There’s a troubling elephant in the room. Which room specifically? The boardroom.
Among North American companies, only 27 percent of board seats were occupied by women in 2022.
And that figure was just 12.5 percent for underrepresented ethnic and racial groups. Both numbers are strong indicators that board rooms are staying “male and pale,” in the words of Lissa Broome and Jennifer De La Rosa.
They’re the brains behind the Director Diversity Initiative (DDI), which was created within UNC’s School of Law to address that very problem.
Its roots stem back to Henry Frye—the first Black chief justice of the North Carolina Supreme Court—and Tom Ross, then-executive director of the Z. Smith Reynolds Foundation.
The pair approached UNC’s Law School dean in 2003 and asked if they could help drive greater diversity on corporate boards.
When Broome, a professor and director at the Center for Banking and Finance at the UNC School of Law, first joined the endeavor, it was solely focused on racial diversity.
But the issue was more widespread than that, she was convinced. Boardrooms weren’t just neglecting racial minorities. They were also nearly exclusively male.
In 2006, the DDI launched its directory, offering companies and nonprofits a deep bench of qualified minority and women board member candidates. The database is now 670 people strong.
Of those 670 candidates, 70 percent are women, and more than half are people of color.
“We want to advance the number of women and people of color on corporate boards,” said Broome. “And through our education program, make sure that they are going to be contributing members on the boards and that they are equipped to go about the board search in the best way.”
Board member boot camp
The Director Diversity Initiative also started an annual boot camp program for women and minorities who want to learn about corporate board service.
The boot camp temporarily went virtual for two years due to the Covid-19 pandemic, which ended up expanding rather than limiting the organization’s reach. Based on that success, the initiative also decided to add one-hour virtual programs that cover improving one’s candidacy for board seats.
The last few years also brought an series of events that urged companies to take diversity—in the boardroom and otherwise—more seriously.
A key shift came from the murder of George Floyd by Minneapolis police and the resulting protests, said De La Rosa, the director of business operations for UNC School of Law’s Center for Banking and Finance.
“After the devastating events of George Floyd’s murder and seeing corporate boards wake up to ‘Oh, yeah, we’re still male and pale, and we need more diversity,’ we realized, wow, we’re sitting on something that really is part of the solution of a bigger problem,” De La Rosa said.
2020 was such a pivotal year that DDI placed board members in four public companies, one private company and one nonprofit.
In North Carolina specifically, DDI has over the years placed successful candidates into boardrooms for Greensboro-based Unifi Inc. and Culp Inc.—both are publicly traded companies—as well as Wikoff Color Corporation, a food packaging coloring company headquartered just outside Charlotte.
They are hoping the Triangle tech ecosystem will engage with its list to boost diversity at the board levels as well.
Anyone who would like to be considered as a potential board member can register for the Director Diversity Initiative database. Over time, the database has expanded to take into account sexual orientation, military veteran and handicap status, which are different kinds of diversity.
Whenever a company does come to DDI looking to increase the diversity of its boardroom, it can receive a short list of all the qualified candidates based on their specific criteria. So far this calendar year, 34 companies have sought out DDI’s resources to help them fill a board seat.
Removing the blinders
These are companies that recognize their own biases. If a board is already homogeneous—traditionally, full of white men—they will not naturally think to recommend people who aren’t in their own networks, which also tend to be white men, Broome said.
“It’s a self-perpetuating, monolithic board structure,” Broome said. “And they’re depriving themselves of a large chunk of the population.”
It’s not just a social reckoning that is sparking more and more companies to pursue more diversity at the board level. It’s also the growing knowledge that a company benefits performance-wise when they have different perspectives at the table.
A 2019 McKinsey study found companies in the top quartile for gender diversity on executive teams were 25 percent more likely to have above-average profitability than companies in the bottom quartile.
“Having different perspectives leads to better decisions,” Broome said. “It sometimes takes longer to get to a decision, which is why some people like the monolithic boards. You can solve this fast and get out on the golf course. But if you have a more robust discussion, influenced by a lot of different perspectives, you may think of things you never thought of before and come to a better solution.”
Across the 50 largest public companies in North Carolina, diversity in boardrooms is still starkly low, De La Rosa said.
“How many times have we heard leaders say, ‘There’s nobody there?’” De La Rosa said. “That’s not true. They’re there. They just don’t know how to find them.”
Even though DDI has fostered some change, they are still far behind where Broome would like to be nationally.
“I’ve worried sometimes if we hadn’t been here beating this problem, where would we be?” Broome said. “Because I would have hoped for much more progress than this.”
Broome said once these board seat candidates get into the door at a company, they rarely have problems finding other board seats. But it’s that initial door in that is sometimes so difficult to open and walk through.
That’s where the directory hopes to come into play.
“Getting that first one is the real tough nut to crack,” Broome said. “The more that we can help people get that first board seat, the more success they will have later on in additional board seats.”