By Stuart R. Levine, Chairman and CEO, Stuart Levine & Associates

Published in, Forbes

Of the more than 30 million businesses in the US, less than 1% are listed on a public stock exchange. Despite recent efforts to focus on the diversity of boards within these publicly traded companies, private companies remain under regulatory radar. Andrew Ross Sorkin brings these numbers to light. Of the 843 that have gone public since the year 2,000, they are now worth more than $10 trillion. There are only 49 of those board seats which include Black directors from a total of approximately 4,700 selected board members – or less than 1%. Not surprisingly, the venture capital and private equity firms that fund these companies are about 1% black. According to Ms. Ursula Burns, founding partner of the Board Diversity Action Alliance and board members of Exxon Mobil, Datto, Uber and Teneo. 

How does this tie into strategic communication and CEO/board communication? It’s easier to move things along when people come from the same background and have the same ideas. They do what’s comfortable and hire within their immediate circles. Yet the numbers show that diversity yields outperformance of teams and companies. BCG reports higher innovation revenue at companies with diverse leadership, 45% of total revenue vs. 26%. Companies working on diverse leadership may be able to attract greater capital as well based upon these new statistics. 

Changing actions in the boardroom now reflect one third of all new board members from July 2020 through May of 2021 are black. According to ISS Corporate Solutions, this numbers was up from one tenth within the same period the year before. Companies that underwrite offerings, like Goldman Sachs, are now requiring minimum levels of board diversity before working with companies. 

In one extremely successful company they formed a Women’s Council to encourage and mentor women. This sent signals throughout the organization that led to the recruitment of talented women from diverse backgrounds. The CEO was smart enough to drive this process providing smart and ongoing strategic communication around the subject of diversity and supporting the LGBT community as well. The numbers and stellar growth of this company proves these strategies have been impactful for creating both the attraction of talent and innovation through diversity of thinking. 

Board members can select 3-4 high potential leaders within the organization to meet and mentor, thanking them for their hard work and expressing appreciation to them. This requires a trusting CEO who has the character to enable these discussions which encourage these key team members to feel the support and continue to grow exponentially. Very often these high potential leaders are diverse. The welcoming nature of these conversations encourages them to continue to have the confidence to express their ideas openly, leading to diversity of thought and collaborative, inclusion thinking. 

CEOs who stay close to their customers and go out into the market to see and hear from them directly, can then share what they are seeing regarding their products and services in the marketplace with their senior leadership teams and their boards. This data can then go on the CEOs dashboard, becoming part of board room discussions. Unfortunately, many boards at the initial stages of start-up companies are formed based upon like-minded individuals from the same communities, the same schools, and the same backgrounds. Now, there is a positive movement to diversify boards, prior to going public, or just in general, to ensure diversity of thinking which has now been proven to improve results. Making the right decisions to deliver value to shareholders and stakeholders requires beginning with the assumptions that drive the financials and the beliefs that influence actions. Having these often challenging and robust conversations at the board level will only improve outcomes and lead to diversity strategies to improve results. 

 In organizations where you can have dynamic cultural change, this moves your collective brainpower out of just one lane and into open conversations that lead to innovation. This re-orientation of culture takes time, focus and energy. It doesn’t just happen. It needs to be placed on the CEO dashboard and understood and embraced at the board level. No small task considering the lack of diversity on many boards currently. By adding these initiatives to the CEO dashboard that becomes the basis for an annual review. This will additionally send powerful messages and signals throughout the organization. Tone at the top implies measuring the acquisition and development of diverse people.