Diversity is also proven to be good for the bottom line—when Catalyst examined Fortune 500 companies using the number of women on their boards, those in the highest quartile in 2009 outperformed those who had the least women by 42 percent.
Papandreou acknowledges that reaching out to candidates that represent diversity in race, ethnicity, or gender can be a sensitive endeavor. Oftentimes, she receives questions from potential candidates on whether they are being considered because of their success or simply because of the diversity they bring to the table. They want assurance that their skill set is being valued.
“At the same time, it is challenging for a company to connect with candidates who are not in their natural network. Therefore companies turn to a professional services firm with a diversity practice,” she says.
That said, there are ways that both companies and candidates can work on making the natural network more accessible to women and minorities. George Herrera has served on Wyndham Worldwide’s board of directors since 2006, and credits the board’s diversity—which includes three women and two non-white individuals at its table for eight—to an open-minded and forward-thinking leader, Chairman and CEO Stephen Holmes.
“When I agreed to join the board, I said, ‘Look—if we’re going to drive [diversity and inclusion] from the top down, you need to take ownership of it.’ He gave me his word, and has been true to it,” Herrera says. Having previously worked as president and CEO of the U.S. Hispanic Chamber of Commerce, Herrera has dedicated much of his career helping to bolster the Hispanic business community in the United States. He says the key aspect of Wyndham’s diversity is that it is built into the company’s DNA.
“It’s not about us trying to feel good about diversity and inclusion,” he explains. “For us, it’s a business imperative. That means starting in the corporate boardroom and infusing different perspectives throughout every level of our organization to reflect our customer base and enable us to grow. We place a high value on having that diverse range of perspectives not only in the boardroom, but throughout our organization, and being open and welcoming to people of all backgrounds that apply the same level of strategic thought.”
Papandreou’s experience has led her to a similar conclusion. “If you have diversity on the board, that will filter to management, which will filter to middle management, which theoretically, over time, should filter throughout the company,” she says.
Papandreou stresses the importance of also working from the ground up, noting that companies need to communicate an effective diversity and inclusion initiative in order to develop junior talent within their organization.
“The hope is diversity and inclusion becomes more organic and authentic,” she explains.
“For instance, if we focus on gender diversity, the question becomes how do you bridge the gap between the women who have experience with board service, and the talented women who could absolutely sit on a board in 10 years? Through the work we do at Ferguson Partners, we are able to connect aspiring board members with seasoned ones who can serve as guides and mentors. I find it extremely important to help these women connect.”
Up-and-comers also face the challenge of waiting for board seats to open—which can take a lot of time if a board member remains active into his or her 70s. To Herrera, a true commitment to diversity and inclusion should mean simply expanding the number of board members to accommodate a well-rounded selection of individuals. “I think that we can still be very aggressive and have a very active advocacy role in ensuring that diversity and inclusion is embedded within the corporate mindset,” he says.
There is no cut-and-dried conclusion on the issue of diversity. Papandreou and Herrera both note that while the corporate world is slowly but surely making strides to be more inclusive of women, there is still much work to be done on the ethnic and racial inclusion front. According to Herrera, if you look at the Fortune 1000 landscape, approximately 830 companies do not have a single Hispanic individual on their board of directors.
“I mean, that’s appalling,” says Herrera. “And we will continue to advocate for more racial and ethnic diversification. It is good that we’re getting gender diversification—and hopefully that will translate into getting these CEOs to take a look at some qualified minority candidates to diversify their respective boardrooms,” he says.
Papandreou agrees. While in the past boards favored retired CEOs—typically white men—many are becoming more flexible in the mix of titles represented and are looking to seat active leaders who can present fresh ideas.
Papandreou says, “Although these are small steps, the industry is moving in the right direction. The goal is redefining that default mental image of a board member.”