In TPIN Blog

Many companies, such as the Alliance for Board Diversity, track how many men and women hold positions of power in Fortune 500 companies. They analyze this data to figure out trends in the numbers and status of minority groups and women in these companies. This data is then released to the general public, showing the gains (or losses) in diversity over time. Over the last twelve years, these organizations have been tracking how and when there are shifts in these key demographics, and they research and hypothesize regarding the meaning and value of each year’s findings. Completing these reports over such a significant amount of time has allowed these independent companies to track trends and monitor growth in the areas of diversity and inclusion at this level of corporate structure.

According to a 2016 report by the Alliance for Board Diversity, women and minorities have only seen very modest gains in representation on the boards of Fortune 500 companies. Using the statistics gained from their research this year, the Alliance for Board Diversity found that women and minority groups make up only 30.8% of the seats on the boards in these companies. This leaves almost seventy percent of the available seats in these powerful company boards taken by Caucasian males. This is an important disparity, because these boards are no longer representative of the American population. The success of companies has been shown time and again to hinge on how connected they stay to their target audiences. The population of the United States has become increasingly diverse over the last decade. The statistics and trends found in reports such as the Missing Pieces Report confirm that the diversity and inclusion of women and people of minority backgrounds has experienced a correlative increase on the corporate boards of Fortune 500 companies. However, annual reports confirm that there is a correlation between positive corporate performance and increased diversity on the board of directors.

Men and women in minority groups have gained very slightly over the past few years. Their participation on Fortune 500 company boards has risen from 12.8% to 14.4%, according to the Alliance for Board Diversity 2016 Missing Pieces Report. Still, the total number of board seats held by minorities of less than fifteen percent is untenable. The rate at which people of varied backgrounds have been able to gain important positions in corporate Fortune 500 companies casts a very discouraging light on the practices and policies within our top branches. A proportionate and representative number of seats held by people of minority backgrounds would be around 40%. This would create a situation where the people on the governing boards of Fortune 500 companies would be representative of the consumers in their target markets. Such a representative force would be able to better relate to and sell to this consumer base. As it sits now, with such a majority of the boards of directors still Caucasian/white men, the target inclusion percentage will not be achieved until at least 2026, according to the Alliance for Board Diversity.

Though some of these findings show that progress for women and minorities has been very slow–and often stagnant–they do show an inevitable shift towards a more diverse and inclusive representation on the boards of Fortune 500 companies in the United States. Women and minority groups have been making the long, hard push for equality and equal representation in the workplace for many years. In many aspects of the United States workforce, these efforts have been successful. Women and minority groups have made significant gains in the areas of equal pay, even though these successes have been more difficult to attain in more corporate environments. These recent yearly reports that have come out show that while women and minority groups are making steady progress, even in the high-profile arenas of Fortune 500 companies, it is a slow progress without significant gains in any one year. These people are still fighting tooth and nail to gain equal opportunity in some of America’s highest paying and highest profile corporate positions.

 

Eric Lawrence Frazier, MBA
President and CEO
NMLS #461807  CalBRE #01143484

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