Efforts to improve diversity on corporate boards took a step forward this week as several U.S. companies pledged to take The Board Challenge, a new initiative that asks companies to place at least one Black person on their board of directors within the next 12 months. The focus on adding directors who are Black marks a major change in attempts to diversify boards which have emphasized adding women or “underrepresented groups.” The Board Challenge will use a network of influential organizations and senior business and community leaders to encourage companies to add Black directors, an approach that hasn’t been tried before. This development will likely keep board diversity as a key agenda item for many corporate boards over the next year.
Companies such as United Airlines, Verizon, Lyft, Uber, Nordstrom, Corning and Merck that already have at least one Black board member have signed on in support of the challenge. They’ve pledged to promote the importance and value of board diversity while encouraging other companies to take The Board Challenge and add a Black board member.
So far, Zillow is the most well-known organization that has signed on and pledged to take steps to add a Black director over the next 12 months. The Board Challenge co-founders Altimeter Capital, Valence and TheBoardList will monitor all organizations signing up and taking the pledge. They will evaluate their progress toward selecting a Black director in six months and in 12 months.
The recent social justice movement, sparked by the death of George Floyd, and the stakeholder capitalism movement have likely played a role in helping this initiative take off. The Board Challenge has a good chance of succeeding to increase the number of Black directors on corporate boards because:
• It has clear goals and an actionable method of accountability. There is full transparency here. Organizations that commit to the challenge know what they need to do and the organization will monitor their progress and provide assistance to make sure they are successful.
• Supporters can testify to the business case for adding diversity to boards. The press release announcing The Board Challenge contains stats from several surveys that claim diverse boards enjoy better financial performance, better board performance and produces unique perspectives to handling business problems. Since organizations that have diverse boards are part of this new effort, they can speak to the actual business benefits diversity can bring. Hearing testimony from someone you know can be more persuasive that reading a report.
• As more companies commit, the growing network becomes a powerful resource. One key to finding diverse talent is diversifying your network. Once a company commits to finding a Black director, theoretically, they inherit all the contacts of all the other companies that have already found Black directors. That can be a powerful tool to finding the right person with the right skills, for this board search or other searches in the future.
• CEOs can educate other CEOs about recruiting diverse candidates. CEOs who complain that they can’t find diverse candidates or they don’t know how to go about recruiting diverse candidates can be introduced to other CEOs who have done it and are willing to share their strategies. Peer to peer conversations about how potential Black board talent can be identified, evaluated fairly and recruited successfully will take place, which will be a great thing for diversity and inclusion in corporate America.
Clearly, not everyone will be in favor of an initiative that focuses on Black candidates. Some people will claim that specifically seeking out Black board candidates is unfair and perhaps even illegal. Such complaints will keep the conversation about board diversity and how to achieve it on board agendas in the near future and any discussion about extending opportunities to and building pipelines for Blacks or any other underrepresented group should benefit them all. As long as the idea of getting more diverse groups on boards remains something that boards are talking about, there is an opportunity to widen the pool of available board candidates for all companies to tap into.