Photo Courtesy of Marriott
By Marshall Kirby, Policy Analyst, The National Puerto Rican Chamber of Commerce
America has become more diverse and in the process, has become more aware of the benefits of a diverse workplace. Women and minorities have proven their abilities through executive leadership in business, civil society, and in top positions in the public sector. Despite this, representation in America’s boardrooms has become less diverse over the past several years, which points to ongoing challenges of diversity.
A recent article points out that since 2004, women and minorities have lost ground in overall representation in Fortune 500 board membership. The Alliance for Board Diversity Census, found that in 2010, white men held 77% of seats in Fortune 500 firms, with white women holding 13%, minority men 7%, and minority women 3%. Surveying Fortune 100 firms, the census found that white men held nearly 73% percent of board seats, which is up from their survey results from 2004 when held 71.2% of seats. Analysts and leading diversity groups had hoped and predicted that over time, women and minorities would see increased membership in the boardroom, however over the last six years, there has been a decline in diversity.
A further breakdown of the data shows that African American men were less represented in 2010 than in 2006, and Hispanics, Asians, and other minority groups showed no significant change. As if underrepresentation was not problematic enough, women and minorities only held slightly over 5% of top leadership positions on the boards of Fortune 500 companies. Even more surprisingly, the survey showed that no Hispanic female held a director or board chair position.
There are many explanations that have been floated around to explain this disappointing phenomenon. Arnold Donald, the President and CEO of the Executive Leadership Council, a network of African American Executives, stated that he believes, “The biggest contributor is just a lack of proactive intervention.” Mr. Donald also added that he feels the Sarbanes-Oxley Act, which sets standards for financial accountability for publicly traded firms, was also a contributing factor. Increased regulations, particularly regarding financial matters has led to the recruitment of retired accounting and financial executives to the boardrooms of America’s top firms. These former executives are predominantly older white men. Additionally, Mr. Donald believes that in many cases, minorities have left their position on boards and were not replaced with other minorities.
Ilene Lang, the President and CEO of Catalyst, which advocates and promotes increasing roles for women in business, added that she believes the recession, which began after the last survey, also played a contributing role. Both she and Mr. Donald believe that companies are not attempting to discriminate or exclude women and minority groups from leadership positions, but rather they have failed to actively recruit and promote diversity.
Despite the fact that women and minorities may not be discriminated against, this still presents a major economic and social problem. There is no doubt that there are many qualified professionals from minority groups who could easily serve and contribute to America’s top firms. They have proven their skills and abilities as top managers in the corporate world and also in small businesses. Hopefully, this study will raise the issue of diversity as a topic of conversation for further discussion by selection committees and in the next survey we will see improvement in women and minority representation. Ultimately, Fortune 100 and 500 firms must look out for their bottom line, and the best way to educate the selection committee on the importance of workplace diversity is to display success stories and point to empirical evidence. As Ms. Lang pointed out, “Research has shown that diverse teams produce better results…. Corporate America has the opportunity to seize the advantage that a more diverse board can yield in this increasingly competitive global economy.”
Mr. Kirby joined The National Puerto Rican Chamber of Commerce as a Policy Analyst with an experienced background in Public Policy Analysis. He has worked for Americans for Informed Democracy, the Center for US Global Engagement, and for local governments in Virginia on issues ranging from international finance, national security, and other areas of foreign and domestic policy. He holds a Master of International Development Degree from the University of Pittsburgh.
Marshall can be reached at 866-576-5222 x 8, or MarshallK@NPRChamber.org.
