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Is It Time To Check The Rooney Rule Off The List?
May 31, 2018
#3 In Trewstar’s Series: Let’s Change the Conversation
Enough about the Rooney Rule.
The Rooney Rule – in the boardroom context – is a distraction. Just ask Jeff Bezos.
The world’s most innovative company made headlines recently for a decidedly retro stance on board diversity. Amazon’s stable of ten white directors – 7 of them men – rejected a shareholder proposal to mandate including diverse candidates in its board selection process. After an overwhelming outcry from institutional investors and other constituents, the company reversed its position and reluctantly adopted the Rooney Rule.
Bezos isn’t the only corporate executive frustrated by an outsized focus on an ineffective tool. First, some background: Our clients follow the Trewstar Rule, which means they consider an all-female slate of candidates first, with a back-up plan to consider men if necessary. Using this approach, a client of ours recently selected five female candidates to interview from a list of thirteen women. A few weeks later, after interviews and reference checks, that all-male board is now considering adding two women, instead of just one. If you are an institutional investor, you really can’t ask for a better outcome. Yet, one of our country’s major state pension funds is still pressuring the company to add the Rooney Rule to its by-laws.
What better proof that the Rooney Rule has simply become a box-checking exercise.
The Rooney Rule does not mandate the addition of women to boards. It mandates consideration of at least one female candidate. We have written about this before, and the difference is enormous.
If board members are truly committed to finding a woman for an open seat, they should articulate the skills, knowledge and experience necessary, find the women who meet those specs and create a slate of candidates that is 100% female. Once boards realize this is truly effective, maybe they can make a suggestion to their institutional shareholders: check a box for the Trewstar Rule.
Beth Stewart
Founder and CEO
Trewstar Corporate Board Services
