Yesterday I had the great pleasure to moderate a discussion between Jay Timmons, President of the National Association of Manufacturers (NAM), and Dr. Michelle McMurry-Heath, CEO and President of the Biotechnology Innovation Organization (BIO) to address the middle market and early stage companies piece of the LGBTQ+ Corporate Boards representation challenge. Both BIO and NAM, large and influential industry associations based in Washington, DC, just entered new strategic partnerships with Out Leadership to support and advance the LGBTQ+ community.
This session was part of our three-days Annual Quorum Summit in which we brought all the stakeholders of the Corporate Board diversity world to discuss our latest piece of research “Visibility Counts: The LGBTQ+ Board Leadership Opportunity”.
The specific focus of this session was small and middle-market public companies (less than $500 million in revenue) as the vast majority of Board opportunities are obviously outside of the Fortune 500 companies.
I now speak daily with #Quorum aspiring board members and they unfortunately often remain focused on board positions with large public companies and institutions. However, as our “Visibility Counts” research reiterates, the majority of these companies’ boards remains almost hermetically closed to LGBTQ+ candidates. Credentials such as having prior board experience, having been a C-suite executive in a Fortune 500 company or a Cabinet appointee remain insurmountable bottlenecks to greater LGBTQ+ representation. The reliance on informal networks (think PGA Board) and recruiters also decrease the chances of our Quorum candidates to be tapped as this means a very small pool of candidates are considered. Finally, the reluctance of corporate secretaries to include questions on the sexual orientation and gender identity of their Board Members under the disguise of respect for privacy, something Michelle denounced as “BS” in the panel is also a sign of resistance to diversification from the gatekeepers themselves. As Michelle mentioned, if the data is not there, the problem is not addressed.
This explains the Board homogeneity in most top public companies or institutions. Have a glance at the US Spencer Stuart Board Index 2020 highlights on S&P 500 Directors: only 28% of new Board members did not have prior governance experience and 35% of the 2020 incoming class were CEO, chair/vice-chair, president, or COO. And as a reminder, we found that out of 5670 Fortune 500 Board seats, only 25 are occupied by openly LGBTQ+ people.
But many BIO and NAM members are smaller companies which, as Jay and Michelle mention, are also on a diversification spree for their Boards and increasingly open to LGBTQ+ profiles. The small and middle-market includes micro-cap companies, mutual funds, private companies, private equity-backed companies, authorities, consortia, community banks, government regulatory bodies, etc.
The reality is that for these positions there is less competition, the requirements are less stringent and more based on skills and expertise than credentials, and investors and management play a greater role in handpicking the right directors. Compensation is also sometimes equity-based which can be a great incentive. However, these opportunities are also harder to identify.
So how do you get on the radar screen of these Board opportunities? And how can boards with a lack of networks into diverse communities tap talent from these communities? Both Jay and Michelle reiterated the importance of networking specifically for Board positions – in an authentic and out manner. Michelle noted that the modern form of leadership is “authenticity, courage, & vulnerability,” so candidates also have to lean into that in their Board search approach. For many of us it means being very upfront on Linkedin or our Board profile about our sexual orientation and gender identity and why it is central to our professional contribution. Jay spoke at length about how supportive NAM members have been of him as an out CEO and also of his family.
This is also where we come in at Out Leadership, if you are not part of Quorum, join us. Seats in the small and middle-market are filled through networks: most placements are by word of mouth. In 2021, we plan to continue making our network available to companies and recruiters alike. In the last few weeks, four companies (3 small, and 1 large) reached out to us for a list of LGBTQ+ director candidates who fulfill certain criteria We are also partnering with Equilar, Diligent, and the NACD to ensure our candidates are visible in all databases and that their sexual orientation and gender identity is listed. Finally, we encourage our top-tier candidates to take director-education programs: they can be somewhat pricey but are also great networking opportunities.
And who knows increasing representation of LGBTQ+ people on small and middle-market public companies could lead to greater representation in large public companies and institutions. It is the next frontier of the “lavender ceiling”.