Corporate Diversity in the Boardroom Comes into Focus

High-powered African American executives and scholars consider boardroom diversity's proven benefits as Obama's candidacy changes the national dynamic

by Roger O. Crockett

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In a period of crisis, what if we were handed a proven method of problem solving? What if mathematical equations paved the way to a better result—a more tenable Congressional bill or a better way for corporations to sell widgets? According to University of Michigan professor Scott E. Page, there is such a panacea: When people in Congress, a corporate boardroom, or virtually anywhere else are faced with solving a problem or making a prediction, a diverse group is more likely to yield a superior outcome. Using mathematical models similar to those used to predict the movements of financial markets and voting patterns, Page demonstrates how difference beats out homogeneity. "I'm not making political statements, he says. "These are mathematical results."

Such analysis is music to the ears of many high-powered African American executives. Consider the response from a group of some 120 African Americans who serve as directors of publicly traded companies. Each year, Ariel Investments, a Chicago-based money management firm, and executive recruiter Russell Reynolds Associates, sponsor a gathering of prominent African Americans who serve as corporate directors. As Page, who is white, laid out his argument Sept. 6 to this group during the annual Black Corporate Directors Conference in Laguna Beach, Calif., several in the audience smiled and even cheered. "It made the conference that much more powerful," says Charles A. Tribbett, managing director for the Chicago office of Russell Reynolds .

In the Age of Obama, when a black man has become a viable candidate for President, executives are looking for ways to create a corporate world that is just as open and inclusive as the political arena. In addition to the conference's black directors, several of the nation's most powerful white executives were present to discuss the value of diversity in the boardroom, including General Electric (GE) Chief Executive Officer Jeffrey Immelt, McDonald's (MCD) Chairman Andrew McKenna, and DreamWorks Animation (SKG) Executive Chairman Roger Enrico.

Struggle Over Race

For them, diversity isn't a topic to avoid. And their presence suggested that the conference, now in its seventh year, has developed its own cachet. "We had a sort of budding reputation the last few years," says Mellody Hobson, Ariel's president. "Now there is clear energy around Barack Obama and clear energy around race issues being more on the front burner."

No doubt, Corporate America continues to struggle with the topic of race. The vast majority of the nation's publicly traded companies continue to be led by a rather homogenous group of graying white men. At the country's 100 largest corporations, African American's occupy only 9% of the board slots, yet they represent nearly 13% of the U.S. population and nearly 12% of the labor force. Another sobering fact: Black board representation is about the same as it was two years ago and might even be trending slightly downward, according to officials at The Executive Leadership Council, a nonprofit organization of black executives devoted to broadening black leadership.

Women and all minorities represented just 14.8% of the top 500 company board seats in 2007—again, essentially the same percentage as in 2005, according to researcher Catalyst Inc. And yet, "There is a flat-out, bottom-line, pragmatic reason to have greater representation of blacks [and other people of color] on boards," says Professor Page. "That is due to differences in the way they think that comes from their different life experiences."