Regardless of industry, size or goals, every organization will face its own set of ongoing challenges, from new competitors and market fluctuations, to media scrutiny, or evolving technologies. A leadership team and board that embraces a diverse combination of skill sets and perspectives is better equipped to navigate challenges as they arise.
A recent analysis by BoardEx explores the benefits of having executives and board members with diverse experiences and backgrounds. It examines how some S&P 500 companies diversify their boards, and best practices for identifying new talent to help steer your organization.
The Importance of Diverse Leadership
Having a diversity of experience within a leadership team—both in terms of skill sets and demographics—helps organizations remain agile, innovative, and better at navigating risk management.
A 12-year-long study conducted by AXA IM Rosenberg Equities found that U.S. companies with greater than 20% gender diversity on their boards have higher profitability in the future compared to organizations with lower diversity.
The same study discovered that gender balance can also protect businesses from competitive pressures.
Two things may account for these findings: Not only do female board members bring a unique perspective by virtue of their identity, but they also have diverse professional experience, in part due to social trends. A study by Russell Reynolds Associates analyzed women directors at Fortune 250 companies and found they came from a wide array of sectors.
The directors were almost evenly split between those with corporate experience and those who came from government, nonprofit, or other sectors. This is likely because in the past, it was easier for women to access leadership positions in non-corporate sectors, as for-profit corporations have historically been slower to promote women to C-suite roles (although attitudes and trends are evolving.)
These varied backgrounds play a valuable role in the success of an organization. The same study demonstrated that a board with diverse perspectives and experiences is more effective at anticipating and minimizing risk.
Diverse skill sets also help an organization spot and capitalize on opportunities that a more homogenous board might miss out on. Recent trends in hiring show that companies are aware of these benefits and are actively building more diverse leadership teams.
Trending Skills for Leadership Teams
When it comes to finding new members for your board or C-suite, nominating a candidate with previous leadership experience is common. While CEOs are adept at making decisions that increase an organization’s value and help fulfill its mission, it’s important to consider the industries in which these individuals have previously worked.
Aptiv is an auto parts company that ranked 535th on Forbes’ Global 2000 list for 2021 and is a part of the S&P 500. Below, BoardEx data is used to uncover and understand the individuals on Aptiv’s board and their skillsets:
This data visualization, powered by the BoardEx Discovery product, reveals that Aptiv has many directors with more experience at the CEO level than some other skill sets, however the CEO roles come from different industries:
- Richard Clemmer was CEO of NXP Semiconductors and Agere Systems, manufacturers of semiconductors and integrated circuit components, respectively.
- Joseph Hooley held CEO roles within the financial services industry at State Street Corporation and Boston Financial Data Services.
- Rajiv Gupta was CEO of Rohm and Haas, a manufacturer of specialty chemicals.
Having backgrounds in varied industries allows these board members to bring their unique perspective to identifying opportunities and managing risk.
Delta, also a part of the S&P 500, has even more skillset diversity than Aptiv. A majority of Delta’s board members are, or have previously held a CEO position.
Again, while CEO experience is the most common skill set, the board members come from a variety of industries:
- Edward Bastian, the current CEO, previously served as CEO of Northwest Airlines before it was acquired by Delta.
- Other prominent CEOs on the board are David Taylor, CEO of Procter & Gamble, and Francis Blake, former CEO of Home Depot.
How to Develop a Leadership Team with Diverse Experience
Whether you’re hiring C-suite executives or nominating new members to a board, it’s critical to have access to a solution that lets you quickly identify talent with diverse backgrounds. BoardEx Discovery allows you to quickly access and understand the diverse experience of an organization’s board and where there might be gaps or risks.
1. Determine Key Competencies
Plan for the challenges your company is likely to face, then aim to nominate board members whose expertise offers unparalleled insight. Often, this may be a niche issue that requires collaborators with very specific knowledge, connections, or skill sets.
Delta operates in a highly regulated industry, so finding board members that can navigate the market and have connections to regulators is likely a priority when making board appointments.: Francis Blake worked in the U.S. Environmental Protection Agency, Michael Huerta worked at the U.S. Federal Aviation Administration, and Ashton Carter was the U.S. Secretary of Defense during the Obama administration.
2. Consider Demographics and Personal Attributes
Russell Reynolds Associates, the same organization that studied women directors at Fortune 250 companies, encourages a holistic approach to nominating new leadership.
In addition to noting a candidate’s functional experience, consider their demographic and personal attributes. When contributing to conversations and projects, individuals draw upon all three areas to inform their perspectives.
3. Identify Gaps
You might know where you want your company to go, but do you have the leaders on board who can take you there? Assess your existing leadership team to determine which types of functional experience or backgrounds you still need to round out your board or C-suite.
4. Decide on Networking Needs
One of the benefits of adding new leaders to your organization is that they bring along their professional networks. Before starting your search, determine how important it is for you to understand the size and quality of their network.
BoardEx’s proprietary relationship mapping algorithm can provide a clear picture of who a candidate is connected to through current and historical roles. It can also show you a person’s connections from their university experience or their involvement in non-profits.
5. Find Up and Coming Talent
The best nominee for your leadership team doesn’t necessarily need to come from an executive position. Sometimes, people in vice-director positions are ready to take on bigger challenges while bringing more diverse perspectives. As countries, regions and indexes roll out new laws requiring more women in leadership positions, searching for untapped talent from below the C-suite is more crucial than ever.
After talking to directors at over one hundred Fortune 250 companies, the team at Russell Reynolds Associates noted, “Our conversations suggest that there is a substantial pool of developing talent of women immediately below the C-suite level that can be tapped into if nominating committees are willing to look a little deeper.”
A 2020 study on corporate board practices in the Russell 3000 and S&P 500 further supports this practice. The report found that the percentage of S&P 500 directors serving as executives from below the C-suite at another for-profit corporation almost doubled over three years, from 4.7% in 2016 to 8.9% in 2019.
Measuring the Diverse Experience of Board and C-suite Teams
Diversity in leadership continues to be a priority for companies. Studies show that teams of executives or board members with diverse skill sets and perspectives are better at navigating challenges and more likely to increase a company’s value.
BoardEx Discovery provides a dashboard view of an organization’s board and leadership team. It allows you to determine the depth and breadth of experience across key functions within a company. It also scores organizations based on other diversity elements like age, gender, sector, and geography.
This visual presentation of skillset will highlight how an organization prioritizes experience and where there could be gaps or opportunities. To learn more about BoardEx and the new Discovery tool request a BoardEx demo today.
Explore the backgrounds of the leadership teams that were featured in this article.
- CFO Experience – Both Aptiv and Delta include several people on their board who have CFO experience. At Aptiv, Nancy Cooper was the CFO of CA Technologies and IMS Health, Lawrence Zimmerman was the CFO of Xerox, and Paul Meister was the CFO of Fisher Scientific International. At Delta, board member Sergio Lires Rial was the CFO of Cargill and Kathy Waller was the CFO of Coca-Cola.
- Technology Experience – Having technology experience seems to be a important for Aptiv’s board. Ana Pinczuk was the VP of Engineering at Cisco Systems, Nick Donofrio was the Senior VP of Technology at IBM, and Rick Clemmer’s time as the CEO of NXP Semiconductors doubles as technology experience. On Delta’s board, David DeWalt was CEO of McAfee Inc.
- Operations Experience – Both Aptiv and Delta value operations experience. On Aptiv’s board, Kevin Clark was once the COO at Aptiv and Joseph Hooley was previously COO at State Street Corporation. On Delta’s board, David Taylor worked in Operations at Procter & Gamble.
- Legal Experience – Francis Blake, one of the board members at Delta, previously held the role of general counsel at General Electric and the U.S. Environmental Protection Agency.
- Sales Experience – Ana Pinczuk, a member of Aptiv’s board, held senior sales roles at AT&T and Cisco Systems. David DeWalt, from Delta, held roles in sales at a number of companies including Oracle, Quest Software, and Segue Software.
- Marketing Experience – A member of Delta’s board, Kathy Waller, worked in marketing at McDonald’s. Fellow board member David Taylor gained marketing experience while at Procter & Gamble.
- HR Experience – Michael Huerta, from Delta, was the Chief of Staff for the U.S. Transportation Secretary Rodney E. Slater.
- Academic Experience – A public policy professor, Ashton Carter—a member of Delta’s board—currently serves as Director of the Belfer Center for Science & International Affairs at Harvard Kennedy School.
- Government Experience – Several Delta board members have experience in government organizations, including Ashton Carter in the U.S. Department of Defense, Francis Blake at the U.S. Environmental Protection Agency, and Michael Huerta at the U.S. Federal Aviation Administration.
- IPO Experience – Both Aptiv and Delta have board members with IPO experience. At Aptiv, Kevin Clark took Delphi Automotive (the former name of Aptiv) public in 2011. Richard Clemmer took NXP Semiconductors public in 2010. At Delta, David DeWalt took FireEye public in 2013, and George Mattson founded and took public NextGen Acquisition Corp in 2020.
- PE Experience – Aptiv board member Paul Meister is the founding partner at Liberty Lane Ventures, and Nancy Cooper was a partner at General Atlantic Partners.