An initiative from investors across the Midwest aims to increase the diversity of company boards throughout the region, and they're utilizing a technique born from the NFL to help companies find diverse candidates.
The Midwest Investors Diversity Initiative (MIDI), a group of institutional investors from Illinois, Michigan, Minnesota, Ohio and Wisconsin, looks to boost the number of women and people of color on the boards of companies based in the Midwest. The 11-member institutional investor coalition has more than $750 billion in assets, and its members include the Illinois State Treasurer’s Office and the Ohio Public Employees Retirement System.
The group was formed in 2016 and works with companies to help put in place measures to enhance their board’s diversity. It offers companies resources like a Diverse Search Company Toolkit, which outlines best practices for implementing a diverse search policy.
The MIDI is also asking companies to adopt the Rooney Rule, a process that began in the National Football League that asks that for every open board seat, female and minority candidates must be included in the initial search for candidates. The Rooney Rule, named after former Pittsburgh Steelers chairman Dan Rooney, requires NFL teams to interview at least one minority candidate for every head coaching vacancy.
The MIDI reported on its three-year progress Tuesday, noting that 24 Midwest companies in total have adopted the Rooney Rule to make their boards more diverse, and 10 companies have added 12 diverse directors.
In recent years there's been an increased focus on boardroom diversity in the Midwest and across the country. In July, it was reported that every member of the S&P 500 had at least one female director, the first time that feat has been accomplished. However, in the Russell 3000 index, a collection of the 3,000 largest U.S. companies, more than 300 businesses still have all-male boards, according to Bloomberg.
Some of the Midwest companies to add diverse board members in 2019 include Madison-based Exact Sciences and Detroit-based American Axle.
"We know that diversity is good for business. We also know that change is hard, especially inside our nation’s boardrooms,” Illinois State Treasurer Michael Frerichs said in a statement. "Many corporate leaders agree that diversity benefits their operations and board performance. Our focus is to help them navigate this change."
In Chicago, a similar initiative is taking place on the venture capital side. Chicago Blend, an organization founded in 2018, is collecting diversity data on Chicago's VC firms, and working on strategies to increase “DEI” (diversity, equity and inclusion) at local venture firms and the startups they back.
