By Melissa J. Anderson
“Our goal is to bring greater visibility and access to those minority individuals who have demonstrated a potential for senior leadership,” said Nancy Sims, President of the Robert Toigo Foundation. The Toigo Foundation has worked to help diverse candidates enter the financial services industry for almost 22 years. According to Sims, Toigo’s mission and work is grounded in the belief that diverse teams deliver better results—at all levels of leadership. In 2000, the organization recognized the need to do more to prepare younger generations of leaders to enter the industry and introduced leadership development and career management services as part of its programming. Today, the Foundation’s focus is on this initiative, Leader 20/20, and ensuring diverse professionals have the skills and support to lead organizations and drive industry change.
One way the Foundation is reaching out to women and minority individuals is through its new All A Board initiative – preparing diverse high performing professionals to enter board service.
While at the core of the All A Board initiative is addressing the “supply side” by building a clearinghouse of qualified minority director candidates, Sims said, “All A Board provides thought leadership and networking with other organizations who share in our goal to promote diversity leadership , and later this year formalized training components to help candidates take their experience and leverage it for the next level.”
Toigo’s All A Board initiative is complimentary to CalPERS and CalSTRS’ diverse director initiative. The two pension funds recently announced their Diverse Director DataSource, or 3D, as a platform to launch diverse Fortune 500 board candidates into the limelight. 3D has been launched as an independent entity, owned and operated by The Corporate Library.
Anne Simpson, Senior Portfolio Manager, Investments, Global Equity at CalPERS, said, “The underlying issue is that we need the companies we invest in to grow, thrive, and survive over the long term. Boards are desperately in need of new talent and companies are coming to us asking if we can recommend candidates.”
The Pipeline and the Pool
Simpson went on to explain that diversity is simply a matter of good governance – if boardrooms are composed almost entirely of very similar individuals, are they really seeking out the best and the brightest directors? Or are they just relying on comfortable stereotypes of what they think a leader should look like?
She continued, “We have learned that groupthink is corrosive. Even the IMF, in the post mortem of the global recession, identified groupthink as a stealth risk in the boardroom.”
The DataSource, in concert with the Toigo Foundation’s All A Board program, are two parts of a solution to the question facing the corporate sector: “why are our boardrooms so homogenous?”
While the Toigo Foundation is working to prepare and present an extensive pipeline of diverse director candidates for board service to corporations and non profits via its online platform and upcoming board training, the CalPERS and CalSTRS 3D initiative is focused on expanding the pool of senior boardroom candidates for Fortune 500 board service.
Sims explained, “The partnership addresses three concerns: to make sure we identify the best people possible [for board service], to provide a vehicle for them to be introduced to or should this say organizations, search firms and nominating committees?, and to provide a scalable training model and support for them to be successful.”
Simpson added, “We’re on the demand side and Toigo is on the supply side.” Maura can you rephrase this since I referred to the supply side above?
Why Board Diversity is Critically Necessary
Simpson said, “Diversity brings two things. First of all, there is an inherent value in different viewpoints around the table. We need boards to challenge assumptions that live deep into our corporate culture.”
She continued, “And second, it’s about talent. We’re not happy if boards are fishing in a small pool, which typically they are. If the search is narrow, they are excluding a huge amount of potential talent.”
Additionally, she said, the marketplace is becoming more diverse as well. And boardrooms must represent that shift. “There is a rising societal expectation of corporate responsibility. Companies have to understand the markets they’re in. If you do not understand the value of the wider population, and if you are not training on talent from all the communities you serve as a company, then you are really at a disadvantage.”
Sims added, “As a long term investor, this is a wonderful resource to improve board governance, competence, and ensure companies are able to grow, thrive, and create wealth in a responsible way.”