by Anis Salvesen
It is no secret that boardrooms in America are not renowned for their diverse composition. But did you know that not only are many of the board members of the largest companies the same type of people (male, Caucasian, 55+), they are the same people? Remember Enron back in 2001? I found an article written in the aftermath of that scandal that cited the following statistic: “Eleven of the 15 largest companies, including Pfizer and Citigroup, have at least two board members who sit together on another board.” .
Unfortunately, lack of boardroom diversity continues to be an issue. Not only were excessive homogeneity and board interlocks cited as factors in the events leading up to the Enron scandal, but they have also been shown to play key roles in more recent scandals. A great article in the Harvard Law School Forum on Corporate Governance and Financial Regulation from March 2009 actually stated the following: “We find strong evidence that board interlocks are related to the spread of backdating [of employee stock options]. A firm is more likely to begin backdating option grants if the firm has a director who is a board member of another firm that previously backdated its stock options.”
The good news is, there’s at least one person doing something about board diversity. Linda Bolliger is the founder of Boardroom Bound , which is a national public service program that delivers pre-trained diverse business leaders as candidates to companies for board service. In the 1970s, Linda served as the first woman appointed to a cabinet-level position in an Illinois city government administration. She and her program have received many awards.
The following is an interview :
You spoke of ‘the nexus between nonprofit and for-profit board service.’ Could you please expound upon that?
LB: Of course. Consider this: The majority of current board directors sitting on boards of for-profit companies actually first encountered governance during their nonprofit board service.
How does Boardroom Bound recognize this nexus?
We received a grant from the Dunham Fund to develop a training program for nonproft organizations to help them increase their governance muscles. Boardology™ 100© is the result.
So you train leaders, giving them skills they can take to the non-profit boardroom and then translate those skills and experience to the for-profit world. What sorts of skills are more typically honed in the nonprofit arena?
LB: Essentially we introduce the sequence concept to nonprofit Board Chairs and Elects. It’s oriented to their learning how to use governance and collaboration as tools for their group’s long term sustainability.
Usually we think of the nonprofit sector as having something to learn from profitoriented businesses, but it seems it can also be the other way around.
LB: Exactly! It’s a sequence. Nonprofits engaging in the governance paradigm we champion will produce leaders who can, with appropriate training, successfully compete for corporate board service.