I'd like to be on a board. What's the results of all the efforts to make boards more diverse?

Q: Given all talk on increasing board diversity, what is actually happening with board composition?

-Aspiring board member

Dear Aspiring Board Member,

There is good news on this front. While there has been a lot of talk on increasing the diversity of boards there has also been a lot of progress.

Spencer Stuart has been issuing a Board Index report for the past 37 years. Last year, the 2021 U.S. Spencer Stuart Board Index painted a picture of massive and widespread change in S&P 500 boards. The firm found that the new class of S&P 500 directors as the most diverse ever. This year’s report just came out and it reveals that the changing profile of S&P 500 directors continues. According to the findings, historically underrepresented groups—defined as individuals who self-identify in one or more of the following categories: women, underrepresented racial/ethnic group or the LGBTQ+ community—account for 72% of the new class of directors (the same proportion as last year) and a rising share of S&P 500 board directors as a whole. Meanwhile, “next-generation” directors, aged 50 and younger, account for 18% of the incoming class of 2022, up from 16% in 2021.

There is even a break-out specifically about board diversity, which can be accessed here and I include some of the highlights below:

• 72% of the incoming S&P 500 class of directors come from historically underrepresented groups.
• 32% of all S&P 500 directors are women and 22% are from historically underrepresented racial and ethnic groups.
• Diversity in board leadership lags board diversity overall. Just 9% of S&P 500 independent board chairs and 10% of lead directors are from historically underrepresented racial or ethnic groups.

You asked about boards, but I also want to share what’s happening with CEOs because it reflects a similar increased emphasis on prizing diversity. According to the Heidrick & Struggles Route to the Top 2022, the group of CEOs appointed between July 1, 2021, and June 30, 2022, included the highest share of first-time CEOs in three years, which shows that boards may be more open to taking a risk for the right experience. We are seeing that newer group of CEOs, those appointed over the past three years, are bringing more diversity and fresh perspectives into the role and changing on the overall profile of the CEOs. When it comes to gender balance, there’s a small but steady increase: 13% of new CEO appointments were women, compared to 11% in 2021 and 9% in 2020.

All of these findings show that boards are seeking diverse voices and fresher sets of experiences both when it comes to assigning new directors as well as CEOs to lead the company. In the words of my favorite musician Bob Dylan, the times they are a-changin’. If you are interested in being on a board and have a new perspective to bring to the role there’s never been a greater opportunity.

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