Achieving Better Representation

With more than three decades of experience conducting executive and board member searches, Jim Gauss, chair of board services for executive search firm Witt/Kieffer, has developed a keen eye for talent. Gauss has been widely recognized for his work on diversity and disparities issues and recently completed a six-year board term with the American Hospital Association’s Institute for Diversity.

Gauss recently spoke with Diversity Executive. Below are excerpts from the interview.

You’re known to say that when looking to create diverse boards, recruiting outside of community is important. How are you defining “community?”

This is largely dependent upon the constituencies an organization serves, of course. A small hospital may have a service radius of only 20 or 30 miles, while a large bank, manufacturer or tech company may represent a nationwide or global community of employees, consumers and other stakeholders. So I would define community as the people and geographic sphere that an organization directly serves. This is important when considering out of community membership for boards; the point is that boards need to get trustees who bring objectivity, fresh ideas and viewpoints from beyond their traditional sphere of activity. You might say going out of community is a way for boards — even those of multinational organizations — to go outside their traditional comfort zone.

What is your current assessment of how “community diverse” most major boards are?

Let’s start with board diversity in general first. Most boards have made good, not great, strides in terms of overall diversity — for example, gender diversity has improved, but ethnic diversity on most boards is still sorely lacking. They’re just beginning to consider other aspects of diversity such as sexual orientation, age, religion and so forth. So most boards have a goal of being reflective of the communities they serve, yet still have a ways to go in this regard. This is true in health care, in which I work most often, but also in most every industry.

The irony is that, in order for boards to look more like their communities, they are finding that they need to look further afield, outside their communities, for qualified individuals. This just gives them a much larger pool of potential candidates. Oftentimes they’re seeking board candidates who might provide layers of diversity — a young woman from an ethnic minority, for example. The pool of qualified “diverse” candidates ready to step into a high-profile board position is small; meanwhile, qualified diverse candidates have more opportunities than they have time to devote.

What kind of contributions might you get from a board that is diverse from a community standpoint compared with a board made up of members of a similar community?

First, board members who come from outside the community will, at least in the early stages of their tenure, bring fresh ideas, objectivity, and none of the community and political biases inherent in local members. Once a few out-of-community members are in place, the board will have a better balance and greater diversity of perspectives.

Another contribution is in regard to competencies, and the overall skill set that a board has. Boards these days in almost all industries need a more sophisticated, multitalented mix, and oftentimes this means looking outside their community. A board for a Midwestern organization might want to look, for example, to Silicon Valley for an expert in information technology or Wall Street for someone with financial expertise. That’s a simplistic example, but it’s happening in the real world. Walmart added Marissa Mayer (then of Google, now CEO of Yahoo) to its board two years ago — you could say that’s a case of Walmart going outside its traditional community, looking to diversify and strengthen its board.

How does the value of having community diverse boards vary by industry?

Again, it’s important that boards reflect their constituencies — not just for ethical reasons but for practical, strategic reasons. There has been more buzz about out-of-community members among nonprofits because these organizations are so closely tied to their missions to serve people and communities. However, from a pure business standpoint, corporate and for-profit boards need to be community diverse as well. Whatever the industry, boards will be more effective if they reflect, and represent, constituents and consumers.

Age is another area that has proven to be important when it comes to board diversity. Why is that?

It goes back to skill sets and balance. Marissa Mayer, who’s still under 40, understands the new digital age and provides a perspective that, quite frankly, some of the older members on the Walmart board simply cannot provide. Walmart’s fears are similar to those of any board — being out of touch with massive forces shaping businesses and society. In health care I work with a lot of boards who know their organizations are adopting electronic medical records and undertaking major IT initiatives, but few board members understand the IT space well. The board can often overcome this by looking to younger members who tend to be more technologically savvy. Boards need to get used to the idea that it’s OK to have younger people in their midst.

Are there real-life examples of the benefits of having an age-diverse board?

It is hard to quantify, but I think there is plenty of anecdotal evidence — of people saying, thank goodness we recruited some younger members. I recently had the opportunity to help the University of Arizona Health Network reconstitute its board — UAHN was formed by the merger of different organizations, so it wasn’t feasible to combine boards into one. This was a rare opportunity to rethink the very fundamental objectives and purpose of the board, and to reconstruct it in line with the organization’s strategic goals. Age diversity was one element of many that were considered in selecting members, and the consensus is that the new board has been very high-functioning. I think it’s safe to say that in today’s rapidly shifting industries, young people are contributing more and more to leadership and strategic decision-making.

Eric Short is an editorial intern at Diversity Executive magazine. He can be reached at editor@diversity-executive.com.