Many companies look to data as the go-to DEI strategy but fail to deliver change. Nasdaq's new board diversity rule, which went into effect in August, seems to be falling into the same trap, one CEO says.
Corporations listed on the U.S. stock exchange will now be required to disclose the ethnic and gender makeup of their boards. If the corporation does not have at least two diverse members on its board, it must submit an explanation as to why. While the Securities and Exchange did approve of Nasdaq's latest requirement, it does not plan to encourage diversity beyond the two-member rule — which means there is no guarantee that this will encourage diversity in corporate America.
"It's an effort to put a pillar of diversity, equity and inclusion into practice, but there's no structural or substantial change," says Jeffrey Bowman, co-founder and CEO of Reframe, a DEI management platform. "This rule is them admitting the boardroom has been a predominantly segregated place of work, which is disturbing in itself."
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Bowman notes that DEI was initially developed as a way to help America integrate a segregated workforce, its roots tracing back to the 1960s and the passing of legislation like the Equal Pay Act, Title VII of the Civil Rights Act and the Age Discrimination in Employment Act. For Bowman, Nasdaq's board diversity rule reflects a failure to integrate corporate America by 60 years.
As of 2020, only 27% of corporate boards have women serving on them and only 17% have minorities, according to ESG management company
Ultimately, revealing a company's ethnic and gender breakdown does not equate to a company including diverse leaders or changing biased attitudes within a workforce, explains Bowman.
"Being transparent doesn't necessarily mean that anything is going to change" says Bowman. "Everybody knows the numbers are bad, and it's been bad for decades. So what are you going to do about it?"
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Data does not tell all: it does not necessarily reveal the biased attitudes and behaviors that encourage a segregated board room, or how a work culture evolves with limited diversity over a span of decades. DEI is no longer just about achieving integration, but transformation.
"The experience of an employee was designed predominantly for the type of workplace that existed in the 1950s, which was predominantly white and predominantly male," says Bowman. "Structural change takes shifting attitudes and behaviors because that's when [DEI] becomes sustainable."
This would be a movement where education and communication would be key in the workplace. And if leaders are struggling to shift their mindsets to be more open and inclusive, then it may mean changes in management — something
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Still, Bowman does have hope that Nasdaq's board diversity rule will at least influence consumers' buying choices. "Millenials and Gen Z will hold these companies more accountable, and likely take action if the company doesn't achieve such a minimal ask."
Regardless, Bowman advises employers not to be satisfied with transparency and a minimal number of diverse hires. Anyone who claims to care about DEI should demand more from their company.
"Consider how adding a few diverse members will actually drive impact and change," says Bowman. "That oftentimes gets missed when you're publishing race and ethnic numbers in itself."
