Diversity as a Business Imperative
The last day of the 2012 NACD Board Leadership Conference is packed with panels of leading minds in business. Managing Director and CFO Peter Gleason opened the day by introducing a session on the new Blue Ribbon Commission Report on board diversity, released to attendees yesterday.
The session, moderated by NACD Chairman Barbara Hackman Franklin, featured two of the commission’s co-chairs: Curtis Crawford, president and CEO of XCEO; and Cari Dominguez, the former chair of the U.S. Equal Employment Opportunity Commission and director at Manpower. The panel also included Commissioner Solomon Trujillo, corporate responsibility chair at Target and Bonnie Gwin from Heidrick & Struggles.
Franklin, also a commissioner, provided an overview of the report’s highlights. First and foremost, diversity in the boardroom is a business imperative–a means to competitiveness. A board’s performance relies on knowledge of the company and its operating environment. As such, board composition should reflect the company’s stakeholders, particularly employees and customers. While each board will approach diversity differently, the report outlined four tasks that are essential to any process:
1. Review and evaluate board composition.
2. Expand horizons for seeking candidates.
3. Improve director evaluations.
4. Preserve, enhance, or consider adding tenure limiting mechanisms.
The panelists went on to discuss the business case for board diversity. According to Crawford, to have the best board, it is necessary to seek out the best talent available. To find where the best talent resides, the board should not limit itself to only seeking certain dimensions. Dominguez agreed, noting that diverse demographics represent an increasing segment of purchasing power. However, just as ketchup and salsa are both popular condiments, including diversity in boardroom composition “does not shrink the pie, it grows the pie.”
From his experiences as a business leader globally, Trujillo observed that differentiation and diversity are critical in obtaining a competitive advantage. “Directors have a fiduciary duty” to place diversity as an item for discussion. From the vantage point of an executive recruiter, Gwin noticed that at companies that embrace diversity, it is advocated for by the CEO and the most senior independent director.