Can Legislation Lead to Greater Board Diversity?

Board diversity in Chicago’s largest public companies has improved, but the gains are not even across each demographic. For instance, there are 103 women serving on boards, up from 74 five years ago, but only 72 minorities-defined as African Americans, Latinos and Asian Americans-are on those boards compared with 59 five years ago. Chicago’s percentages are similar to those across the nation, with female directors making up 24% of the board members on Chicago’s top 40, which is also the national average, according to recruitment firm Spencer Stuart. Minorities make up 16% of directors locally, slightly less than the national average of 17%. Overall, 37% of the directors at Chicago’s 40 largest companies are women or minorities, up from 29% five years ago. Although many companies in Chicago and beyond have prioritized board diversity, Illinois lawmakers are considering a bill to mandate that each public company in Illinois have at least one woman, one African American and one Hispanic on their board. Most of the area’s largest companies-familiar names like McDonald’s, Allstate, Northern Trust and Baxter International-for years have recruited women and minorities to their boards. If the bill passes in its current form, however, just 12 of Chicago’s 40 largest corporations will be in full compliance. Those that wouldn’t are among some of those with the strongest diversity records on their boards, including Allstate with five of its 10 directors being women or minorities. Most boards in Chicago have at least one woman and minority, but lack both an African American and Latino.

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