John Rogers and James Bell not only represent two of America’s most powerful corporate directors but the unwavering, outspoken advocates for diversity and inclusion among board members. Rogers, chairman and CEO of Ariel Investments L.L.C. (No. 1 on the be asset managers list with $11 billion in assets under management), serves on the boards of S&P 500 companies McDonald’s and Exelon and is co-founder of the annual Black Corporate Directors Conference, which brings together scores of African American corporate directors to grapple with such issues. Bell, the retired EVP, Corporate President, and CFO of Boeing and corporate director on the boards of JPMorgan Chase, Dow Chemical, and Apple, has been vocal about the underrepresentation of African Americans within major corporations and as part of public forums.
Black Board Members and Business Leaders Need to Take Stand and Demand Parity in Corporate America
BE recently had the opportunity to hold an in-depth discussion with these two on effective corporate governance. In their Q&A with Editor-in-Chief Derek T. Dingle, they reviewed everything from continued imbalance in the boardroom to the need for African Americans—from seasoned corporate directors to individual investors—to take a stand and demand parity in corporate America.
Black Enterprise: In developing this year’s list of the Most Powerful Black Corporate Directors, we reviewed the entire universe of the S&P 500 and found 40% did not have black board members. When we evaluated the S&P 300 last year, the percentage was 30%. From your vantage point, why is there such a great disparity?
John Rogers: When you go from 300 companies to the entire S&P 500, part of the issue is that smaller companies don’t feel the same pressure to diversify their boards. I spent 34 years investing in small and mid-sized companies, and when I talk to those management teams about the lack of diversity on their management team or boards, they’ll say, “No one’s ever challenged me on this issue.” The larger companies are used to being challenged.
be: So how do you diversify the boards of those companies?
James Bell: The smaller companies just don’t think it’s a priority. Maybe it’s a lack of awareness. Maybe they don’t feel their customer base demands it because they’re B2B. Those companies are suppliers to big companies where diversity is a priority. We have to put pressure on the larger companies to look at their supply base to make sure that their diversity initiatives flow down to them. If you’re on the board, you have a great opportunity to do that.
BE: So you’re making the case that suppliers should embrace the same policy as their corporate customers as it relates to diversity, including having African American corporate directors.
Bell: Exactly. I think it’s fair to ask that your whole supply base value diversity, and then you should hold them accountable.
Rogers: When James was the CFO and interim CEO of Boeing, he made sure those suppliers were working with minority businesses and putting pressure on them. I’ve also seen that happen with [former McDonald’s CEO] Don Thompson, who would often meet with local suppliers throughout the United States. If he saw that their workforce and boards were not diverse, he reminded them that McDonald’s was an important customer, and the next time he came to visit he was expecting to see a diverse workforce and leadership group.
Lack of Black Board Members in Silicon Valley
BE: We have had a huge focus on tech. When we started our list, Apple did not have an African American board member. Now, James is on the board. Google/Alphabet didn’t have an African American board member. TIAA CEO Roger Ferguson is now a corporate director. But still there’s no African Americans on the boards of Amazon, Netflix, and Intel. Given today’s environment, why do we still see such resistance in that sector to African American board representation?
Bell: Either their customer base hasn’t made it a priority or they don’t understand the value of diversity in the organization. If your market is global, most of the people around the world are people of color. All of those companies sell products in the black community so I would think they would want to look like the markets they serve from top to bottom.
BE: John, each year, you hold the Black Corporate Directors Conference. One approach shared has been for directors to meet with CEOs and nominating committee heads to push for more black board members among their peer groups. What has been the outcome?
Rogers: I’ve been involved with boards with robust diversity programs, wonderful spending programs, minority professional services companies … just great history. Then you wonder whether those folks on that board are exporting it to other institutions.
You don’t see enough CEOs who are leading organizations that are doing the right things; taking those practices and then pressuring, pushing, nudging, and encouraging other CEOs to do exactly the same thing.
BE: Both of you have made diversity a priority on the boards in which you serve. Do you believe all black board members should have that mandate as part of their board service?
Rogers: We started the Black Corporate Directors Conference 15 years ago to exactly address this issue. We were getting more African Americans on corporate boards but we weren’t fighting for the civil rights agenda once in the boardroom. Too often, we were just happy to be there. We were uncomfortable making the white leadership uncomfortable. So we sort of sat there and, in effect, gave cover for the status quo to stay the same.
“We Have a Responsibility to Fight for Our Community…”
What we do every year is bring in what we call the “Conscience of the Conference,” someone [like Harry Belafonte, Rep. John Lewis, Rev. Jesse Jackson] to remind those of us who have been fortunate to be on a corporate board that we have a responsibility to fight for our community once we’re in the boardroom. If we don’t speak out nothing will change, because the traditional leadership has other agendas. They’re worried about profit margins, growth rates, and all the rest. They’re not thinking about us unless we remind them of how important it is, and hold them accountable for the commitment and promises they’ve made about diversity and inclusion. If I’m on a board, I’m helping management teams do their job by reminding them to live up to those values and commitments.
Bell: John has also had current board members speak to this topic at the conference, and specifically me last year. I really thought it was interesting, some of the questions I got about when is a good time to bring up diversity in the boardroom. And I was like, ‘You’ve got to be kidding me.’ Anytime. When you’re talking about the strategic plan, when you’re talking about a big debt deal, when you’re talking about any aspect of strategy, we should be thinking about inclusion. We should think about how we can keep differentiating ourselves from our competition. It should be part of the discussion just like the return on investment.
BE: I am struck by a recurring theme at the conference of courage. It surprised me since it is an assemblage of some of the most powerful people in global business, black or white.
Rogers: I was fortunate in my career to get to know Maynard Jackson very, very well. The late mayor of Atlanta made such an impact throughout his career around diversity and inclusion. Right before he passed away, he was talking on diversity and inclusion issues and the fact that he felt too many of us who were getting on boards had a chance to make a difference but weren’t doing it. He said they had this “scared Negro disease.” He talked about that so thoughtfully. And one of the directors got up at the end of the conference and said, “I think I was afflicted with that disease.”
We remind people that it does take courage to speak out to make a difference. It’s so much easier to make people comfortable, accept the check and be there. But we have a responsibility.
So when we’re on governance committees or nominating committees making decisions about prospective board members—whether it’s a nonprofit or corporate board—we must make sure that individual has a history of fighting for our community. It’s not enough that they come from a big company, had a nice career path, and got the right title. They need to be vetted on what they’ve done to make a difference in our community before I’m going to suggest that person go on the board. That’s really something that we just don’t do enough.
“Only 60% of the S&P 500 have African Americans on Boards”
Bell: That’s so important. You mentioned that only 60% of the S&P 500 have African Americans on boards. For most of those companies, only one. In some cases, you may have two. So when you get down to it, it has to be the right one. On average, boards have 10 to 12 people. So if you don’t have one of color that’s speaking up on the right things then you don’t have anybody that’s leading that charge. John says it’s a responsibility; I believe it’s an obligation. It’s not about us just saying, “Well, I don’t want to carry the weight. I don’t think I should be the one that stands up.” It’s about having an obligation to make sure this subject is talked about in an objective and sensitive way. But it’s not just a moral application of it; it does make good business sense.
BE: So what roles should investors and asset management firms play?
Rogers: Lay investors often invest directly in mutual fund companies or sit on investment committees of their church, university, or 401(k) plan at work. So they can ask all those people buying asset management services to demand that those asset managers be more progressive. They do it when it comes to socially responsible investing. Individual investors pushed their asset managers to divest from South Africa, which was something that was very important 40 years ago, or not to invest in tobacco stocks, or [to focus on] the environment. They know how to push on those issues and asset managers listen and companies respond. So we can do the same thing when it comes to race and diversity and inclusion.
If we as asset managers demand that our companies look like America and live up to the values they say they care about, they will change. Unfortunately, most money managers are not asking those questions. They talk about profit margins and growth, and what’s happening with the stock price and valuation, but not pressing that management team on those issues.
That’s something that’s very distinctive about Ariel. We push hard on the companies we invest in to be diverse, and we’ve had a lot of success with getting African Americans on boards and into leadership roles by pushing companies to do the right thing.
Why African American Board Representation Matters
BE: That begs another question. Why should the average consumer or employee, who is far removed from the boardroom, care about African American board representation? How does it have a direct impact on their lives?
Bell: A lot of those average consumers are people of color, and people like them should have opportunities in these companies. As John said earlier, we’re not asking for something special or a disproportionate share. We just want these companies to look like the rest of America. They do business with these communities and people that buy their products ought to get some benefit. I mean, why should you go to a store every week and spend a substantial amount of your money, and not look around to see if people of color work there? And if they don’t, why wouldn’t you ask yourself should I still support this store, or ask management “Why don’t you have people of color working here?”
BE: Are there other access points to diversify the pipeline?
Rogers: Private equity now is so dominant in today’s economy. These giant companies literally control hundreds of companies and have 500,000 or a million employees. And often their customers are the biggest public pension funds, biggest college endowments, hiring firms like Blackstone and KKR. No one has been asking those private equity companies, until recently, about lack of diversity in their management teams and boards of the companies they control. The private equity firms determine who will be the first eight to 10 board members on those companies before they go public.
African Americans are often in charge of public pension funds. If we demand that the private equity firms not only be diverse but diversify the boards and management teams of companies they control, we can make a difference.
Bell: Diversity programs within large companies are so important. You have to make sure that we’re getting enough people that would have the fundamental requirements to compete to be on these boards or to be considered for them. You’re going to always have a gap on these big company boards because we don’t have enough senior executives coming from the large companies. That’s a problem we’ve got to fix.
Rogers: We have to ask these questions, not only pushing for stronger minority businesses but stronger minority leadership in majority companies, particularly professional services. We can create a whole opportunity set for people of color to join boards in the next generation.
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