The numbers of women and people from racial minorities serving on America's corporate boards may have increased over the past decade, but the influential elite holding multiple board positions remains a white, male closed-shop. New research explores why.
According to a study of 2,000 of the largest US companies published in the Academy of Management Journal, women and people from racial minorities make up 28 per cent and 22 per cent respectively of directors who serve on a single board but only eight and five per cent respectively of those who serve on more than one.
This essentially relegates women and ethnic minority directors to the second tier of corporate leadership because holders of multiple board seats seen by other board members as being members of the corporate elite who therefore exercise disproportionate influence over corporate policy at each of the firms where they serve as a director.
Access Denied: Low Mentoring of Women and Minority First-Time Directors and Its Negative Effects on Appointments to Additional Boards, by management professors Michael L. McDonald of the University of Texas San Antonio and James D. Westphal of the University of Michigan, also found that this situation hasn't changed over the past decade, a strong sign that there is more to it than just the natural time lag between acquiring a first board seat and gaining appointments at other boards.
One reason for this, the report found, is the glaring reluctance of nine out of 10 of these same white males to spend any time helping, advising or mentoring first-time female and minority board members on the basics of board participation and the unwritten rules of behavior and protocol that can be the difference between having real influence and just making up the numbers.
In fact, racial-minority first-time directors are 72 per cent less likely than white males to be advised by an incumbent director to get the CEO's okay before raising concerns or questions about strategy or policy issues in formal meetings and 69 per cent less likely to be advised that directors are expected to provide advice and information to the CEO rather than exercise control over policy and strategy. For female first-timers, the comparable figures are 54 per cent and 49 per cent, This matters, McDonald and Westphal argue, because first Impressions leave an indelible and lasting legacy on subsequent interpersonal judgments.
"Even if first-time directors who did not receive significant mentoring are able to begin to realize on their own what the prevailing norms are, their subsequent participation will continue to be seen through the lens of any early behavior that did not conform to the subtleties of participation-process norms," the study says.
The folly of placing so much store by these first impressions is further underlined by the revelation that minority newcomers in the boardroom have significantly higher levels of management experience than their white male counterparts, provided higher levels of advice and information to CEOs and demonstrated knowledge and strategic insight that were rated more highly by their peers.
But despite this, the lack of mentoring reduced the likelihood that first-timers will be invited during the next two years to join a second corporate board by 57 per cent. So much for corporate meritocracy.
"The differential access to mentoring that we observe in this study may ultimately tend to compromise the quality of director contributions to strategic decision-making, because it disadvantages women and minorities who could otherwise provide relatively high-quality advice and counsel to executives on strategic issues from getting board," the report argues.
While the study acknowledge that this mentoring gap is more an unconscious manifestation of in-group favoritism rather than outright negative treatment or discrimination against women and minorities, it nevertheless poses some serious questions as to the conduct of corporate boards and, in particular, their reluctance to challenge executive decisions and tendency towards group-think
As Prof Westphal said, "It is commonly thought that a particular virtue of having women and minorities as directors is that they bring an outsider's perspective to boards. Ironically, to the extent that this view emphasizes the outsider status of these groups, it may very well contribute to the discrimination and the career impediment that we have uncovered in this study."