For Black board directors, this time may really be different. At least for now.
According to new data, George Floyd’s murder and the protests that followed set off a remarkable hiring spree of Black directors. Firms in the Russell 3000 index added 130 Black directors in the five months afterward—a 242% jump from the same period prior. In all, Black directors of Russell 3000 companies grew 10% last year, and they have accounted for 18.5% of all new board appointments since Floyd’s death.
But many say the data since then is troubling. Despite the early jump, the diversity push is now at a critical juncture, says Marvin Perry, president and CEO of the nonprofit Black Board of Directors Project. “Shareholders and employees have to keep the pressure up,” he says. “It makes a tremendous amount of difference.”
Last spring and summer, after the Floyd case spurred international protests over racial inequality, business leaders made special pledges to increase Black representation and create more inclusive environments within their companies. But while that commitment was initially strong, today some 60% of Russell 3000 companies, 1,800 in all, still don’t have a single Black director. Of the roughly 27,000 board directors of Russell 3000 companies, only 5.4% are Black.
The waning effort, experts say, reflects shifting public support: just three months after Floyd’s death, support for Black Lives Matter dropped across ethnic groups, most notably among White people, where support fell 15%. White people who consider Floyd’s death a murder has fallen to 28% in March from 55% last June.
Those figures suggest leaders run the risk of relapsing into the way it was, says Andrés Tapia, a Korn Ferry senior client partner and the firm’s global diversity and inclusion strategist. “We are in a slippery moving place,” he says—it isn’t that the 60% of companies without a Black director are resisting progress or fighting against it, “it’s just that they aren’t doing anything either.” It’s the difference between doing something with intentionality versus letting it happen organically. And, according to Tapia, when it comes to moving the needle on Black representation, “it has to happen with intentionality or nothing is going to change.”
To be sure, boards are increasingly putting term limits and age limits in place to facilitate turnover, which should create more opportunities for underrepresented groups. Even more encouraging, an increasing number of large, visible organizations are building diversity targets into annual bonus and long-term incentive plans for top executives, including the CEO. McDonald’s, for instance, aims to have 35% of its US senior management from underrepresented groups by 2025, a roughly 5% increase from the current level. Apple also plans to increase or decrease annual bonuses for executives by up to 10% based on ESG measures, though the company didn’t set specific targets. (See: Bonus Metrics for ‘Doing Good’)
For Jane Stevenson, a Korn Ferry vice chair and the global leader of the firm’s CEO Succession practice, succession remains a key weakness. She points out it takes an average of 15-20 years to groom an entry-level employee for the C-suite, and among large firms, Black leaders occupy just 3% of executive and senior-level roles. “The C-suite is still lagging because the pipeline hasn’t been built,” she says.
Still, she says the increasing number of companies tying financial rewards to diversity targets shows that boards are keeping up the pressure on management to live up to the promises of the last year—and to keep pace with their gains. “Boards are very serious about their own diversity and that of their management teams,” says Stevenson, who has placed more than a dozen directors on boards so far this year, all but one of them from underrepresented groups. “Thankfully, they are not letting up—if anything, the pressure is rising."