CHICAGO, Sept. 9, 2020 /PRNewswire/ -- Racial and ethnic
diversity in the boardrooms of Fortune 500 companies has been
notably slow to take shape, according to the findings from Heidrick
& Struggles' (Nasdaq: HSII) 2020 U.S. Board Monitor. While the
report found boards made significant gains in appointing gender
diverse board members in 2019, with women making up an all-time
high of 44% of new board seats, the number of board appointments of
African Americans, Hispanics, Asians and Asian Americans has
remained stalled at 23% since 2017.
Now in its eleventh year, Heidrick & Struggles' 2020 U.S.
Board Monitor examined the trends in non-executive director
appointments at U.S. Fortune 500 companies in the past year,
finding that companies filled 467 vacant or newly created board
seats with independent directors in 2019, up slightly from 462 in
2018.
"Intentional and purposeful actions towards inclusivity are more
critical than ever as our country grapples with the high climate of
racial injustice," said Lyndon
Taylor, managing partner, Diversity & Inclusion
Practice, Heidrick & Struggles. "Companies are opening their
eyes and beginning to address their own systemic issues around
racial equity in leadership and the workplace, and three years of
stagnation in appointing board members of color requires a greater
focus and commitment to a sustained effort to bring more diverse
representation into boardrooms."
Key Trends in the 2020 U.S. Board Monitor
1. Women continued making significant gains on
boards; representation of people of color remained stalled in
2019
a. Based on the current
upward trend, the report projects that by 2022, appointments of
women to board positions will reach 50% among the incoming class of
new directors.
b. Appointments of African American board directors decreased
slightly to 10% in 2019, down from a high of 11% in 2017 and
2018.
c. Appointments of Hispanic board members increased slightly
moving from 4% in 2018 to 5% in 2019.
d. Asians and Asian American appointments remained unchanged
from 2018 at 8%.
2. The vast majority of new appointments had
prior board, CEO or CFO experience
a. Boards filled an all-time
high of 72% of open seats with directors who had previous public
board experience—up from 69% last year.
b. Half of the new board appointments were current or former
CEOs (50%), and 21% were current or former CFOs.
3. Boards are increasingly appointing directors
with areas of expertise across digital, cybersecurity and
sustainability
a. Because of the
enterprise-wide importance of digital and cybersecurity, 40% of
director appointments in 2019 had digital or social media
experience, up from just 10% in 2016, and cybersecurity expertise
increased significantly to 14% last year, up from 6% in 2017.
b. One in ten (10%) new directors in 2019 had sustainability
experience, illustrating the growing importance of environmental
concerns.
"Most boards seek executives with previous experience serving on
a board, or as CEOs or CFOs of organizations of relevant complexity
and scale, however, the number of diverse leaders in these senior
roles today is too low," said Jeff
Sanders, vice chairman and co-managing partner, CEO &
Board of Directors Practice, Heidrick & Struggles. "To increase
diverse representation, boards will need to broaden their networks
and criteria for board selection, going beyond the traditional CEO
and CFO profiles to consider diverse leaders who have proven
experience and leadership capabilities across a wider range of
business areas and functions. Companies also can implement
forward-thinking succession planning and build a more diverse
leadership pipeline for the top leadership positions across the
C-suite."
Strategies for Building Diverse Boards
To build stronger, more diverse boards, Heidrick & Struggles
recommends that boards of directors think and act differently:
1. Ensure that every list of appointments, as well as
longer-term board succession plans, includes diverse
executives.
2. Focus on abilities and competencies, not just titles,
by considering executives with experience and expertise across a
range of key areas, including human capital, marketing, legal, and
risk, among others. The insights and skills these individuals
possess can be just as valuable as those with more traditional CEO
and CFO profiles.
3. Broaden the board's network, and be open to individuals
with demonstrated leadership abilities outside of traditional
corporate roles, including academia, government, medicine, the
military, and social impact and non-profit organizations.
4. Build relationships early on with high potential rising
executives who are diverse and likely to take on broader, more
senior roles, establishing a sustainable roster of future diverse
directors.
"In order to evolve and best represent the next generation of
stakeholders, boards need to provide a seat at the table – as board
chairs, lead independent directors and committee leaders – to new,
diverse directors who have the skillsets of the future," said
Bonnie Gwin, vice chairman and
co-managing partner, CEO & Board of Directors Practice,
Heidrick & Struggles. "We are committed to working with
companies to accelerate their board and organizational diversity,
and we have made significant progress helping boards add diverse
talent. So far this year, 66% of our North America board of director placements
were diverse, and that figure was 61% globally."
In 2018, Heidrick & Struggles was the first executive search
firm to announce that on an annual basis at least half of the
cumulative slate of initial board candidates presented globally to
its clients would be diverse, and has exceeded the pledge goal each
year. Additional efforts to expand the pipeline of diverse
executives for board and senior leadership roles include Heidrick
& Struggles' Director Institute, an apprenticeship program
designed to accelerate the development of diverse executives and
prepare them for broader operating roles and corporate board
service.
About Heidrick & Struggles
Heidrick &
Struggles (Nasdaq: HSII) serves the senior-level talent and
leadership needs of the world's top organizations as a trusted
advisor across executive search, leadership assessment and
development, organization and team effectiveness, and culture
shaping services. Heidrick & Struggles pioneered the profession
of executive search more than 60 years ago. Today, the firm
provides integrated leadership solutions to help our clients change
the world, one leadership team at a time.® www.heidrick.com
Media Contacts:
Heidrick & Struggles
Nina Chang
nchang@heidrick.com
M Booth
John McLaughlin
johnm@mbooth.com
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