Why #BlackLivesMatter is (and must be) an issue in corporate boardrooms

kpmgLike many, I am horrified by the videos showing the death of George Floyd, saddened and shaken by the knowledge that such a thing can happen in America today, and hopeful that momentum will continue and lead to positive change.

 I believe that each of us can make a difference in the areas we know best, and so I write this about one area I know well, the corporate boardroom. Some companies have been highly focused on it, and for others, there are so many boardroom issues these days – reopening plans, liquidity, supply chain, etc. – that board agendas may well be focused elsewhere. Indeed, it may be tempting to view the current unrest as a societal or political issue that is not an appropriate boardroom topic. I believe this would be the wrong approach, and thus I offer the following considerations:

Recognize that the reputation of the company – and perhaps its very ability to execute strategy– may well depend on how it acts at this moment.

  • We are in a time of crisis, and the lessons of crisis management dictate one priority – people first, visibly.
  • Every company should realize that its stakeholders are watching and for a long time after the current unrest subsides, customers, employees, suppliers, the community and investors will remember how the company acted in this moment and many of them will make decisions with this in mind. Board leaders can set the tone and assess what management is doing to listen to black employees throughout the organization as well as other stakeholders.

Society is at an inflection point, and director education about the issues is critical.

  • Historians and commentators across the political spectrum have noted that the current moment feels different and have described it as a tipping point. As boards consider the implications for the company’s role in society, level setting will be important.
  • It may be helpful to seek outside expertise and allocate time on the agenda for open discussion. Note that this is no time to “assign” this to one person on the board (and particularly not to expect a person of color to take on the role of educating the rest of the board members) – this is a full board exercise. Again, while the societal issues are massive, the purpose of this particular discussion is to focus in on better understanding the issues as they impact each of the company’s key stakeholders – employees, customers, suppliers, investors as well as the community.

Change starts at the top, with management held accountable.

  • We can expect accelerated interest in questions relating to diversity of the company’s workforce, from investors, employees, and the community at large, and the board will be expected to set the tone. What are the company’s programs to attract, retain and promote diverse talent, and how is management measured? Ongoing boardroom discussions to set expectations and hold management accountable will be critical.
  • Because it directly links to company strategy, risk and reputation, the conversation should not stop there. Even if the company has never had an incident, this is the time for an assessment of whether the company has sufficient processes in place to prevent bias in the company’s interactions with customers, and it is a good time to assess and strengthen supplier diversity plans as well as the company’s commitments to the broader community.

This is yet another reason that board diversity is so important.

  • Diversity of perspectives is and always will be important from a business perspective. In the current environment, a diverse board (and management team) can bring life experiences and understanding to discussions of corporate purpose and culture that can make all the difference.

As a society, we are faced with incidents that are so deeply disturbing it feels wrong and disrespectful to even consider going back to business as usual. And so we do what we can, some in the community, some in the boardroom and some in the streets. George Floyd, Breonna Taylor, Ahmaud Arbery, and so many more -- they may never have seen a corporate boardroom but I submit that it is incumbent on all of us in the boardroom to see them, and to ask what our company will do.

Article by Susan Angele
“I was moved by the recent events and felt compelled to comment as the discussions of racial justice relate to the corporate boardroom”
KPMG's Board Leadership Center

...we find that banks with more gender diversity on their board perform better once the composition of these boards reaches a critical level of gender diversity, corresponding to a board female share of around 13-17 percent.

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