Playing the Long Game to Diversify Corporate Boards
Byna Elliott, Head of JPMorgan Chase, Advancing Black Pathways
The recent push to diversify the corporate world must extend to the board room.
Over the last year, we’ve seen an unprecedented surge of interest amongst the nation’s largest companies in hiring Black talent at all levels, along with a renewed focus on diversity, equity and inclusion (DEI) as a standard business practice.
As a managing director at the largest U.S. bank, it’s certainly inspiring to see-and play a direct role in-the intentional focus on hiring and retaining of Black (and other talent of color) across corporate America. But the scope of this challenge is immense, and sobering industry research makes clear that it won’t be solved overnight. A recent McKinsey analysis, for example, found that Black workers continue to be underrepresented in the highest-growth
industries and overrepresented in frontline jobs- which tend to pay less while offering limited opportunities for upward mobility.
This lack of representation in high-potential career paths plays a direct role in why we continue to lack diversity in the C-suite and in corporate board rooms. Just looking at the Black population for a moment-we can still count the number of Black CEOs at Fortune 500 companies on one hand. In turn, the low number of Black CEOs feeds into the lack of Black executives on boards at major corporations.
In June, the international law firm Perkins Coie noted that although nearly one-in-eight Americans identifies as Black, 37% of S&P 500 companies did not have a single Black board member until 2019. The firm also noted that Black directors comprised just 4.1% of Russell 3000 board members. Meanwhile, Deloitte research published in June notes that over the past two years, racial diversity on boards has stagnated, with Black men even losing one board seat in the Fortune 100 and five seats in the Fortune 500.
Here at JPMorgan Chase, we recognize that historical structural barriers in the U.S. have created profound racial inequities across many aspects of American life-including representation in corporate offices and board rooms. This realization drove us to review our own workforce diversity and internal business practices, and over the last year we’ve implemented a number of efforts to drive DEI at our firm- such as holding our executives accountable by
incorporating DEI priorities and progress into year-end performance evaluations and compensation decisions.
Our efforts to drive diversity both within our firm and beyond also extends to the work we’re doing to diversify board rooms at public companies. Since 2016, we’ve worked to help our corporate clients diversify their boards through our Director Advisory Services (DAS) program. DAS offers a curated, referral-based platform of independent director candidates to our corporate clients.
Over the last five years, we’ve provided more than 1,000 companies with director referrals, while building an expansive network of talent across all functions, industries, market caps, geographies, and most importantly-diversity profiles. Although we’re certainly proud of what DAS has accomplished since 2016, we’re also mindful that this isn’t merely a feel-good initiative. We also see it as a business imperative.
Our view as a firm is that greater diversity on corporate boards ultimately leads to stronger governance and better returns for all stakeholders. Corporate boards exist in large part to engage leadership teams on strategy, hold them accountable and push companies to be the best versions of themselves that they can be. In recent years, we’ve crossed a threshold where both C-suite leaders and boards have grown to see the value of having diverse voices and perspectives in the room.
In support of our firm’s commitment to inclusion, DAS maintains a diverse slate of board candidates-60% of whom are either people of color or women. Additionally, nearly 80% of the appointed candidates that we’ve referred to companies for board seats have either been people of color or women.
Through our Advancing Black Pathways (ABP) strategy, we’re working to drive a steady pipeline of qualified Black executives towards boards seats and have contributed candidates to the DAS platform since 2019 when ABP was launched.
But even as we continue to build on the work we’ve done since 2016 to help diversify public boards, it’s important to note that it’ll take time to see progress on a systemic level because board positions simply don’t open up every year. It takes years for board seats to become available, with age being a key driver for open seats. This means it may take decades before we achieve representation that’s proportional to the overall Black population in the U.S.
But rest assured, this won’t deter us. We’re playing the long game.
Visit JPMorganChase.com/ABP to learn more about Advancing
Black Pathways.