Report: Board Diversity Progress Made but More Needed

Fortune 500 board representation of women and minorities saw an all-time high of 34 percent (1,929 board seats), compared to 30.8 percent in 2016 (1,677 board seats), according to the Missing Pieces Report: The 2018 Board Diversity Census of Women and Minorities on Fortune 500 Boards, a multiyear study published by the Alliance for Board Diversity (ABD), in collaboration with Deloitte. The report also found the number of Fortune 500 companies with greater than 40 percent diversity on boards has more than doubled to 145 from 69 since 2012.

The report shows that total minority representation increased to 16.1 percent (912 board seats) from 12.8 percent in 2010, the first year Fortune 500 data was captured. Report findings point to the increase being driven by the Fortune 100 companies, which have 25 percent women and 38.6 percent women and minorities. The Fortune 500 companies lag behind with 22.5 percent women and 34 percent women and minorities.

Though still a slow pace in relation to the rapidly shifting demographics in the U.S. (white men still hold 66 percent of all Fortune 500 boards seats and 91.1 percent of chairmanships) the shift points towards greater diversity in America’s boardrooms. Key findings for the Fortune 500 include:

• African American/Black women gained 32 seats in 2018, an increase of 26.2 percent from 2016. African American/Black men gained 26 seats in 2018, an increase of 8.5 percent from 2016.

• Hispanic/Latino men gained 21 seats in 2018, an increase of 14.3 percent from 2016. Hispanic/Latina women gained four seats in 2018, an increase of 9.8 percent from 2016.

• Asian/Pacific Islander men gained 25 seats in 2018, an increase of 20.3 percent from 2016. Asian/Pacific Islander women gained 17 seats, an increase of 38.6 percent from 2016.

• The study also showed that boards more frequently will pull from a pool of existing minority board members instead of bringing in new directors. African American/Black women and Hispanic/Latinas hold “recycle rates” – the rate at which individuals serve on more than one board – of 1.39 and 1.36, respectively. The recycle rate of many minority groups increased from 2016 to 2018.

The report is based on a census where ABD and Deloitte measured the top companies by revenue as identified by their research cutoff date (for 2018, the research cutoff date was June 30, 2018). The census compares Fortune 100 or 500 results against results from prior censuses, not against a specific identified set of companies over time (in other words, the composition of the Fortune 100 and 500 groups changes over time, but the methodology to identify them does not).

“This is a bottom-line issue,” said Linda Akutagawa, chair for the Alliance for Board Diversity and president and CEO, LEAP (Leadership Education for Asian Pacifics). “We encourage corporate boards to continue to embrace the benefits of diverse board composition and further their efforts to match the changing demographics we are experiencing in this country today.”

“More and more companies are realizing the significant benefits of having a diverse and highly skilled board,” Deb DeHaas, vice chairman and national managing partner, Deloitte Center for Board Effectiveness. “The 2018 Missing Pieces Report demonstrates that while progress has been achieved, there is still much more work to do. Boards can optimize their diversity by taking intentional actions to expand the pool of women and minority candidates, including reaching out to a broader set of professional networks and considering candidates with a variety of skills, backgrounds, and experiences.”