The likely culprit, according to a new report by executive search firm Heidrick & Struggles? Boards, concerned about economic conditions, turned to the highest percentage of current and former chief executives and chief financial officers to fill board seats seen since it began tracking the figures in 2009. And because so few women and minorities currently or formerly held those jobs -- there are just 24 women leading S&P 500 companies, for instance -- the diversity problem becomes self-reinforcing.
"In the world that we live in, which has a lot of turmoil and economic uncertainty, I think boards have tended toward adding people with strong operating experience," said Bonnie Gwin, vice chairman and co-managing partner of Heidrick & Struggles's Global CEO & Board Practice. Asked if she thinks boards are too obsessed with adding former chief executives, she said, "There’s a comfort level with CEOs and CFOs, people whose track records are usually well known and who may even be well known to the boards."
While that may sound like the definition of the clubby, "old boys club" image of the corporate boardroom, Gwin said she believes boards are genuinely interested in becoming more diverse. "They see value in it," she said. "The challenge is if they think 'we really need a CEO' -- and sometimes that really is the right skill set -- the pool is not going to be very diverse."
Last year, 4 percent of new directors were Hispanic, down from 4.7 percent in 2014 and nearly as low as the 3.9 percent of new Hispanic directors named in 2011. Asians or Asian Americans made up 4.8 percent of new directors in 2015, down from 5.3 percent in 2014. Women made up 29.8 percent of new directors. While the figure increased slightly from the 29.2 percent last year, the rate of growth was slow enough that Heidrick had to adjust its forecast for when women will reach 50 percent of seats in the boardroom, shifting it forward two years to 2026.
African American directors saw their percentage of new board seats grow from 8.3 percent in 2014 to 9.3 percent last year.
The slowing of Hispanic directors draws particular concern since Hispanics make up an increasingly large share of the overall population -- and consumers. With just nine Hispanic CEOs among the Fortune 500, Gwin said, boards "really have to look beyond the CEO role, including people who lead nonprofits, people who are entrepreneurs, people who are academics running large institutions."
What's also notable is that the slowdowns or flat growth come in a year when there was more turnover on corporate boards that usual. Because many boards don't have term limits and fewer are setting mandatory retirement ages, some have said greater turnover would free up more seats for women and minorities. Yet that didn't appear to happen last year. More seat changes around the table "have to be combined with leaders in the boardroom who are really committed to looking at diverse slates," Gwin said. "We need people in the boardroom who are advocating for that."