Boardroom diversity in Fortune 100 and Fortune 500 companies has increased for women and certain minority groups, according to the "Missing Pieces Report: The 2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards," a multiyear study published by the Alliance for Board Diversity (ABD), collaborating with Deloitte for the 2016 Census. However, minority men and women have experienced only slight gains in the last six years, since the ABD first started tracking Fortune 500 board diversity in 2010, up from 12.8 percent in 2010 to 14.4 percent in 2016. The total number of board seats also has not changed much during this time; there were 5,440 total board seats in the Fortune 500 in 2016, compared to 5,463 in 2010.
Key findings include:
- In 2016, fewer than 15 percent of all board seats in the Fortune 500 were held by minorities, including African Americans/blacks, Asian/Pacific Islanders and Hispanics/Latino(a)s.
- Some progress has been made for African Americans/blacks in securing/holding Fortune 500 board seats, with the bulk of the African American male increases occurring within the Fortune 100. There has been an increase in the Fortune 500 of African American women board members by 18.4 percent, while the total number of African American male board members in the Fortune 500 had only an increase of 1.0 percent. African Americans/blacks appear to have the highest rate of individuals serving on multiple boards – indicating that companies are going to the same individuals rather than expanding the pool of African American/black candidates for board membership.
- Asian/Pacific Islanders have shown continued growth in percentage representation on Fortune 500 boards. However, their starting baseline was small – the overall representation of Asian/Pacific Islanders is only 3.1 percent, representing a total of 167 seats.
- Hispanic/Latino men picked up a nominal gain of eight board seats, while there was a loss of two Fortune 500 board seats for Hispanic/Latina women since 2012. Overall, Hispanic/Latino(a) men and women hold 188 total board seats, or 3.5 percent of the total.
"The increase in boardroom diversity over the last four years is a small step in the right direction – but it's equally important to note the larger context in which these gains were made. Almost 70 percent of board seats in the Fortune 500 are still held by Caucasian/white men, and at the current rate of progress, we won't likely see the number of women and minorities increase to ABD's target of 40 percent board representation until the year 2026. This is not acceptable," said Ronald C. Parker, ABD chair and president and CEO of The Executive Leadership Council. "A great deal of work remains for corporate board composition to keep pace with the changing demographics of the country at large."
In addition, the report includes data for the Fortune 100 – showing these companies lead the growth in boardroom diversity, outpacing the Fortune 500 with 35.9 percent of women and minorities holding board seats, compared with 30.8 percent in the Fortune 500. Currently, 65 percent of Fortune 100 boards have greater than 30 percent board diversity, compared to just under 50 percent of Fortune 500 companies in the census. However, since the ABD began conducting its census of Fortune 100 board directors in 2004, collective gains for women and minorities have been minimal. In 2016, women and minorities held 35.9 percent of board seats in the Fortune 100, compared to 30.1 percent in 2010 and 28.8 percent in 2004.
Other findings include:
- Representation of minorities within the Fortune 500 is smaller than in the Fortune 100, where minorities held nearly 20 percent of board seats. Minority men have gained only 1.0 percent in the period 2004-16, and today 82.5 percent of total Fortune 100 seats are held by Caucasian/white individuals.
- While nearly 50 percent of Fortune 500 boards have reached at least 30 percent women and minorities on their boards, the "recycle rate" – or rate at which individuals serve on more than one board – is higher for women and minorities than Caucasian/white men, which indicates that while diversity on boards may be increasing, there needs to be a broader net cast to capture "new" women and minorities on boards. This rate also points to the need to look at a broader set of networks, backgrounds, skills and experiences in potential board candidates.
To download the full report "Missing Pieces Report: The 2016 Board Diversity Census of Women and Minorities on Fortune 500 Boards," which includes additional data on board diversity in the Fortune 100, Fortune 500 and a list of companies with the broadest diversity on their boards, please visit www.deloitte.com and http://theabd.org/.
The Alliance for Board Diversity and Deloitte utilized a census methodology for the 2016 Board Diversity Census. The Board Diversity Census counts Fortune 500 board directors to provide a measurement of the representation and progress of women and minorities in business leadership and to allow for comparable statistics based not on a discrete list of identical companies, but on the Fortune-listed companies in the given years for which the census was conducted.
The Board Diversity Census analyses are based on companies on the Fortune 500 list published in 2016. ABD examined Fortune 500 companies because they are recognized, and serve as the most influential businesses in the United States, ranked by revenue each year.
For the purposes of this study, extensive research was conducted to confirm the gender, race, and ethnicity of board directors. To ascertain each company's total number of directors and board composition, Deloitte reviewed Securities and Exchange Commission annual filings submitted as of June 30, 2016. For more details on the methodology and definitions used for this census, see the full report at www.deloitte.com and http://theabd.org/.
Quotes from Deloitte and Alliance for Board Diversity members: Catalyst, The ELC, HACR, LEAP and Diversified Search
"Unfortunately, U.S. companies have a long way to go to achieve diversity in their boardrooms and their executive ranks. Progress is glacially slow and boardrooms don't look anything like the customers and stakeholders they serve and represent. It takes intentional, bold action to accelerate meaningful change," said Deborah Gillis, president and CEO, Catalyst. "We'll continue to work with business leaders across the country to prioritize board diversity, build it into the fabric of their decision-making, and help them take advantage of an incredible talent pool they're currently missing out on."
"Studies have shown that boardroom diversity is tied to company performance. We're committed to a diverse board here at Deloitte, and have seen first-hand the benefits of diversity on board performance through our own board, as well as our work with clients," said Deb DeHaas, vice chairman and national managing partner, Center for Board Effectiveness, and chief inclusion officer, Deloitte. "Because the majority of new board members are still selected through relationships with other board members, it's important to ask boards to consider board diversity based on gender, race/ethnicity, age and other perspectives as they look to fill positions, and to consider their extended networks both in business and in their communities."
"While the report clearly indicates there is much to be done, I think there is some light pouring into the tunnel," said Patrick Prout, a managing director for Diversified Search, one of the nation's premier executive search firms for recruiting minority talent in the C-suite and on corporate boards. "I can tell you that our clients are increasingly demanding that candidate slates be diverse. And it's not just lip service. There is a growing feeling—and it's growing quickly—among corporate leadership that board diversity is vital for generating new ideas and strategies, which in turn makes it great for the bottom line."
"Progress has been slow for Hispanic representation in Fortune 500 boardrooms, even as we constitute 17 percent of the total U.S. population," said Cid Wilson, president and CEO of the Hispanic Association on Corporate Responsibility (HACR). "The data are pointing in the right direction, but there's more work to do. As Corporate America sets out to create shareholder value, HACR will continue to be at the forefront in supporting corporations that make a commitment, do the work, and foster Hispanic inclusion."
"Asian and Pacific Islanders are often stereotyped as 'doers' and not leaders which often results in exclusion from leadership pipelines that lead to board positions. We challenge companies to expand their concepts of what a leader looks like. This is even more important as the U.S. becomes a 'majority minority' country and non-western countries become increasingly important in the world economy," said Linda Akutagawa, CEO and president, Leadership Education for Asian Pacifics, Inc. (LEAP).
"The Executive Leadership Council is encouraged by the increase in African American women board members in the Fortune 500. However, at a time when our pipeline of African American talent is stronger than ever, there are still many companies that have zero African American representation on their boards. We are looking at an entire decade of virtually no growth. If other business objectives yielded the same results, it would be viewed as unacceptable business performance," said Ronald C. Parker, president and CEO, The Executive Leadership Council.