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Our findings

Boards are moving from intention to action

We no longer need to prove the business case for board diversity to drive action. Stakeholders and shareholders have made clear demands for more representation of minority groups in the boardroom by addressing racial injustice, requesting more transparency in board composition, and implementing regulations that mandate diversity on boards. Now, boards need to ensure not only that they have diversity represented among their members, but also that they have created an inclusive board culture where these perspectives are heard and valued. This heightened focus on both diversity and inclusion has significantly changed the role of board chairs, putting them in positions they may not have anticipated or previously considered.

This year’s Global Board Diversity Tracker highlights milestones in representation and shares the stories of boards that are nurturing an inclusive culture and the ways chairs are adapting how they lead. Read on for our top takeaways from the 2022–2023 study.

1

Boards have gotten more diverse but not necessarily more inclusive.

In our 18 years of tracking board diversity, we have seen progress around the world on representation.

Because inclusion is an experience created by the behaviors of people around you, it has been harder to gauge in a quantifiable way. Qualitatively, however, there is evidence of inclusive board practices.

We see it in:

  • The way chairs run meetings.
  • How dissent is handled.
  • New director onboarding and sitting director reorientation.
  • Candid conversations about director succession planning.
While it is more difficult to measure, inclusion is what brings the power of diverse representation to life. You can gather a diverse group of people in the boardroom, but if the environment is not fully welcoming of their perspectives, then you have missed the opportunity to create a more effective board.
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Making Diverse Boards More Effective Boards

In conversation with Egon Zehnder's Global DEI Practice Co-Leads Pamela Warren and Cynthia Soledad.

Progress on Representation

Globally, boards have improved in gender diversity. Overall, women hold 27 percent of board positions, up by 3.7 percent from 2020, marking the fastest improvement in the percentage of women on boards in 10 years. In addition, the number of major companies with at least one woman on the board has risen from 89 percent in 2020 to 93 percent. Across the 44 countries we studied, we mostly saw progress. Only five countries saw declines in the number of women on boards in the last two years: Argentina, Belgium, Israel, Malaysia, and Sweden, though the latter three fell by less than 1 percent. In 16 countries, the percentage of boards with women has improved by 5 percent since 2020. These are nations in Europe (Greece, Luxembourg, Czech Republic, Hungary, Poland), South America (Brazil, Chile, Colombia), Middle East (Saudi Arabia, Turkey, UAE), and Asia (Hong Kong, Indonesia, Japan, South Korea, Taiwan). Boards that prioritize diverse representation are also contributing to advancing their organizations' overall environmental, social and governance (ESG) agendas.

2022
  • 24
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
/ 44
Countries with at least
1 female director
Scroll to reveal

Progress Over Time

  • 2012
  • 2014
  • 2016
  • 2018
  • 2020
  • 2022

Countries

  • 8
  • 9
  • 15
  • 19
  • 19
  • 24
/44
Where 100% of companies surveyed have at least one woman on their board

Racial and Ethnic Diversity Are Rising, Slowly

Progress was also made in racial and ethnic diversity, although this data is still emerging in many regions or not reported on at all.

In the UK, the Parker Report set a target to appoint at least one director from a minority ethnic group on each FTSE 100 board by 2021 and on each FTSE 250 board by 2024. According to the 2022 Parker Report, 89 companies of the FTSE 100 achieved that target by December 2021, five more companies announced new appointments of ethnic minority directors in early 2022, and another three companies said they were actively engaged in recruitment. In the FTSE 250, where companies still have two more years to hit the target, 55 percent of companies have already achieved it.

FTSE 100
16% of all director positions are held by minority ethnic groups
FTSE 250
10% of all director positions are held by minority ethnic groups

In the United States, non-white board members held 19 percent of directorships among Russell 3000 companies in 2022, up from 12 percent in 2020, according to our analysis of data from Institutional Shareholder Services.

Scroll to reveal

Percentage of directorships held by race or ethnicity in:

  • 2020
  • 2021
  • 2022

Source: Institutional Shareholder Services data analysis of Russell 3000 companies

...however, the majority of positions are still held by white directors:

LGBTQ+ Perspectives are Often Underrepresented and Undefined

While companies are increasingly aware of the importance of including LGBTQ+ perspectives in executive leadership positions, this hasn’t always translated into concrete actions in the boardroom.

A 2022 Out Leadership report found that less than 1 percent of Fortune 500 companies have inclusive policies at the governance level aimed at LGBTQ+ leaders, and LGBTQ+ leaders hold only 26 out of 5,670 board seats, several of which are held by the same person.

Fortunately, some board leaders are focused on steering their boards toward progress. Since our last Global Board Diversity Tracker two years ago, we have seen encouraging actions. In 2021, Nasdaq enacted board diversity requirements for its roughly 3,000 listed companies: hire at least one woman and a racially diverse or LGBTQ+ individual, and disclose the demographic makeup of their board directors.

One of the reasons why the LGBTQ+ perspective is often not represented on boards is because it is largely missing from the definition of diversity. As the Out Leadership report finds, only 41 Fortune 1000 companies define board diversity as inclusive of LGBTQ+ individuals.

Even when there is overall support for DEI, LGBTQ+ inclusion may be lagging. For instance, in 2021, the UK’s Financial Conduct Authority invited proposal submissions on board diversity and inclusion to improve transparency for investors, but the final rule left out any mention of LGBTQ+ diversity. In Australia, there are still no ASX-listed companies that explicitly include LGBTQ+ diversity in their board policies.

In Canada, the story is a bit different, with provisions aimed at increasing the representation of women on boards to 50 percent and other minority groups (including members of the LGBTQ+ community) to 30 percent within five and seven years, respectively.

Of the 5,670 board seats in the Fortune 500,
only 26 are held by openly LGBTQ+ directors
Only 9 of LGBTQ+ directors are women
Only 4 are Black and only 2 are Latinx or Hispanic among the 5,670 LGBTQ+ directors
Openly LGBTQ+ 26 5,670 Board seats LGBTQ+ Women 9 / 5,670 4 / 5,670 2 / 5,670 Black LGBTQ+ Latino/a LGBTQ+
* Data is from Out Leadership.

Our take

An inclusive board culture is every director’s responsibility, but it starts with and is led by the chair.

Board chairs must be culture champions—ensuring directors communicate and make decisions in an open and collaborative way as well as checking and balancing for possible bias. There are both high-level and pragmatic strategies they will need to implement to do this, from thoughtful consideration about where each director sits at a meeting, to ensuring there is time for each board member to be heard, to making space for productive dissent.

Another step board chairs can facilitate is rewriting their board charters to add inclusion. A recent study showed that while more than half of a sample of board charters mentioned representation, only a small portion mentioned inclusion. Adding inclusion to your board charter will establish a level of psychological safety in the boardroom that enables every director to bring their full selves to table, which can unlock new ideas and different solutions.

Chairs have an important role in stimulating the process in the board of directors—from educating them on the proper language around diversity, to setting an agenda, to encouraging directors’ participation in external forums aimed at discussing various DEI issues, among other initiatives. The more knowledge provided, the more empowered everyone is—especially minority directors—to actively exert their voice on the board.

Rodrigo Galindo
Chair, Cogna Educação
2

Chairs of newly diverse boards must bridge the gap between how the board used to operate and how it needs to function today.

As boards seek to reap the benefits of diversity, new challenges emerge for board chairs. Now that they have a range of perspectives around the board table, chairs must ensure they can get this multidimensional group to act as a team as they debate tough issues and align on decisions. To build a truly effective board, chairs will need to take the lead in making important updates in how the board functions, including enabling productive debate, managing conflict effectively, revising director onboarding to ensure inclusivity, and infusing diversity, equity, and inclusion into all board processes.

Conflict is inevitable on a board—and arguably necessary at times. But how the conflict is managed determines whether the experience is a stimulating debate that encourages curiosity or a personal grilling of someone’s beliefs and opinions. This is where a strong chair comes in, notes Toni Townes-Whitley, who serves on the boards of Nasdaq, PNC Bank, and the Thurgood Marshall College Fund. “Setting the tone of an inclusive environment, creating opportunities for debate—respectful debate—and then modeling how to interrogate an idea, not a person,” she says.

This is especially important when directors who are new to board service join. Robust onboarding and integration processes enable new directors to feel comfortable in their role quickly, so they can have confidence contributing right away. Many boards have increased diversity by appointing more first-time directors and more functional and divisional leaders, and this warrants some extra consideration during onboarding. For example, preparation for first-time board service could be bolstered by director education courses. Business onboarding for new directors can be customized to lean into their functional expertise rather than a “cookie cutter” approach for every new director.

Integration could include pairing each new director with an experienced director to act as a mentor and sounding board, particularly in the first few meetings. As new directors bring more diversity to the board, current board members may benefit from a reorientation, opening their minds to operate in a new way. This could be a refresher on the DEI principles the board governs itself by, skill building on mitigating bias and inclusive leadership behavior, or practice communicating effectively with empathy.

The board chair also has the opportunity to model inclusive leadership behaviors at every moment. For example, they can show curiosity about new perspectives and approaches to problems, include different expertise in the room, or even talk about themselves and their own development journey. This openness and vulnerability can be the ultimate bridge builder between how the board operated in the past and how it needs to operate today and tomorrow.

Our take

Chairs can acknowledge and share their DEI “Aha!” moments to enable the full board to learn and grow from those experiences.

In our work with board chairs, we found the “Aha!” moments—instances in which your perspective shifts—to be powerful tools for both personal and organizational change. For example, chairs have shared with us that although they intend to always act as champions of inclusion, they later may have an “Aha!” realization that something they said in a meeting may have shut down a conversation rather than encouraging a new director to speak up.

“Aha!” moments may make you feel vulnerable or self-conscious, but they are also moments of learning and change that can be even more impactful if they are shared with others. If board chairs show a willingness to shift perspective based on personal learning, it has a positive ripple effect through the board’s culture. Changing the way your board has run for years can be daunting, but if chairs approach the evolution with a genuine desire for continuous improvement, that mindset paves the way for the full board to collectively grow.

When I got to the board of directors of the Central Bank, I was the second woman to hold that position, and that forced me to think about gender. In the first interviews, none were entirely centered on what I was thinking about monetary policy, but were hovering around, ‘You are the second woman to get to the board.’ It was then that I knew it was not neutral for me to be a woman in this world—it has been different. And what rankled me most was I did not reflect upon those differences while I was living them.

Ana Maiguashca
Board member, Interconexión Eléctrica S.A
3

Directors from minority groups are landing board seats, but diversifying board leadership is a critical next step.

We have seen increases in the number of underrepresented minorities on boards, but the number of minority directors who hold committee chair or board chair roles is disproportionately lower. While every seat on a board is highly impactful, leadership seats carry additional responsibility and influence, so it is important to bring diverse perspectives into the leadership level of a board.

Scroll to reveal

Percentage of board chairs by race or ethnicity in:

  • 2020
  • 2021
  • 2022

Source: Institutional Shareholder Services data analysis of Russell 3000 companies

...however, the majority of positions are still held by white directors:

Scroll to reveal

Percentage of committee chairs held by race or ethnicity in:

  • 2020
  • 2021
  • 2022

Source: Institutional Shareholder Services data analysis of Russell 3000 companies

Most committee chairs are held by white directors:

There has been progress in gender. In 2022, 25 percent of board committee leaders globally were women, up from 21.2 percent in 2020. There also was a slight increase in non-executive chair positions held by female directors (from 7.2 percent in 2020 to 8.4 percent) and in the number of female executive chair positions (from 3 percent in 2020 to 3.7 percent).

The recent improvement of diversity among directors presents an opportunity to bring that diversity into the development pipeline to board leadership roles. History tells us that progress in representation does not happen without intention. So how can boards intentionally address this representation gap? For Yvonne Hao, board member of Gentherm Inc., Flywire Corp., CarGurus Inc., and ZipRecruiter Inc., an answer could be to create a leadership succession plan from within the board, including identification of potential successors and mentoring and development to prepare directors for board leadership. “A couple of boards I'm on now have been really good at being proactive in thinking through how do we map out [future board leadership]. You do this with a company for seamless succession planning for CEOs. You’ve got to do the same thing for the board.”

Most companies we work with have historically used informal processes to determine committee leaders, perhaps through natural inclination for some directors to raise a hand, or through the chair unsystematically gauging individual interest. By shifting the leadership succession approach to be intentional, systematic and strategic, board chairs have the opportunity to consider diverse representation across board leadership roles, equitably engage directors in conversations about their development, and avoid possible biases or blind spots in determining possible successors.

Our take

Create a formal process for selecting and developing future committee and board chairs.

Chairs must ask themselves if their boards have a clear development process in place or if it’s more ad hoc. If board leadership succession processes are lacking, inconsistent, or nonexistent, now is the time to design or update them.

An effective process could start with the chair allocating individual time with each director to hear about their aspirations on the board and what development journey they want to pursue. The chair can also talk to current committee chairs about the committee's expertise needs both today and in the future. Together, these insights can start to inform a succession plan based on necessary expertise while also considering diverse representation across the range of leadership roles. Mentorship and apprenticeship by committee may follow, and even formal training at an academic institution or board-focused association. Finally, there should be consideration for which committee experiences may prepare an individual best for the chair role in the future.

If you don’t see yourself as lead director or as chair, and if you’re not developing toward those responsibilities and capabilities, I’d say you should think differently about if that is the board for you.

Robin Washington
Lead Director, Salesforce Inc.; Board Member, Alphabet Inc. And Honeywell International Inc.
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