Can NFL Approach Lead to More Diverse Boards?

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By Michael Greene

Oct. 2 — A National Football League rule requiring teams to interview minority candidates for top positions may be used to address the lack of diversity in American boardrooms, according to speakers at a Sept. 26 National Association of Corporate Directors conference.

Speaking at the NACD's diversity symposium, Jeremi Duru, an American University law professor and of counsel at Mehri & Skalet PLLC, said that the NFL's “Rooney Rule” has been largely effective and could be workable in other industries.

It has been widely reported that since the NFL implemented the “Rooney Rule” in 2003, it experienced an increase in diversity in its coaching staff.

Cyrus Mehri, a founding partner of Mehri & Skalet who also spoke at the symposium, told Bloomberg BNA after the event that companies may voluntarily adopt a similar approach to make their director recruitment more inclusive.

Lack of Results

The lack of diversity in U.S. boardrooms has been frequently criticized.

According to a February EY Center for Board Matters report, the proportion of women on boards has increased only 5 percentage points over the last 10 years. The report also noted that only 16 percent of S&P 1500 board seats are held by women—“less than the proportion of seats held by directors named John, Robert, James and William.”

“This is a very serious problem that has been going on for years and years without a solution,” Mehri told Bloomberg BNA. “The fact is 10 years from now we will have the same problem, with the same results, and American companies are going to suffer because diversity is not built into the DNA at the top” of organizations—where it needs to be.

Thinking Broadly

Unlike other methods for increasing board diversity that focus on who gets hired—such as binding gender quotas or resolutions that set voluntary and aspirational goals—the “Rooney Rule” places the emphasis on opening up the process so that more diverse candidates are considered.

In the NFL, the rule forced teams to think broadly about who they wanted to hire, which ultimately led to some success stories on the field, Duru said. He added that one of the legacies from the rule is that by “thinking more broadly, you will benefit.”

Diversity is at the core of being able to attract the best leadership, NFL Executive Vice President and Chief Human Resources Officer Robert E. Gulliver said during the NACD symposium. He also observed that diversity may come in many forms, including diversity of background and perspective.

Slow Down

In the past, experts have criticized boardroom nominating committees for placing too much emphasis on whether a director candidate has chief executive officer experience, which results in fewer minorities and women being considered.

Moreover, Pablo Schneider, chairman of Renaissance Dinners and an advisory board member at HITEC, said that opportunities for improving boardroom diversity often arise from finding the gaps in expertise.

Considering a wider field of candidates will slow down the recruitment process, which may produce better results, Mehri said during the symposium.

Gaining Traction?

It remains to be seen whether the NFL's approach will be accepted in boardrooms.

Robert L. Johnson, founder and chairman of RLJ Companies and founder of Black Entertainment Television, has urged companies to implement the Rooney Rule when considering job openings at the vice president level and above.

Companies such as Facebook Inc. and Xerox Corp. have decided to implement versions of the rule, when hiring certain employees.

Additionally, Securities and Exchange Commissioner Luis Aguilar has referenced the rule in several speeches as one way to move the dialogue from lip service to action with respect to improving diversity.

Mehri told Bloomberg BNA that the SEC or another government agency could make the Rooney Rule a corporate governance requirement. He suggested that transparency may be one way to implement the rule, such as directing companies to disclose the number of diverse candidates they interviewed for their boards.

“There are different ways you can hold people accountable,” Mehri said. “It doesn’t always have to be done in a way in which you hit them with a hammer and give them a fine. It can be just by requiring information.” 

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