How Directors Can Move Diversity Forward
The Nasdaq article, “How Directors Can Move Diversity Forward," quoted Russell Reynolds Associates Consultant Rusty O'Kelley on how boards can exemplify diverse leadership for the rest of the organization. The article is excerpted below.
Think about the issues that boards of directors have oversight for: They help the CEO and other C-suite leaders shape strategy and governance. They weigh in on talent, and how the organization is preparing future leaders. And of course, it is the board's responsibility to hold management's feet to the fire when it comes to performance.
Even with all these issues, what our current environment is making abundantly clear is that boards of directors play a critical role in influencing decisions around diversity and inclusion.
But here's the key—and often-overlooked—point in all of this: Diversity and inclusion begins in the boardroom. And while there has been progress—women now account for 25% of directors at Fortune 100 companies, up from 18% in 2010—the growth in the number of minority board members has been much slower. Minorities now make up just 19.5% of Fortune 100 board seats compared with 15.4% in 2010.
A plan forward
One of the most fundamental ways directors can begin this process is by taking an honest and candid look at their board's current composition and where they'd like it to be. Jack “Rusty" O'Kelley, managing director of board and CEO advisory partners at management consulting firm Russell Reynolds, says matching skills and experiences to a go-forward strategy is essential.
“A lot of boards fill one position at a time, or just think about filling the skill set that was lost," he says.
A more holistic approach, O'Kelley believes, is to do a proper board composition study first, and then look at future needs. “The smartest boards create a succession plan that also looks for opportunities for diversity within that plan," he says. “The two things aren't mutually exclusive."
Connecting it across the enterprise
This is a key point because some companies do not give their boards enough granular data in order to make judgments on progress around diversity, adds O'Kelley. But asking for that data isn't enough.
“Once the board has that data, it needs to ask management about its plan to meet its diversity goals," he says. An increasing number of companies, including Starbucks and Microsoft, have gone a step further by tying part of executive compensation to diversity goals.
The pandemic as a catalyst for change
Still, O'Kelley says Covid-19 is at least focusing the spotlight on the most essential issues. “The combination of business being so radically changed because of the pandemic, and the parallel emphasis on social justice," he says, “have combined to create a unique moment where companies are being very deliberate and intentional about not only their workforce needs overall, but how that aligns with their thinking about diversity and inclusion goals."
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