Protests — and mandates — push banks to add more minorities to boards
The American Banker article, "Protests — and mandates — push banks to add more minorities to boards," quoted Russell Reynolds Associates Consultant Rusty O'Kelley on the need for banks to expand their search criteria for diverse leaders. The article is excerpted below.
The board of directors at SVB Financial Group in Santa Clara, Calif., looks very different today than it did a few years ago.
Once made up almost exclusively of white males, the board at the $97 billion-asset parent of Silicon Valley Bank has added two women in the last two years and earlier this year welcomed Richard Daniels, a retired executive vice president at Kaiser Permanente, who is Black. Today, about 40% of its directors are women or people of color.
SVB’s efforts to bring more diversity to its 13-member board are reflective of trends playing out in the banking industry and public companies more broadly. For a number of years now, companies have been saying that their leadership teams and boards must be more diverse to better represent the customers and communities they serve, and many are now starting to make good on those promises.
But there’s also a growing realization among leaders at public companies that if they don’t take steps on their own to add women and minorities to boards, important constituencies — lawmakers, investors, even stock exchanges — could force them to do so. This year’s protests over racial injustice, combined with coronavirus pandemic’s disproportionate impact on people of color, have only heightened awareness around boardroom diversity.
While the calls for more board diversity apply to all kinds of public companies, banks are arguably under the most pressure because they can play such a crucial role in closing the racial wealth gap that was at the center of so many of this year’s unrest. Banks have already taken a number of steps to this year to help address inequality— funding jobs programs, pledging support to community development lenders — and adding more people of color to boards is seen as an extension of those efforts.
One common refrain in the broader conversation about diversity is that experienced women and minority candidates can be hard to find, and those that do fit the bill are in high demand, especially of late. Recruiters say that's an issue they can be addressed if companies are willing to broaden their search criteria.
“There is plenty of board ready, diverse talent,” said Rusty O’Kelley, co-leader of the board and CEO advisory at the recruitment firm Russell Reynolds Associates. “What companies need to do differently is not keep looking at the usual suspects and open up their aperture and look at a broader range of qualified talented people who are diverse.”
The banking world in particular has a lot of diverse talent working in the regulatory and compliance functions, O’Kelley said. Many of those executives could be prime candidates for director positions upon retirement, he added.
“It takes time and it takes a deliberate effort to build a network and database of diverse people,” O’Kelley said.
The full article can be found here.