It will take more than symbols to achieve corporate board diversity
Boards of directors here in Illinois and across the country remain overwhelmingly white and male. The rest of us – as customers and investors - must put pressure on companies to have boards that reflect the diversity of our society.
When Mattel unveiled an Ida B. Wells Barbie doll last month, the toy manufacturer was praised for honoring the Black journalist, suffragist and anti-lynching crusader.
“Barbie is proud to honor the incredible Ida B. Wells as the newest role model in our Inspiring Women series, dedicated to spotlighting heroes who paved the way for generations of girls to dream big and make a difference,” a Barbie Instagram account said.
Other women Mattel has similarly honored include author Maya Angelou, who recently made history by becoming the first Black woman to be featured on a U.S. quarter. Her coin is the first in a series designed to celebrate the accomplishments of American women.
“Each time we redesign our currency, we have the chance to say something about our country — what we value and how we’ve progressed as a society,” U.S. Treasury Secretary Janet L. Yellen said in a statement.
It’s good to see accomplished women honored in these ways, as Harriet Tubman was last week when a Lake View elementary school was renamed in her honor. Symbols are powerful and important.
But it’s worth noting once again that symbolic gestures are no replacement for substantive action. And when it comes to big corporations — many of which have pledged to do a better job on diversity — there’s work to do in making sure boards of directors mirror the customers that companies serve.
Corporate boards still remain overwhelmingly white and male, with directors who are Black, Asian, Hispanic, Middle Eastern or from another non-white ethnic group occupying fewer than 1 in 5 board seats in 2021, according to an analysis by ISS Corporate Solutions.
Women of all races accounted for just over 1 in 4 seats.
In Illinois, publicly held corporations headquartered in our state are now required to report diversity information to the Secretary of State’s office. In 2020, just 35% of those corporations had two or more non-white directors, with Black and Hispanic directors particularly underrepresented, an analysis by labor experts at the University of Illinois at Urbana-Champaign found.
Of the 74 companies that provided information, 19 reported having not even one person of color on their board. An average of just 15% of board members were non-white, compared to about 40% of the state’s population.
The 2021 report is due to be released in the next few weeks. More companies — almost 100 — have filed information this time around.
Illinois is one of only a few states to require publicly held companies to report the gender and racial/ethnic composition of board members. It’s a step this board supported in 2019, preferring it to the approach taken by California, which set numerical quotas for women directors and then more recently for those from underrepresented communities.
Public reporting makes it easier for the public to apply pressure for a diversified board — and when customers speak, businesses listen.
Effective policies are also important. Companies often talk in the abstract about valuing diversity but can’t point to a specific policy or practice they use to promote these values, says Eunmi Mun, an assistant professor at the U of I who helps analyze the Illinois data. “It’s great to say you value diversity, but those values have to inform your practices.”
Illinois’ disclosure law is a “small first step,” said R. Mark McCareins, a clinical professor at Northwestern University’s J.L. Kellogg Graduate School of Management. “You’re really not attacking the broader issue, especially when you’re exempting privately held companies.”
With that in mind, the U.S. Securities and Exchange Commission and the Nasdaq stock exchange are on the right track: They’re considering rules to require public and private companies — no matter where they’re based — to report the gender and racial makeup of their boards.
In the meantime, it’s up to the rest of us — as customers and investors — to pay attention and put pressure on companies that fail to take steps to recruit and hire women and people of color.
Corporate boards wield considerable power and influence in business and in society as a whole. It only makes sense to have everyone’s voice at the table.
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