Chicago Boardrooms Lag Nation in Diversity
Chicago lags the nation in the number of minorities found in the boardrooms of its biggest publicly held corporations, according to a new study.
Overall, minorities account for only 12 percent of the boards of directors at Chicago's 50 largest firms, versus 15 percent at the 200 largest S&P 500 firms, said a new report by Chicago United, a not-for-profit group that advocates diversity in executive ranks.
Among the city's 50 largest companies, nine lack any racial diversity at all in their boardrooms, and only three are above 25 percent minority.
That's the goal they should be striving toward, given Chicago's large pool of minority talent, said Gloria Castillo, president and CEO of Chicago United.
"It's not going to happen overnight, but it's reasonable we'd see nothing less than 25 percent of directors being not Caucasian in two years because there is a talent pool that would support that," she said in an interview.
The study also found that minority representation is even lower among chief executive officers, chief financial officers and other C-level positions, as well as other top executives.
At Chicago's 50 largest publicly held firms, by sales, minorities accounted for 10 percent of the top executives listed in their filings with the Securities and Exchange Commission, and 7 percent of the C-level executives.
Chicago United didn't break out its findings for individual companies except to say that the Chicago-area firms with the best track record for diversity are McDonald's Corp., where 29 percent of directors are minorities, followed by Office Max Inc., Tenneco Inc., Exelon Corp. and Molex Inc.
"Companies try hard and struggle with it," said Peter Crist, head of Crist Kolder Associates in Hinsdale, Illinois, an executive search firm that focuses on C-level and board of director searches. "Every nominating and governance head knows they have to improve their minority and women representation."
It's a problem for Chicago's largest not-for-profit groups, too.
One problem is that turnover on boards is typically very slow. Castillo said that as the economy improves many of the firms that were reluctant to change leadership during a downturn will be bringing in new blood, making her goal of 25 percent reachable in two years.
"I'm not going to argue the goal," Crist said. "I just fear the time to get there will be painfully slow. It's not about quality candidates," but "if one slot opens up every five years, it takes a long time to change."
Chicago United has done similar surveys of Chicago companies several times since 2001, finding little progress since the last study two years ago. This is the first time the advocacy group has used public records and outside consultants to add a national perspective to the results.
Chicago United's 2012 Corporate Diversity Profile, released today at a conference in Chicago, also contains for the first time case studies of companies that have successfully developed minority executives as well as a list of best practices and checklists for recruiting and promoting minorities.
"There are some really good practices taking root in Chicago," Castillo said. "These are the leading companies and they do show diversity throughout their C-suite and boardroom. We want to show who are the leaders, how is it impacting their company and how do we create tools so it can be replicated and we can actually start moving the needle."
Compiling best practices is a good idea, Crist said, but "it all starts at the top. If the CEO doesn't embrace and make it a true goal for the organization — at the board level and throughout the company — it's just going to fall short."