Diversity is making uneven progress in leadership positions of American business. Women increasingly are getting positions on boards of companies. Members of racial and ethnic minorities, however, are still rarely appointed to boards.
Twenty-seven percent of new company directors in the Russell 3000 Index were women during 2016-2018. That is up from 21 percent in the three-years before, says ISS Analytics. It provided these estimates in an examination for Reuters. In 2018 alone, the percentage was 32 for women.
Though women still are underrepresented, their gains have been larger than those of African-Americans and Latinos. Blacks represent 5 percent, and Latinos 2 percent, of new directors in 2016-2018. This is very close to the percentages from the three-year period just before.
White men have long controlled U.S. corporate boards. Some business leaders argue that it is hard to find qualified candidates of diverse backgrounds. They also say it is difficult at times to know the race or ethnicity of candidates.
Now, directors and experts say, women are gaining entry partly because of pressure from major investment companies and lawmakers. But also, the experts say, realizing gender diversity is simpler than other diversity. Women are easier to count and make up a larger group to choose, they say.
Supporters of greater gender diversity say it can bring better financial results and improve public relations. They also argue that gender diversity is the right move since women are more than half the American population.
Joe Johnson is a Boston-based partner at the Goodwin law firm. He advises corporate boards. “They’ll move to minorities next,” he said, adding that now most big companies are looking for more women.
Dominique Mielle is a white woman who was named a director of Anworth Mortgage Asset Corporation in November. She said things like the “Me Too” movement have forced boards to add women so that big investors will continue to support them.
“If they will say no to your…directors, that’s a problem” Mielle said.
A new California law requires that at least three women sit on the boards of state-based publicly traded companies with six or more directors by the end of 2021. At least four other states have passed or are considering similar laws, says the National Conference of State Legislatures. While this is good for women, no laws are planned to help minorities.
Lack of women ‘a flag’
Other countries are more explicit in their demands for diversity – at least when it comes to gender.
In Europe several countries have quotas, including France which requires 40 percent of board members at its largest listed companies to be women. In Germany there is a 30 percent quota. Britain has a government-backed target for women to make up a third of its 350 largest boards by the end of 2020.
In the U.S., those who want diverse boards say they help companies deal better with modern issues.
Some research shows that gender diversity is linked to better financial results. This may be because those companies are more likely to have engaged employees and lower turnover.
But other studies suggest that companies with more women directors perform no differently.
The advising company PwC surveyed 714 corporate directors last October. Eighty-four percent of those questioned said diversity improves board performance. But 52 percent agreed, at least partly, that “board diversity efforts are driven by political correctness.”
Males represented 80 percent of the board directors surveyed.
Keeping a list
Some companies now provide diversity information in documents required by the government.
Last year finance company Regional Management Corp documented four of its eight directors as “White/Caucasian” and four as “Hispanic/Latino.”
Regional director Roel Campos said investors probably want these details because many of Regional’s customers are Latino.
He says, “We believe that…investors are better informed and can judge” whether his company’s diversity leads to better performance.
Luis Aguilar sits on several corporate boards. He says he does not believe arguments that it is hard to find qualified women and minorities to serve on boards.
“I no longer give much credibility to people saying they can’t find who they’re looking for, because I can quickly find who they’re looking for” through several organizations, Aguilar said.
I’m Susan Shand. And I’m Caty Weaver.
Susan Shand adapted this story for Learning English based on a Reuters News Agency original report. Caty Weaver was the editor.
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Words in This Story
boardroom – n. a room where the group of people who manage or direct a company or organization have meetings
bias – n. a tendency to believe that some people, ideas, etc., are better than others that usually results in treating some people unfairly
gender – n. whether one is a man or a woman
quota – n. a specific amount or number that is expected to be achieve