By Andrew J. Sherman, Esq. and Linda K. Bolliger
We have more than acknowledged as a nation the critical role of embracing, appreciating and celebrating diversity in our society and in the workplace. Diversity is not only the right thing to do, it is the smart thing to do, especially when serving a diverse set of customers and markets. A diverse work team leads to better decision-making, better results and a greater level of innovation and creativity. See www.innoversity.com for additional resources on the intersection between diversity and innovation.
But when it comes to diversity in our nation’s boardrooms, we still have a lot of work to do.
Women and minorities remain grossly under-represented in U.S. corporate boardrooms, crimping companies’ potential to lead in the global economy, a report by the Alliance for Board Diversity (ABD) recently showed. White men held 73 percent of board seats at Fortune 100 companies in 2010, up from 71 percent in 2004, according to the ABD, which advocates the inclusion of women and minorities on corporate boards. White women accounted for 15 percent in 2010, compared with 14 percent in 2004, while minorities made up 13 percent, down from 15 percent. Among Fortune 100 companies, white men gained 32 board seats from 2004 to 2010 and white women gained nine. Minorities lost a net 25 seats, and African-American men specifically lost 42. Overall, 16 seats were added to Fortune 100 boards in the period, according to the ABD report.
The Alliance for Board Diversity is made up of Catalyst, which focuses on women in business; the Executive Leadership Council, an organization of leading African-American executives; the Hispanic Association on Corporate Responsibility, which represents 16 Hispanic organizations in the U.S. and Puerto Rico, and Leadership Education for Asian Pacifics Inc., which provides leadership training to the Asian and Pacific Islander communities.
Citigroup Inc., International Business Machines Corp. (IBM)and Procter & Gamble Co. were among only 15 companies in the Fortune 500 whose boards last year had representation from each of the U.S. Census Bureau’s major groups: men, women, Whites, African Americans, Asian Pacific Islanders and Hispanics. In our view, companies can’t truly drive shareholder value until its boards are reflective of the markets they serve or hope to serve, with leaders from different backgrounds, ethnicities and genders.
In addition to the great work of the ABD, firms such as Boardroom Bound are helping qualified candidates from diverse backgrounds get ready for board service.
One of the featured programs is the The Boardology Institute which has developed a director candidate training program in an intensive multiple day framework. It requires pre and post seminar work for prospective candidates to learn governance, best practices, legal compliance and risk management as well as the time, commitment, risks, liabilities and protocols required of for-profit board service.
The Boardology program goals and agenda includes:
- Attain an in-depth understanding of for-profit board service requirements;
- Identify areas of needed development in order to establish board service credentials;
- Create a “Strategy and Action Plan” to address identified needs;
- Learn to use Boardroom Bound as a resource for implementing strategy;
- Create an on-going peer and professional support network.
- Among the topics covered:
- Board Requirements + Directors’ Roles & Responsibilities
- Corporate Governance – Implications of Sarbanes-Oxley (2002) + Recent SEC Legislation
- Priorities and Expectations CEOs, Board Chairs/Secretaries have of their Boards
- Director Fiduciary Responsibility including
- Types of scenarios Directors encounter
- What financial skills are required
- Board Dynamics – Balancing Fitting In with Effecting Change
- Straight Talk About Board Principles – hear directly from Directors about personal board selection & service experience
- Strategies for Getting Appointed to a Corporate Board
- Positioning “Yourself” with an Executive Search and Board Placement Firm
Programs like these help ensure that shareholders are being served by well-trained, highly-informed and truly diverse boards of directors. If your company does not have a board orientation and training program, or an effort to improve diversity of board composition, now is the time to develop an initiative.
Remember, these are not times to have your head in the sand on critical strategic, leadership and governance issues. Competing in global markets can only be achieved with a diverse leadership that has the experience, knowledge and the varying perspectives that can lead the way to sustainable business growth.
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ABOUT THE AUTHORS
Andrew J. Sherman is a Partner in the Washington, D.C. office of Jones Day, with over 2,500 attorneys worldwide. Mr. Sherman is a recognized international authority on the legal and strategic issues affecting small and growing companies. Mr. Sherman is an Adjunct Professor in the Masters of Business Administration (MBA) program at the University of Maryland and Georgetown University where he has taught courses on business growth, capital formation and entrepreneurship for over twenty-three (23) years. Mr. Sherman is the author of twenty-three (23) books on the legal and strategic aspects of business growth and capital formation. His twenty-third (23rd) book, Harvesting Intangible Assets, Uncover Hidden Revenue in Your Company’s Intellectual Property, (AMACOM) is due out in the Fall of 2011. Mr. Sherman can be reached at 202-879-3686 or e-mail ajsherman@jonesday.com.
Linda K. Bolliger is Founder and Board Chair of Boardroom Bound®, a national program fostering quality corporate governance. The program’s Boardology™ Institute is a leader in the board candidate development space with the nation’s largest database of inclusive, pre-qualified director-candidates for private business and publicly traded company board service.