The percentage of women appointed to fill new board seats on U.S. Fortune 500 companies last year reached a high of 40 percent, yet the total share of seats held by women is still only 22.5 percent, according to a board monitor report by Heidrick & Struggles.
Meanwhile, the report shows that appointments of African-Americans, Hispanics and Asians in 2018 remained unchanged from the previous high of 23 percent in 2017. The report attributed much of the rise to African-American appointees nearly doubling over the past decade.
The 10th annual study of the trends in non-executive director appointments at the largest companies in the U.S. saw the biggest gains in female appointments to boards in the past two years. In 2017, female appointees saw an 11-percentage-point jump to 38 percent, the biggest year-on-year increase. The figure, in 2018, rose to 40 percent with 183 of the 462 appointments going to women.
The recent surge, the report said, was driven by more boards making diversity a priority; by boards feeling accountable for their performance on diversity (a new law in California mandates female directors at public companies); and possibly by the #MeToo movement.
The breakout by ethnicity and race shows African-Americans accounted for 11 percent of new board seats in 2017. Ten percent, or 14, of the first-time board appointees in 2018 were African-Americans.
The Hispanic share stood at 4 percent in 2017, down from 6 percent, and they gained 3 percent, or 4 of the first-time board appointments, in 2018.
Asian and Asian-American board appointments rose to 8 percent from 6 percent in 2017. Twelve percent, or 17 of the first-time board appointees in 2018, were Asians or Asian-Americans.
Even with the gains in female appointees, the report suggests that women will not reach gender parity on board appointments until 2023. But the report paints an optimistic picture for the future, noting that there are plenty of board-ready candidates who are women or from racial or ethnic minority groups. The key to finding them, it said, is looking beyond the default preference for CEO experience.
“Many outstanding general managers and divisional heads have just as much expertise in skills such as strategic orientation, operational ability and P&L experience,” the report said, adding, “Diligent searching can identify younger executives on the fast track to the top. As a group, they’re generally more diverse than executives in the past, and they will furnish many of tomorrow’s CEOs.”
In 2018, the proportion of current or former CEOs appointed to boards reached an all-time high of 60 percent, so it’s clear that companies aren’t consistently casting their nets widely, the report added.