Diversity takes backseat in American boardrooms

In the wake of the killing of George Floyd, a Black, by a White police officer in Minneapolis, on May 25, 2020, which had triggered the Black Lives Matter, it had also coincided with the American companies trying to make their boardrooms diverse, equitable and inclusive (DEI), and the number of blacks in the boardrooms had jumped in 2022. But in 2024, there is a change. Diversity is no more a top criterion in the search for directors. In 2022, the number of new Black directors was 26 per cent. It has fallen to 12 per cent in 2024. And the number of White directors rose to 69 per cent in 2024 from a low of 52 per cent in 2022. Is it a conservative backlash and does the change reflect what it will be like during Donald Trump’s second presidential term?

But even before Trump had won the presidential election, the American Supreme Court had ruled that using the criteria of race or ethnicity in college admissions is unconstitutional. This was a blow to the DEI principle in general as well. Mellody Hobson, co-CEO of Ariel Investments and who was on the boards of JP Morgan and Starbucks, said that during the George Floyd days there were requests for diversity in the lookout for directors. “During the George Floyd days there were dozens and dozens of them. Those requests have dramatically dropped. It is not a non-issue. It’s just not The issue.” But she thinks that in the long term companies will move in the right direction and follow the principle of diversity. The reason that Fortune 500 companies were open to the diversity issues was as much due to business concerns as it was a response to the Black Lives Matter. The companies felt that diversifying the boardrooms is good for business, that it helps companies to expand their market.

The disparity between races is much too glaring to be overlooked. The US Census Bureau data shows that 14 per cent of the working age adults are Blacks, but there are just 8 per cent of Blacks as directors in Russell 3000 companies, while the representation of Whites in the board is 78 per cent in Russell 3000 and 74 per cent in S&P 500 companies, while the White working age adults constitute 57 per cent of the population. The representation on the boards is not commensurate with the people in the working age segment. This is a clear racial bias. There is a move to counter it, but it has not happened yet. Hobson says, “I don’t think it is overt racism, although it does exist, but perhaps people feeling less of a need, may be less pressure on this issue.”

There is optimism despite the dominant conservative streaks in the Trump camp, though Trump has wooed Black voters and he has own quite a large number of votes from among them. But the Trump team, and his hardcore supporters, display strong White biases.

But the optimism is justified because Trump cannot hope to achieve his rhetorical goal of Making America Great Again (MAGA) if there racism is on full display. Which was possible in the 1950s, and even then racism was tottering because Blacks quietly rebelled as could be seen in Rosa Parks, who refused to give up her seat on the bus in Memphis, and Martin Luther King Jr led peaceful resistance movement. Racism has not completely disappeared in American life. Otherwise there would have been no need for the rise of Black Lives Matter movement. Diversity, Equity and Inclusivity (DEI) cannot be pushed away any more in America.