Healthcare company governing bodies are falling behind on their own diversity, equity and inclusion goals and need to assess the effectiveness of board membership policies and recruitment strategies, according to report published Tuesday.
Executive search firm WittKieffer and the Health Management Academy conducted a survey of executives and board members from 25 health systems, representing more than 400 hospitals, to assess governance trends and progress on previously stated goals.
Although health systems are reviving strategic initiatives amid the COVID-19 pandemic with a focus on diversity, equity and inclusion, most are struggling to operationalize those plans, the survey found. Only 3% have appointed health equity experts to their top boards, for example.
Governing body membership remain predominantly white, male and over 50. Racial and ethnic minorities make up nearly 40 percent of the U.S. population but only 21% of board members at the companies surveyed. Women make up more than half of the population but hold just 27% of board seats.
These metrics are improving incrementally over time. From 2019 to 2021, the number of Black board members increased 7% and the number of women on boards increased 6%. Asian and Latino people occupy 1% and 3%, respectively, of board seats. People under 50 hold just 7% of the positions.
The report underlines a need for organizations to reconsider exclusive policies that limit board turnover and to broaden their recruiting efforts to reach candidates outside of existing peer networks.
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A key issue healthcare companies face in diversifying board leadership is low turnover on boards. Those rare opportunities create "pressure to find someone that meets many metrics of diversity," said Victoria Stelfox, an author of the report and manager of research and advisory at the Health Management Academy.
Most health systems surveyed have nearly 20 active board members, which is about twice as many as the average company on the Standard & Poor's 500 index, so expanding boards isn't the answer, Stelfox said. Instead, healthcare companies should look to modernize policies that serve as barriers to meeting DEI goals. These include rewriting bylaws to shed legacy policies, ex-officio commitments or age limits, she said.
"The report clearly demonstrated that the leading health systems recognize that the traditional ways with which board nominating processes work can in and of itself be the impediment for realizing diversity goals. While all of those ingredients have logic to them from a governance hygiene standpoint, boards have to be careful that those same processes aren't impeding their ability to bring diversity into the boardroom." said Paul Bohne, a managing partner at WittKieffer.
Rethinking operations to include virtual meetings and providing compensation to board members could attract candidates that otherwise would be unable to take on the responsibility. Building an internal pipeline that proportionately represents the community being served is a key factor, as well, Stelfox said.
Companies that perform the best track the makeups, expertise and backgrounds of their workforces using a competency matrix, then create well-defined goals when recruiting, Stelfox said.
Generally, boards are still figuring out how they can support their organizations' DEI goals, Bohne said. "There is very clearly an imperative for the demonstration and the sharing of actionable specific practices that boards are taking, so that boards can learn from other boards," he said.
