Pressure to speed up glacial progress on adding more women and minorities to corporate boards has brought a rush of new business for specialist headhunters.
After Nasdaq announced in December that companies listed on its exchange should have at least one woman and one member of an under-represented minority on their boards, companies have called in recruiting firms, often asking them to broaden their searches beyond the usual pool of former top executives.
Some businesses also want help with embedding diversity in board succession plans and advice on how to tackle conversations about ethnicity and sexual orientation at the highest corporate level.
In 2008, only 8 per cent of board members at Russell 3000 companies identified their race as non-white, according to advisory group Institutional Shareholder Services. By 2020, after more than a decade of corporate pledges to improve diversity in a country where 40 per cent of the population is not white, the figure had risen to only 12 per cent.
This year’s widespread demonstrations against racial inequality further highlighted the lack of diversity at the top of most companies, adding impetus to those pushing for more action.
In December, BlackRock, the $7.8tn asset manager, said it would ask companies in the US and Europe to disclose ethnic diversity statistics to try to encourage change.
For now, senior appointments of non-white candidates are rare enough that they still make headlines. In December, Starbucks announced Mellody Hobson would become the chair of its board in 2021. She is only the second black woman to chair an S&P500 company. Ursula Burns of Xerox became the first a decade ago.
Some companies say they cannot find enough qualified minority candidates, former American Express chief executive Kenneth Chenault remarked in December, but he said this could be an easy excuse to justify a lack of diversity.
“If you simply take the position that the status quo approach and processes are the ones that you’re going to follow, then you’re not going to make progress,” Mr Chenault said at the Economic Club of New York.
A diversity drive by US investors, exchanges and state legislators will force companies to widen their networks, said Margot McShane, a board and CEO hiring specialist at Russell Reynolds.
“There’s a race for talent” in public companies, private equity-backed groups and pre-IPO businesses alike, she said. “The highest quality diverse candidates — everyone’s calling them. Boards are going to have to look outside the obvious suspects as well as those within their networks because there aren’t enough of them.”
Her own firm had seen “a dramatic uptick” in demand for more diverse lists of board candidates since this summer’s Black Lives Matter protests, she said. It has also had many more calls since Nasdaq said listed companies should have at…
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