DETROIT — General Motors Co. on Thursday added two new directors to its board, further diversifying the automaker's boardroom.
The addition of Meg Whitman, 64, former CEO of Hewlett Packard Enterprise, would give GM seven women on its now 13-member board. Mark Tatum, 51, NBA deputy commissioner and COO who has Asian and African-American heritage, also has been nominated. The board will stand for election at the company's annual shareholders meeting June 14.
"Our diverse Board of Directors is a competitive advantage for GM as we work to deliver a better, safer and more sustainable world," GM Chairman and CEO Mary Barra said in a statement.
Executives from the Detroit Three automakers and other major corporations in the city last year took a pledge to eliminate all forms of bias, racism, sexism and violence within their communities and companies.
For some, part of that process has meant working to diversify boards and executive leadership, which in research has shown to be fruitful for a business' bottom line. The Harvard Business Review, for example, says companies with above-average diversity levels have on average 9% higher pre-tax margins.
"There's a fairness issue right out of the starting gate that we shouldn't be excluding other members of the society," said Cindy Schipani, a professor of business at the University of Michigan and expert in corporate diversity and inclusion. "And then there's the betterment of decisions by just having more diverse opinions in the mix ... most business people can relate to the more data you have, the better decisions you can make."
GM notes in its 2019 sustainability report released last summer that 10 of the 11 board members identified as white and one identified as African American.
Ford Motor Co. recently confirmed that two of its board members, Edsel Ford II — a great-grandson of Henry Ford — and retired Eli Lilly CEO John Lechleiter, are stepping down. Alexandra Ford English and Henry Ford III — great-great-grandchildren of Henry Ford — were nominated to fill the seats before a May 13 shareholder vote.
According to Ford's 2020 sustainability report, the board of directors included three women, and two members of the 14-person board identified as part of a minority group. If the new board recruits are approved, Ford would have four women on its board and still two identifying as minority.
Executive Chairman Bill Ford said "the board expects to take steps to further strengthen and diversify its makeup, including in areas that are strategically critical in this important period of transformation and growth," according to a press release.
There are three women on Stellantis NV's 11-member board. Everyone is native to western Europe, Canada or the United States except for member Wan Ling Martello, who was born in the Philippines, according to the company's annual report.
"Studies tend to show that you need three for it to make a difference in terms of gender diversity, I assume it's the same for racial diversity," Schipani said. "Otherwise, one can be more like a token that no one listens to, [with] two it starts to get better, but by three ... then there's a real voice, and then difference can be made."
The push for corporate diversity at the executive and board level intensified last year following mass protests for racial equality following the death of George Floyd, an African American man who died after a Minneapolis police officer knelt on his neck during an arrest.
In September, California passed a law requiring California-headquartered public companies to have at least one board director who is part of an underrepresented community. The state also has a board gender diversity mandate.
Schipani is in the middle of researching how compliant companies have been with the gender mandate, and so far her research has found companies are following the rules.
"They're bringing in women with experience, they're ... lifting up women in their own companies," she said.
Board diversity is important for companies to have representation of their own workforce, the consumers that buy their products and their suppliers, partners and communities where they operate, said Cheryl Thompson, CEO at the Center for Automotive Diversity, Inclusion and Advancement.
The push for more corporate diversity hasn't only been made by society, Thompson said, but also by investors like Goldman Sachs, which refused to underwrite initial public offerings for companies if they don't have at least one diverse member on the board.
"The investors are working on this because they see the business case," Thompson said. "They're looking at the shifting demographics, and they're saying we're going to have this smaller and smaller talent pool if we're still focused on the majority white male."
The Detroit Three are working on diversity objectives "really hard" and they are "really trying to make a difference," Thompson said. "What's nice is this isn't something they see as competitive. It's like that: 'rising tide lifts all boats,' and they're willing to come in and share what they're doing to move the needle."
