Launched in September 2020, The Board Challenge is an effort to accelerate the diversification of corporate boards of U.S. companies by asking companies that don’t have Black board members to appoint one. It also asks companies that do have Black board members to use their influence to support what The Board Challenge does by asking other companies to appoint a Black board member.
“The goal is to get more participants from the Black community on boards where decisions are made for companies, where there’s an outsized amount of influence and the ability to create change,” says Guy Primus, co-founder of The Board Challenge.
The Challenge has over 60 companies that have already taken its pledge to appoint a Black board member or have pledged to support reaching out to others to appoint a Black board member. Primus says the organization is now going to approach 120 companies from the S&P 500 they’ve identified to accept the challenge of appointing a Black board member.
“We are reaching out to them in a systematic fashion to say, ‘We notice that you don’t have a Black board member, is this something that we can facilitate for you?’” he says.
In the following interview, Primus discusses the impact The Board Challenge is having on board diversity, the challenges the movement faces and how Nasdaq’s recent proposal on board diversity may affect the diversity of corporate boards.
How do you believe you’ve impacted board diversity so far, and why is board diversity important?
First, there have been over a dozen appointments within our community since launch. The companies who have taken the pledge and said they were going to appoint a board member, we’ve followed up, and companies that didn’t have Black board members before, now have them. That’s very specific, very tangible and measurable.
What we’ve done has also helped frame the conversation. Brad [Gerstner, co-founder of The Board Challenge and CEO of Altimeter Capital] has used his platform as an investor to connect with people who have been doing this for decades… We have people with foundations and schools named after them who are getting behind the movement and saying, “let me introduce you to these 50 companies.”
But I think the most important thing is for us to be a Catalyst for this movement. There are others that have been doing this for many years… We are simply amplifying the message.
For example, when we launched The Board Challenge, one of the organizations that we got on board was Nasdaq. We’re not saying they weren’t thinking about their recent proposal before, but we gave them ammunition to do what they have done subsequent to our movement starting. Again, we’re not taking credit for what Nasdaq is doing, but this is more evidence of us being part of a cultural movement.
The Board Challenge is focused specifically on Black board members. Have you gotten pushback from people involved in diversity who say you should be more inclusive?
There were conversations before we launched about this, but ultimately this is about diversity. It’s about making sure that every board is representative of America – that is the ultimate goal. But like any goal you want to reach, you start by doing things that are small, tangible, measurable and very specific. Catalyzing this movement understanding what’s going on, using our influence directly and doing something that is very specific and measurable. It’s very easy to see when a company has a Black board member or woman board member and when they don’t.
We are just one step in a broader movement. There has been a bit of pushback, but once they understand our process and methodology, there has been almost universal support.
What are your views about Nasdaq’s recent listing requirements that encourage board diversity? Do you feel it will be helpful or harmful to efforts to diversify corporate boards?
I struggle to understand how their proposal could hurt… I see it helping because if you’re a public company you want to be traded on a major exchange, so them using their platform to say, “we understand how important it is for shareholders to have representation from all of their constituent bases,” is positive. But it also says that Nasdaq believes leadership of companies should be representative of society as a whole. When I think about the mandate Nasdaq is handing down, it’s easy to say it is going to have significant positive impact. I applaud it.
Looking at this from the company level, each individual company that does appoint a diverse board member that they wouldn’t have appointed previously is going to have a perspective that they wouldn’t have had. They’ll be able to serve their shareholders much better than they would have previously and that individual Black director is going to be able to take his or her knowledge and influence and apply it back into society in a positive manner. They are going to have influence to pave the way for generations of Black professionals who are skilled in the art of business, and that’s really what we are looking for.
How does Nasdaq’s proposal impact the corporate governance of corporate boards?
It gives diverse individuals the ability to lend their perspective to very specific and strategic moves by the board on organic growth. To help the board understand the customer base in ways that the board would have overlooked before or to understand how a proposal might have negative repercussions. Having diverse board members, whether they are Black, LatinX or a woman or LGBTQ, is important to understanding that all the decisions made on a strategic level that management is looking for the board to sign off on impacts the client base, the customer base, the supplier base and competitive threats. It’s great to have a varied and diversified perspective on those issues.
I don’t think it changes the way things are governed, but just having the knowledge that you wouldn’t have otherwise had helps create shareholder value.
How would you best advise corporate directors deal with Nasdaq’s proposal?
The best thing any company can do is not be beset by groupthink…. If you’re doing the same thing over and over and you’re not thinking differently, it is incumbent upon you to broaden your circles.
I think it’s really important to start having conversations with people who you know are leaders but you hadn’t previously looked at them as a board member. If they can’t join your board, maybe they know someone who would be an ideal candidate for your board. Broaden you circles and resist the temptation to do what always been done. Most people want to perceive this as a pipeline problem – that there aren’t enough Black board members to go around. That simply is not the case. There are hundreds of qualified Black board candidates and being able to find the right candidate is as easy as wanting to.
Also, look at what everyone else is doing. Look at the companies that have taken the board challenge. See how they achieved the results they’ve achieved. Understanding how this has been done successfully is really impactful. The bottom line is CEOs solve difficult problems. If you attack this as any other problem you have in your business, you’ll come up with a great solution for your specific company. The challenge is that some people just want to check a box, or they want it to be easy.
How could the Nasdaq proposal impact the careers of current corporate directors?
For the individuals who are serving on boards, this now gives them something to go back to their boards with and ask, “What are we doing about this?”
There is also a strategic issue here that can be talked about in the context of a traditional board meeting. What are we doing about this Nasdaq proposal? How are we preparing ourselves because we don’t want to be caught at the last minute having to make choices that we might regret. Let’s get out in front of this.
What more can be done to improve board diversity at publicly traded companies?
In the context of board meetings and shareholder meetings I think it’s important for everyone to hold his, her or their company accountable. Ask the question, what are we doing about this?
It doesn’t matter what your title is. If you have access, just start asking the question. CEOs are under a lot of pressure, so if it’s important to the CEO, it will be acted upon. But it doesn’t become important to the CEO until he or she or they are made aware of the situation. So if you have access just make your voice be heard because as a shareholder, stakeholder, employee, supplier or strategic partner, make this an issue, because it’s not going away.