New Report Finds Little Change in Diversity on Corporate Boards

The Alliance for Board Diversity today announced the findings of its recent study, Women and Minorities on Fortune 100 Boards, which showed little progress over two years in bringing diversity to the boardrooms of America’s leading corporations. According to the report, white men still held a disproportionate share of board director seats, although the study revealed small gains in the share of board seats held by minority women. It also noted that white men realized a net gain of 21 seats as compared with a net gain of three for all women and minority men.

The Alliance for Board Diversity is a collaboration of three leadership organizations— Catalyst,  The Executive Leadership Council®,  and the Hispanic Association on Corporate Responsibility—that have joined forces to support the business case for inclusion of women and minorities on corporate boards. Each member organization conducts research to assess the progress of board diversity, and with access to highly qualified potential board candidates, member organizations independently offer active board initiatives that include preparing individuals for board service.

Key findings from the study include: 

•  The percentage representation of all women and minority men on Fortune 100 corporate boards did not change substantially from September 30, 2004, to April 30, 2006. Men occupied the vast majority—82.94%—of the 1,219 board seats. In contrast, women held 17.06% of all directorships.
• All women and minority men held 28.47% of board member seats—just under one-third of the total—essentially flat compared with 2004. In 2006, 41% of the Fortune 100 boards had more than 30% of their seats held by women and minorities, up from 38% in 2004.
•  From 2004 to 2006, there were minor improvements in terms of percentage of distribution for Hispanics, Asian-Americans and minorities in general on corporate boards, but no change for African-Americans and a virtual stagnation for women overall on corporate boards.
•  All women and minority men realized a net gain from 2004 of only three seats. Minority women gained 13 seats, but white women and minority men lost seven and three seats, respectively.
• The recycling rate for men overall improved, edging down from 1.21 to 1.18 seats per person; for African-American and Hispanic men specifically, the improvement was even greater. This was the result of more men holding fewer seats per person.
• In contrast, women’s overall recycling rate rose slightly, from 1.18 to 1.20 seats per person primarily because the number of board seats held by Hispanic women outpaced the number of individual Hispanic women who became board members. There was, however, a significant improvement in the recycling rate for Asian-American women and a slight improvement for African-American women.

“With many qualified women and minority candidates available, we hope that more companies will realize what research shows: that diverse teams, well managed, deliver better results—including better financial performance,” Catalyst President Ilene H. Lang said. “Diverse board directors bring independent, creative thought and fresh perspectives to the boardroom. Clearly, many shareholders recognize that strategic and competitive value, especially in a complex global marketplace."

“While the findings are not all positive, we are taking the long-term approach, which includes keeping the issue before corporations. We are in full agreement that corporate board diversity is not just the right thing to do, it is the profitable thing to do!” said Executive Leadership Council President and CEO Carl Brooks.

“The change in demographics of our country is influencing the types of products and services being developed for the nation’s diverse marketplace,” stated HACR President and CEO Carlos F. Orta. “Just as products and services change to reflect these demographic changes, representation from these diverse consumer groups also must be reflected in corporate America’s boards of directors in order to ensure economic sustainability.”

The Alliance for Board Diversity recommends the following when seeking to fill a board seat with qualified diverse candidates:

• Gain clarity on the competencies that will strengthen the board and commit to finding and interviewing diverse candidates who have those competencies. Diverse candidates are likely to bring expertise and perspectives that can enhance a board’s effectiveness in guiding a company to successful financial performance.
• Review board slates and insist that diverse qualified candidates are included. If diverse candidates are not included in a directorship search, work with groups like the members of ABD to find qualified diverse candidates to add to that slate.

This report was compiled with assistance from The Prout Group Inc., a retained executive search firm.