Black Directors Matter
Boards Must Look, Listen and Seize the Moment of #BlackLivesMatter
Will we see systemic racism break down, clearing paths for more diversity and inclusion (D&I) in the senior-most ranks of corporate America, as a result of the recent #BlackLivesMatter protests? That will depend on what corporate America does next. The fact is that nothing has essentially changed for corporate America. Another black man tragically died at the hands of abusive police. Protestors took to the streets. But nothing at corporations has actually happened.
The first phase of corporate America’s response to #BlackLivesMatter constituted emphatic and sweeping statements of condemnation of racism and police brutality, support for real reform, and a swell of aspirations. That was a heartening sign, but entirely reactive and cost-free. The next phase will be much harder because it must constitute proactivity on the part of corporate leaders after the initial display of righteousness is over.
The killing of George Floyd should not be seen as a catalyst for change. Calling something a “catalyst” implies that things will change because of a game-changing discovery or transformative event. It is something that forces change. The invention of gunpowder in China during the Tang Dynasty. The discovery of oil in Titusville, Pennsylvania in 1859. The Immigration and Naturalization Act of 1965. The launch of the Netscape web browser in 1994. These were all catalysts. We are currently being affected by a catalyst, but it’s the COVID-19 pandemic, not #BlackLivesMatter.
Instead of being a catalyst, the death of George Floyd marks the beginning of a moment—a profound instant that most Americans associate with the term #BlackLivesMatter. It is similar to the beginning of the #MeToo era—a moment of opportunity to make progress on a systemic problem that has vexed us for decades and even centuries. This is a moment that we know and can feel we are in, yet one day when we look back, it may end up being one of many similar moments in history when we had an opportunity to enact change, but we didn’t.
Why does it matter how we characterize this from a semantic point of view? Believing #BlackLivesMatter is a catalyst and that change is already happening is illusory. COVID-19 will have long-term impacts on how we live and work well after the pandemic is over. #BlackLivesMatter may or may not. There will likely be more support for diversity and inclusion in the senior-most ranks of corporate America, but for it to be realized, those who have the power to make it happen must act in the moment.
This is where corporate boards of directors must play a lead role. Corporate governance commentators enjoy using the catchphrase “noses in, fingers out” to describe in metaphorical and anatomical terms the role of the board. In this instance, boards should stop fiddling with their noses and fingers. Instead, they need to use their eyes and ears. Look and listen. Then seize the moment.
For the board, change needs to start by taking a hard look at itself. A board that wants to recognize and address systemic racism must start with its own composition. After all, this is one of the few things over which the board has a great deal of direct control. Thus far, most boards have done somewhere between nothing and the bare minimum to the point where state legislatures (e.g., California, Illinois) passed or are working on bills to force the issue. Boards need to dial up the level of activity instead of waiting for legal mandates. Some say this is a difficult thing to do. Yes, it is difficult, but that’s what the board is there to do—to discern difficult issues and make difficult decisions.
Why is board composition so important? Is it not possible for an enlightened board, even if non-diverse, to populate senior management with people of color who have the leadership qualities necessary to make progress on diversity and inclusion and give them the tools to succeed? Of course it is, but the fact that this may end up be more difficult than they expected makes it more likely that they will eventually opt out and let the current moment be wasted. Survey results tell us that directors tend to tire of issues that don’t directly relate to the bottom line, and they put those issues on the back burner. ESG is a recent example of something seen by many directors as a “nice to have” that is fine to spend time on when business is good, but not a “must have” when waters get choppy. Already we have heard some directors express (in private settings) that they are tired of talking about systemic racism. They want to move on to discuss the more pressing business issues. These directors want to drop out of the discussion, and many of them will because they have that option.
Things would be different if we had more boards with directors who don’t have that option. Directors who have been forced think about systemic racism on days when they were exhausted from constantly having to explain to others what it is. Directors who have been starkly reminded about being a member of an ethnic minority at a time and place where they thought it didn’t matter. Directors who know that one day they must have the talk with their 16-year-old about how to conduct themself if they get pulled over by a cop, out of a genuine fear that such an encounter can go horribly wrong.
For directors to really understand how systemic racism (and sexism) impacts the company’s workforce and places hurdles along the path of promotion to the senior-most ranks, they need empathy. However, for those who have never personally experienced racism and discrimination, it is (perhaps understandably) difficult to truly appreciate the physiological and psychological effects. Boards need people who have faced such experiences because no company is immune.
For a board to play a role in breaking down systemic racism, the directors must listen to the stories of their own people. It’s not enough for the board agenda to include regular reports from the chief D&I officer on the company’s aggregated D&I metrics and trends seen in the latest employee engagement survey results. When was the last time board members sat down with a group of employees below the c-suite to talk about corporate culture? When was the last time any director heard from an African American employee about what their personal experience has been like working at the company? While it sounds like this would be impossible to pull off, it’s not. Difficult? Yes. Impossible? No. There are creative ways of doing it, and now is the moment to find new ways to engage. One thing we’ve seen during this moment is people of color coming out to tell their stories in an unprecedented way. People who we’d least expect are telling us about real life situations that we never knew they had faced. The board needs to capture this moment and be a part of it. It’s not going to happen in the boardroom. Get inside the company and listen to the unfiltered stories of the employees themselves. We’re at a moment where many of them want to be heard.
Seize the Moment
The time for boards to act is now. If they don’t, the moment will pass, and it may be a generation before the next one. Don’t expect the current open environment for speaking frankly about systemic racism to continue forever. At some point, the media will tune out, the politicians will move on, and the #BlackLivesMatter lawn signs will become weathered and not be replaced. There may also be a backlash (if that hasn’t started already). We’ve seen it before. We saw it with #MeToo. And we have an election on the horizon being trumped up as a culture war, the outcome of which may kill the moment.
The message to boards must be blunt, and their actions must be swift and decisive. We are already seeing signs of progress. Some companies are seizing the moment by making pledges to appoint Black directors. Major market participants with leverage to incent other companies to act are making bold moves (e.g., Goldman Sachs). Furthermore, boards must not only have the resolve to make these kinds of commitments, but also show the fortitude to stand by them and embrace the changes that will come with diversity.
Detractors are having adverse reactions to what they see as “quotas” and “affirmative action”—terms that have taken on pejorative meaning over the last three decades. However, if simply making a commitment that the next director appointed to the board will be a woman or a minority constitutes a quota, then maybe that’s not necessarily a bad thing.
Message to boards: Look, listen, and take swift and decisive action. You will be remembered as the generation of directors that finally seized the moment.