A recent report from Deloitte and the Alliance for Board Diversity shows that 22% of Fortune 500 board seats were held by individuals from underrepresented racial and ethnic groups, up from 17.5% in 2020. More than half of the Fortune 500 now have boards where more than 40% of seats are held by women and individuals from underrepresented racial and ethnic groups. While the results show improvement, the level of representation in the Fortune 500 still needs to change. For instance:
- For every 100 White women on the audit committee, 21 are serving as chairs
- For every 100 women from underrepresented racial or ethnic groups on the audit committee, only 7 are serving as chairs
Regarding committee leadership, there are notable proportionality differences for women from underrepresented racial and ethnic groups versus White women.
When focusing on the Fortune 100 data, it paints a picture of advancement, with the combined representation of women on boards and individuals from underrepresented racial and ethnic groups reaching a high of 46.5%. The boards of these companies have slightly more board diversity than those of the Fortune 500.
“Boards should consider broadening the range of professional backgrounds considered for board member positions, allowing them to attract more diverse directors who can bring a wide array of skills. These are skills that could also help boards address perennial challenges, including increased competition, regulation, and disruptive technology,” the authors conclude.
The report suggests that there are several ways institutions think about diversity:
- Diversity as symbolic action/compliance, which is a process where organizations choose strategies that are the path of least institutional resistance to meet standards set by external pressure.
- Diversity as change agent, an admittedly rarer phenomena where a fundamental systematic change causes the entity to move toward embracing the inherent value of diversity.
- Diversity as identity, where institutions that have always seen the value of having diverse lived experiences maintain that culture (for example, because the founders/top executives have always been diverse).
Source: Deloitte US