Industry leaders and activists came together on Thursday, October 6, to discuss diversity on corporate boards as part of a lunchtime panel presented by the Sanford C. Bernstein & Co. Student Leadership and Ethics Board, Columbia Women in Business, and the Latin American and Hispanic Business Association.
The event, moderated by Ann Bartel, the Merrill Lynch Professor of Workforce Transformation, brought to light some surprising facts: despite numerous studies linking improved corporate and shareholder performance with a firm’s diverse board, most Fortune 500 companies continue to lack true boardroom diversity. While women represent 51 percent of the US population and African Americans, Asian Americans, and Hispanics together represent 34 percent, only 28 percent of board seats are held by women and minorities.
The panelists represented organizations working to change these statistics: Ilene H. Lang, president and CEO of Catalyst and founding CEO of Alta Vista; Monika Mantilla '96, president and CEO of Altura Capital; and Carlos Orta, president and CEO of the Hispanic Association on Corporate Responsibility. Catalyst and the Hispanic Association on Corporate Responsibility create resources to assist corporations in finding and promoting qualified and diverse board candidates. Altura Capital helps institutional investors find new investment prospects among companies with emerging, diverse leaders.
The three panelists agreed that several key factors are essential in persuading corporations to hire diverse senior leadership. First, the business case: research suggests that better decision-making occurs with more diverse groups, and diversity is correlated with better financial performance. Second, talent: women now earn more than half of all professional degrees, Lang explained, and changing customer demographics makes diversity more crucial than ever.
"If you want the best and brightest talent for the next 20 to 30 years, this is what it’s going to look like," Lang said. "And if women and minorities are the future of your customer base, you need leaders who understand those customers."
The third factor, Lang said, is reputation: research indicates that companies with more women are perceived as more ethical; leadership demographics that reflect customers is viewed positively, too. However, a supportive atmosphere for one group doesn’t necessarily mean the same for another minority. "Companies that are great for women may not be great for Latinos, for instance," Orta said.
To help ensure rising opportunity across the board, the Hispanic Association on Corporate Responsibility conducts a 360-degree analysis of a company’s diversity, giving the firm an overall score and offering suggestions for how it can raise the number. "In corporate America, measurement matters," Orta said.Mantilla agreed, noting that the performance argument is particularly effective in the investment management industry. "CEOs have to see the performance advantage for them," Mantilla said.
Despite the obstacles, Mantilla and her fellow panelists are hopeful about the future. "I believe we are changing the world," she said. "It is revolutionary to live in a system that works for all."