What’s next? Redheads quotas on corporate boards? Elements of response to the resistance on self-identification of LGBTQ+ Corporate Board Members
Fabrice C Houdart
ED Assoc. of LGBTQ+ Corporate Directors / Co-Founder Koppa Lab/ Advisor to Fortune 500 / Fmr World Bank & UN Human Rights Staff / Adjunct Georgetown University / Editorial Women's Forum / Board Member
As long as efforts to diversify boards, including on the basis of sexual orientation, were mostly aspirational, many in the corporate world were most willing to entertain the possibility. However, as these efforts could become mandatory with the passing of AB979 in California on September or the submission of the now famous NASDAQ proposal to SEC two weeks ago, a more articulate resistance developed.
Indeed, NASDAQ and The?Equilar Diversity Network, to which the Association of LGBTQ+ Corporate Directors is the latest addition, announced in a Securities and Exchange Commission?filing?that it wants companies it lists (about 3,300 companies) to have at least two?“Diverse”?directors. NASDAQ defined it as?“one director who self-identifies as female,”?and?“one who self-identifies as Black or African American, Hispanic or Latinx, Asian, Native American or Alaska Native, Native Hawaiian or Pacific Islander, two or more races or ethnicities, or as LGBTQ+.”
While many welcomed the move, the NASDAQ announcement also unleashed a lot of questions and, at times downward hostility and derision. The most common dismissive remark I heard was:?“after LGBTQ+ people, other groups will also demand to be represented, where does it stop? Range Rover owners, left-handed people, redheads?”
This resistance was best encapsulated in the Wall Street Journal?editorials “The Woke Nasdaq” (Dec. 2) and “Nasdaq vs. Warren Buffett” (Dec. 3) accusing NASDAQ of?“virtue signaling”, “groupthink”??and?“imposing quotas”?among other things.
But I also heard several substantive arguments against considering LGBTQ+ representation in individual conversations I held in just the last week:
-???????From a prominent search firm executive who identifies as LGBTQ+:?“self-identification is unnecessary since the proportion of LGBTQ+ Board members will gradually increase in a natural way”?and?“Board members will refuse to self-identify”;
-???????From a D&I executive in a large software company:?“We won’t be affected by AB979 requirements anyway as we are moving our headquarters out of California”;
-???????From a corporate governance newsletter editor:?“sexual orientation and gender identity never mattered, Board searches focus exclusively on skills and talent”.
My thoughts were:?“clearly good intentions are not enough given how abysmal LGBTQ+ representation on Board when the Association of LGBTQ+ Corporate Directors has been championing LGBTQ+ Candidates”. As a reminder, our recent research showed that out of 5670 Fortune 500 Board seats, 25 are occupied by openly LGBTQ+ people.
The pushback also illustrated, an American distaste for quotas, the classic issue of merit being of major concern. There is a fear that less qualified people will make it to the Board, since quotas could lead to selection based not on merit but solely on sexual orientation and gender identity. In addition, because of lack of representation in the C-suite (the?“lavender ceiling” I mentioned in past articles), the main pathway to Board roles, some were fearful that a search for LGBTQ+ candidates would mean the threshold would have to be lowered. And maybe less expressed but still real, there was the legitimate fear that competent white, middle-aged men might be?‘disfavoured’?to make room for LGBTQ+ people.
?The reality is that the Corporate Governance world remains a rather conservative and strait-laced world which has been mostly shielded from exposure to the reality of LGBTQ+ people. We must articulate clearly why structural bottlenecks to professional success that LGBTQ+ face are serious and in no way comparable to what?Range Rover owners, left-handed people?and?redheads?might experience.
?The questions I received from headhunters, General Counsels and other stakeholders in the corporate governance space rather than illustrating bigotry show a tremendous need for a better understanding of the LGBTQ+ experience in the corporate world, the reason why LGBTQ+ representation on Boards matters and the easy ways it could improve. This means the work of the Association of LGBTQ+ Corporate Directors is cut out for us.
Where would LGBTQ+ Directors would self-identify? D&O Questionnaires and Proxys
In the past several weeks, I have been reaching out to hundreds of corporate secretaries asking them if they would voluntarily?collect and report information on the sexual orientation and gender identity of their Board Members.
?The timing, ahead of the 2021?“Proxy season”,?is important. Most US companies have their fiscal year ends on December 31, and their annual meetings within five or six months after that. Proxy season runs from late April through early June, with peak week in May. Proxies typically come out about six weeks before the meeting, so you will start seeing a lot of filings beginning in mid-March. Ahead of these filings, companies typically send in January a D&O (Directors & Officers) questionnaire to their Board Members. You can see an example of a?D&O Questionnaire here.
Out Leadership, a private company in New York City focused on VIP Dinners for LGBTQ+ professionals, has developed a turnkey solution to self-identification (basically a word document to copy/paste) to include a question on the sexual orientation and gender identity in that questionnaire as well as report on the findings in the filings. This is particularly useful to companies as they often have doubts on the terminology to be used particularly when it comes to gender identity. In addition, back in 2018, Out Leadership had published Board diversity guidelines. The guidelines include recommendations for companies on how to amend their corporate governance language to include LGBT+ diversity, including guiding language for including sexual orientation in nomination guidelines, examples of company best practices, and the business case for LGBT+ inclusion on corporate boards.?
领英推荐
Our experience with employee’s self-identification
?While many Corporate Secretaries indicated to us they would consider our request, some also informally told us they were baffled by it?“isn’t it inappropriate or illegal to ask sexual orientation and gender identity”, and?“Board members will not self-identify”?echoing the feelings expressed in some mainstream media.??
Interestingly enough, we faced the exact same questions when advocating globally for employee’s self-identification in the early 2000s. Our response remains the same:?“Be transparent and respectful. Inform people of what you want to do and why, and then stick to it. Make sure that it is optional and no person suffers or thinks they will suffer any form of harm, distress or discrimination by participating in LGBT+ self-ID. And when you have the data, make sure you protect this data.”
?We identified LGBT+ employees self-ID as a strategic priority for our diversity and inclusion efforts at the beginning of the 2000s. We believe that investing in self-ID has had, and will continue to have, a number of benefits for companies whether it is at the employee or Directors levels. First, it communicates to employees who are LGBT+ that our member companies know that they are here, that they are welcome in the organization, and that management wants to understand how their identity impacts their experience of working here. Additionally, by better understanding the demographic makeup of employees, companies make better strategic decisions in terms of recruitment and development and continue to deliver on their commitment to create inclusive organizations where people from diverse backgrounds are able to reach their potential and contribute to decisions.
Many forward-thinking enterprises began collecting sexual orientation data in some markets in the mid-2000s, and many of those have subsequently expanded their processes to cover more markets and to include gender identity. We know, however, that many large, sophisticated multinational organizations currently do not collect this information—in part because of the sensitivity of the subject matter, and in part because of perceived legal restrictions and operational complexity.
?The goal of our outreach to corporate secretaries is to say:?“this is possible, easy and a game-changer”.
LGBT+ self-identification is an important, fast-growing, but insufficiently understood practice that enables LGBT+ employees, as members of an invisible minority within the workforce, to raise their hands to be counted.
Why does representation on the Board matters?
A board of directors is an elected group of individuals that represent shareholders. The board is a governing body that typically meets several times of year – sometimes more -?to set policies for corporate management and oversight. Every public company and non-profit must have a Board.
?Because Boards deal with strategy and Governance, we strongly believe it is crucial for LGBTQ people that they start being represented on Corporate Boards (our previous article titled?All Eyes On California This Wednesday: AB-979 Could Alter Corporate Boards For The Better). In fact, , there are many relevant themes discussed by Boards today such as artificial intelligence which will have a gigantic impact on the LGBTQ community in the future. A certain number or percentage of LGBTQ+ in decision-making bodies is necessary for the promotion of LGBTQ+-sensitive decisions. It is as simple as that.
It is not only a question of social justice and fairness but it is mostly about ensuring that we are shaping a future that takes LGBTQ+ needs in consideration. In addition, having a diverse perspective can lead to better outcomes (see my previous article on?whether decisions would be different if LGBT people were adequately represented in Politics, Boardrooms, Sr. Management, or International Organizations).
?So what’s next?
?Independently of regulations and mandates, the Association which manages the only database of aspiring Board Members which have agreed to be tagged as LGBTQ+ - will continue to collect profiles of talented and board-ready LGBTQ+ candidates and offer them to search teams and nominating and governance committees. We will also work with the talent in our database (see examples below) to ensure they position themselves to get these Board seats through networking, acquiring skills and marketing their profiles.
Whether our efforts will result in an increase in the percentage of LGBTQ+ Board members is dependent on many factors, such as whether companies are willing to broaden their requirements (today they mostly rely on CEO, CFO and existing Board members), whether they will implement our self-ID suggestions and whether search teams and NomGov Committees will respond to our outreach.?
As a first step in October 2023, we will host the?first of its kind LGBTQ+ Directors Summit addressing corporate board diversity. The?Summit?will include 6 different sessions ranging from a whole host of themes and discussion points related to corporate board diversity. We hope you can join us so we make sure 2023 is the year LGBTQ+ people start getting their fair share of Board seats.
Here are several examples of outstanding professionals in the Quorum database:
CFO - Farnsworth Art Museum - Rockland, ME
3 年Offering a place to showcase individual talents and success, to help minority people being more visible is a great way to promote diversity. Creating quotas or minimum will have the detrimental result of limiting growth ("we already have that category (include the minority, school, ..), sorry won't take you" is a feedback I heard) so if the quota is a pis-aller to reach a goal, let's make sure it's eliminated once achieved.