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Top boardrooms: No-go areas for women, minorities

WILMINGTON, DE - MAY 09: (L-R) Ford Executive Vice President Robert Shanks, President and CEO Alan Mulally, Chairman of the Board William Ford, Secret...
Where are the women? Ford automotive executives address shareholders at the Ford 58th Annual Meeting of Shareholders at the Hotel DuPont in May.William Thomas Cain / Getty Images

Women and minorities make up only a slim fraction of corporate America’s board membership, a status quo that’s remained virtually unchanged over the past eight years. Experts predict this will hurt companies as they expand into overseas markets and as the ethnic makeup of the United States changes.

In its new biennial study of the gender and ethnic makeup of Fortune 100 and Fortune 500 company boards, the Alliance for Board Diversity found that white men hold more than two-thirds of board seats in both groups. Women hold 20 percent of Fortune 100 board seats, and minorities, who comprise 37 percent of the country’s population, only hold 16 percent.

Ron Parker, president and CEO of The Executive Leadership Council, one of the organizations that comprises the Alliance for Board Diversity, said companies today understand the importance of diversifying in order to gain global market share but often overlook diversity when it comes to their own governance.

"They’re missing the perspective of the growth engine that’s going to fuel their enterprises,” he said. “Different perspectives bring the opportunities for innovation.”

“Boards that are more diverse generally make better decisions. Typically, groupthink is the enemy of good decision-making,” said Eric C. Peterson, manager of diversity and inclusion at the Society for Human Resource Management.

Ironically, Peterson said, companies might think they have a top-notch board of directors because everyone always agrees. In reality, dissenting voices generate better dialogue, more ideas and a more dynamic corporate culture.

“If non-traditional board members are more likely to ask challenging questions of top management, boards themselves may seek diversity to better perform their roles,” Harvard University sociology professor Frank Dobbin said via email.

Inertia also is to blame for the under-representation of women and minorities on corporate boards, Dobbin said. “Change in corporate board diversity has been slow because many boards have no term limits,” he said. “Because turnover is slow, board diversification is slow.” Companies are also hesitant to shake up the status quo in a poor economy, he said.

The dearth of women and minorities on corporate boards not only hurts the companies, but female and minority businesspeople as well. Landing a board seat is a great way to demonstrate leadership skills and network with other top entrepreneurs, Peterson said.

“You’re meeting people who get to see you in action as a leader.”  

Companies that want to achieve a global footprint need leaders who can engage different groups of people, said Joyce Dubensky, CEO of Tanenbaum, a nonprofit that campaigns against religious discrimination in the workplace.

“You want a board that’s going to be able to be responsive to those communities and to those places,” she said.

Dubensky said more diverse leadership also helps companies attract and retain talent. “It’s important to think of the board as a barometer of the company,” she said. “Companies that are known for being responsive and welcoming to a range of perspectives and all different identities will become a magnet for talent.”

Achieving diversity takes more than just adding a woman or a minority to the board and calling it a day, though.

“Tokenism isn’t the answer,” Peterson said. A sole dissenter might not feel comfortable voicing an opposing view, or they simply might not have enough clout to effect real change by themselves.

“We know that tokens in small groups are often paid less attention. When minority group members win 30 or 40 percent of positions in a small group, such as a board, others start paying attention,” Dobbin said. “The good news is that more and more boards now have two women or two African-Americans, and are moving away pure tokenism — one from each group.”