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Diversity Boston

Wider horizons

Companies work to make boards more inclusive

By Ann Carrns, Globe Correspondent, and Katie Johnston Chase, Globe Staff
June 27, 2010

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When it comes to boards of directors, diversity is no accident.

If there is an opening on the board at American Tower Corp., for instance, chief executive James D. Taiclet Jr. said the wireless infrastructure company uses multiple avenues to find five or six qualified directors, including at least one woman or minority. If the initial search doesn’t produce such a candidate, the team “goes back to the well.’’

The strategy has paid off: By broadening its search, American Tower has been able to build a nine-member board that includes three women, an African-American man, and a Hispanic man.

“If you want the very best candidates, you need the broadest pool of available talent,’’ Taiclet said.

Diversity like that at American Tower Corp. continues to be the exception rather than the rule in boardrooms in Massachusetts and across the country, according to a report last year commissioned by big pension fund Calpers. In the report, which was based on 2006 data, only 17 boards of Fortune 100 companies were considered to have high diversity levels, defined as at least 40 percent of seats held by women or minorities, or representation from four minority groups — women, Asian- and African-Americans, and Hispanics.

The report also showed that women make up just over half of the US population, but hold only 17 percent of board seats at Fortune 100 companies; blacks, representing 14 percent of the population, hold 10 percent of such seats; Hispanics, at 15 percent of the population, hold 4 percent of seats; and Asian-Americans, at 5 percent of the population, hold 2 percent.

And some progress made seems to be fleeting. A report published last summer by the Executive Leadership Council, an advocacy group for African-American business leaders, found that African-American representation on big companies’ boards actually dropped: In 2008, blacks held 7.4 percent of board seats at Fortune 500 companies, down from 8.1 percent in 2004, when the group began tracking such data.

Meanwhile, the story of women on corporate boards in Massachusetts is one of stagnation, according to an analysis of the state’s largest 100 public companies. The research, sponsored by The Boston Club, which helps groom and refer female executives for board seats, found that women held roughly 11 percent of board seats in 2009 — about the same percentage as in the prior two years. More than a third of the companies had no women at all on their boards.

“We have seen of late a slowing down of the progress that we had seen,’’ said JoAnn Cavallaro, chair of The Boston Club’s corporate board committee. Cavallaro said the recent recession may have had an impact, since companies may revert to more traditional practices in uncertain times.

Still, the report cited nine Bay State companies that had three women on their boards, a “critical mass’’ at which research suggests that women are no longer seen as “token’’ representatives.

The companies, which include Akamai Technologies Inc. and Avid Technology Inc., say one benefit of a diverse board is that it helps ensure a rigorous discussion of business strategy from differing viewpoints.

“I learned from running a global business that when everyone is exactly the same — whether its race, gender, nationality, or sexual orientation — you create a fraternity-like organization where conformity and fitting in become the norm,’’ said C. Kim Goodwin, an Akamai director. “For corporations, that’s death.’’

Indeed, many companies with diverse boards say they start by identifying the specific expertise needed when a vacancy occurs — such as financial acumen, technology savvy, or, increasingly, global experience — and then layer in diversity as a component.

Massachusetts Mutual Life Insurance Co., the life insurance and financial services company based in Springfield, uses this strategy. The company stepped up its focus on diversity for its board and within the company in 2006, in response to the increasing racial and ethnic diversity of its policyholders. The company’s 13-member board now includes three women and one African-American man.

“Diversity is a critical component of the company’s long-term strategy,’’ said Christine Peaslee, the company’s vice president and corporate secretary, adding that, “We could always do better.’’

At Sonesta International Hotels Corp., diversity has also become a part of its mission. Fifteen years ago, the board of Sonesta was made up entirely of white males. Today, four women and two African-American men sit on the 10-member board of the Boston-based company, which operates 33 hotels, resorts, and cruise ships around the world.

The move to diversify the board started with Stephanie Sonnabend, who felt strongly that the company should have a woman on the board and networked specifically to find the first female director in 1995. Sonnabend, the granddaughter of company founder A.M. Sonnabend, became the second female board member a year later when she became president.

Having women directors is especially significant in the hospitality industry, Sonnabend said, not only because they “tend to look at decisions quite broadly’’ but because women are often the ones planning family vacations.

Sonnabend said the board’s first African-American director was the hotel company’s banker for years — a natural fit for the board after he retired. She said as Sonesta grows more aggressively after recently launching a franchise program in the United States, the board members’ variety of viewpoints will become even more valuable.

“‘I like the opportunity to engage with people who think differently than I do,’’ said Sonnabend, whose uncle, sister, and cousin also serve on the board. ”That’s really what boards are for, really thinking about things differently as opposed to having a board of yes men.”

Pamela Scott, one of three women and the sole African-American on the board of Danvers Bancorp, parent of Danversbank, said she agrees that companies have to make diversity a strategic mission: “It has to be a conscious decision to say, ‘We will look at a diverse pool of candidates.’ ’’

(Emiliano Ponzi for The Boston Globe)