documented. There is a deep body of research that demonstrates that diversity drives creativity, innovation, better decision-making, and, ultimately, increases market share. Diverse companies are more successful in every possible form of measurement, and the same is true for nonprofit organizations pursuing solutions to the world’s most persistent challenges.

 

Consider these facts recently published by Harvard Business Review:
 

“Enriching your employee pool with representatives of different genders, races, and nationalities is key for boosting your company’s joint intellectual potential. Creating a more diverse workplace will help to keep your team members’ biases in check and make them question their assumptions. At the same time, we need to make sure the organization has inclusive practices so that everyone feels they can be heard. All of this can make your teams smarter and, ultimately, make your organization more successful, whatever your goals,” David Rock and Heidi Grant write for HBR.
 
As an executive recruiter focused on mission-driven clients, many in the nonprofit space, I work with clients who are well aware of both the bottom line and social importance of building diverse organizations and teams. But many of these clients have not yet connected that awareness to action, particularly when it comes to their own governing bodies, boards of directors.
 
Boards of directors in the for-profit sector have remained homogeneous (mostly white males) despite recent, increasing pressure from shareholders and investors. Women currently occupy only 18% of board seats at the biggest companies, and only 10% of lead independent directors and 4% of board chairs are women. The stats for racial diversity are even more grim, with some studies showing that 15% of board seats at the top 200 S&P 500 companies belong to racial minorities.
 
The nonprofit sector mirrors this lack of diversity in leadership at the board level. The percentage of people of color in nonprofit board seats has remained under 20 percent for the last 15 years and doesn’t show any signs of changing despite growing awareness of the strategic, financial, and social benefits of diversity.
 
Boards are an area of particular concern and focus when it comes to examining diversity and inclusion. What organization can truly claim itself to be diverse at any level if its highest echelons do not reflect this value? A commitment to diversity – and the action behind that commitment – must start at the top, with Boards of Directors.
 
Recently, my firm, Koya Leadership Partners, conducted a study of nonprofit Boards of Directors called The Governance Gap: Examining Diversity and Equity on Nonprofit Boards of Directors, to gain insight into board composition and board activities around diversity and inclusion. While disappointing, the results were not surprising given national trends. Our survey showed that 96 percent of the participating organizations believe that diversifying their boards is a key objective, yet just 24 percent had taken any steps to increase levels of diversity.
 
What’s behind this lack of action? There are a range of factors, but our survey highlighted one in particular: While boards clearly understand the importance of diversity, their members lack the knowledge, skills, resources, and commitment necessary to bring about measurable change.
 
Recruiting is an area in which most boards tend to struggle, but it is the probably most important when it comes to diversity. Boards members – in both the nonprofit and for-profit sectors – tend to recruit from their social circles, which invariably results in homogeneity. In order to identify talented, passionate, and committed board members outside of the “usual suspects,” boards need to get strategic about recruiting, and members need to push outside of their comfort zones – and their social circles.
 
Many boards we surveyed hadn’t even done a simple analysis of their own composition, both in terms of race, but also with regard to other forms of diversity, such as gender, skills, experience, background, location, etc. This is a key first step in identifying exactly how a board should diversify itself and then developing an actual recruiting strategy to achieve those goals.
 
In addition to developing and implementing effective recruiting strategies, boards need to educate themselves. It’s critical that board members all understand the benefits of diversity and what diversity means for the organizations they govern. This process of education may look different for every board, but it should include some component of education and an explicit commitment to action. This commitment may take the form of a strategic plan or documented goals. Whatever it is, all board members must buy into the vision for diversity and inclusion, and be prepared to work toward it.
 
Finally, it’s critical that boards must also hold themselves accountable for the role they play in building diverse organizations. All boards now know that diversity is a key performance factor, which means that it’s ultimately their responsibility to ensure that the organizations they govern aren’t just talking about diversity, but are taking action to create diverse, inclusive organizations and environments.
 
Corporations and nonprofit organizations – and the boards that govern them – are vital forces in efforts to create a more equitable society. The good news for corporations is that this is truly a double bottom line situation. What’s good for society as a whole also happens to be good for the balance sheet and for any company’s long-term success. Boards can and must lead the way in unlocking their own full potential and that of the entities they serve.