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Don’t Let Politics Color Board Members’ Thinking

When it comes to politics, U.S. corporate boards are, in some cases, as polarized as the general population, according to a Harvard Business Review survey of directors of public and private U.S.-based companies.

Corp Boards vs. General PopulationRepublicans, the survey revealed, are more highly represented on boards than among the general population, with the former shaking out as 50% Republican, 24% Democrat, and 26% Independent and the latter, as 28% Republican, 31% Democrat, and 39% Independent.

There are demographic disparities, as well. Of female board members queried, 39% characterized themselves as Republican and 38%, as Democrat. Of male board members surveyed, however, a whopping 59% classified themselves as Republican and just 19%, as Democrat. Twenty-two percent of female board members and 28% of male board members claimed to be affiliated with the Independent party.

male vs female 2Similarly, of survey participants aged 60 and younger, 51% said they belong to the Republican party, with 26% claiming to belong to the Democratic party, and 23% to the Independent party. Of board members older than 60, 49% claimed to be Republican; 22%, Democrat; and 29%, Independent. In terms of race, the number of Democratic party-affiliated directors in the African American/black and Asian/Pacific Islander groups (67% and 54%, respectively) appears far higher than the number of Republican Party-affiliated directors ( 7% and 15% , respectively).

Perhaps not surprisingly, the political composition of U.S. boards of directors also varies by type of company. For instance, the survey found, boards of companies in the energy/utilities segment comprise a disproportionate number of Republicans (59%), with far fewer Democrats (15%) and Independents (25%). So, too, do boards of companies in the industrial sector, whose boards of directors are, according to the survey, 62% Republican, 18% Democrat, and 18% Independent. This “spread” appears to be somewhat smaller for other segments. Notably, boards of directors of consumer discretionary companies were found to be 42% Republican, 32% Democrat, and 26% Independent.

No matter their age, “directors of all political stripes care a lot about the economy and cybersecurity,” the HBR said. “Republican and Democratic directors (are) aligned in their concerns about political instability and healthcare costs, even though they may have conflicting views” on these topics.

Sample Industries by Political AffiliationBut the research also ferreted out some “notable partisan differences.” Democrats were found to be less pessimistic about the U.S. economy than their Republican counterparts, with a respective 10% and 18% of board member survey participants in the two categories predicting that the global economy will become more sluggish in the next three years. Corporate tax rates (34%) are a major worry for more than one-third (34%) of Republican directors queried, with fewer Democrats (17%) considering it an area of concern.

Additionally, while survey participants agree that board leadership should also support and promulgate board diversity, individuals in the two major parties do not agree on the policies that should be used to increase it. Republicans advocate developing a pipeline of diverse candidates through director advocacy mentorship, but do not support disclosure requirements on steps taken to seat a diverse cadre of director candidates. Democrats surveyed strongly favor boardroom quotas for diversity.

In terms of how politics influences perceptions of board performance, the survey showed the audit/finance committee as being considered the most effective. However, Democratic players identified the compensation committee as companies’ least effective.

Board members also diverge on the skills they deemed to be most important for board service today. Industry knowledge, financial and audit expertise, and international expertise topped the charts for Republican survey participants; technology expertise and risk management, lead for Democratic survey participants.

CEOs have reason to be concerned about these and other disparities brought to light by the survey. “The ideological divisions we’re seeing in the political arena have permeated the boardroom,” HBR said. “Disparities in the importance of these issues could affect how directors prioritize and choose to address risks in the company.”

About Julie Ritzer Ross

Julie Ritzer Ross
Julie Ritzer Ross has been covering all facets of business in a variety of vertical markets, including manufacturing, for the past 35 years and the use of technology in business for the past 25 years. A two-time winner of a Jesse H. Neal Award for business-to-business journalism, her work has appeared in such publications as MICROSOFT EXECUTIVE CIRCLE, CONSUMER GOODS TECHNOLOGY (formerly CONSUMER GOODS MANUFACTURER), VERTICAL SYSTEMS RESELLER, RESELLER MANAGEMENT, RIS NEWS, and INTEGRATED SOLUTIONS.