37. Todd Sears on Out Leadership and its Impact on LGBTQ+ Equality

March 16, 2022

Todd Sears is the founder and CEO of Out Leadership, the first company in history whose sole product is LGBTQ+ equality. Todd has spent over 20 years working at the intersection of finance and equality. He began his career as an investment banker before joining Merrill Lynch as a financial advisor. There, he brought almost $2 billion of new assets to the firm from LGBTQ+ couples and nonprofit organizations. In this episode we talk about Out Leadership, its role as a B Corp, merging business opportunity with diversity and the impact of Out Leadership on LGBTQ+ Equality.

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Links

Todd Sears Bio

Out Leadership Website

Visibility Counts – Corporate Guidelines for LGBT + Self-ID

Visibility Counts – The LGBTQ+ Board Leadership Opportunity

OutQOURUM 2022

Quotes

Founding of Out Leadership

“I ultimately ran diversity strategy for Merrill Lynch and then I was head of diversity of Credit Suisse, and then in 2010 I actually was laid off and was sitting on my sofa with the severance check and multiple martinis.

As I found out, all good ideas come from a martini or two. I thought back to the opportunity that I had at Merrill Lynch to, by virtue of creating a business initiative in a very old-school command and control Irish Catholic investment bank like Merrill to support LGBTQ+ equality from a business perspective, and I thought, “Well, could I do the same thing, but with more companies, not just one?”

So, I looked at Davos World Economic Forum and I thought, “If I could I create that conversation in the LGBTQ+ community?” Because 12 years ago, you did not see businesses speaking up on equality. CEOs were not using their platform and their voice and I wanted to create that, so I used my severance check, started our first summit in March 2011 hosted by the CEO of Deutsche Bank and we had bank of America, Barclays, Citi, Deutsche Goldman Sachs and Morgan Stanley and then grew from there.”

Work with Equilar with OutQOURUM

“A key piece of the conversation is having the opportunity for LGBTQ leaders to self-identify, and Out Leadership almost five years ago wrote the first research on self-ID globally in partnership with Ropes & Gray. We found that companies asked their LGBTQ employees to self-identify in 38 countries globally, but at the same point at the board level, it is still completely absent.

David has used that data, the research, and actually the policies that we’ve written to try to identify more LGBTQ board members in the Equilar database, so that we can start to expand that pool of diversity.”

LGBTQ and the definition of Diversity

“I’m interested right now in particular, AB 979, the California law requiring board diversity. We were a part of, from the drafting perspective, believe it or not, when it was first introduced, the definition of diversity did not include Asian or LGBTQ, and so Ascent Pinnacle and Out Leadership and Quorum worked to have both of those diverse categories added.

But interestingly now, AB 979 is under attack. The State of California is being sued and our leadership is one of the expert witnesses that is testifying to try to protect a law increasing diversity, which is just baffling to me. Every piece of research shown that that shows LGBT and broader diversity bring innovation, de-risk all of the reasons you want diversity on the board, so to be anti-business and sue against the law that seeks to create that, just blows my mind.”

“The United States Congress had three different bills focused on diversity in 2021. Not one of them, when it was introduced into the committee, included LGBTQ and we had to advocate and we were able to get LGBTQ added to all three of them, including a board diversity one and ultimately I testified to Maxine Waters’ House Financial Services Committee in November about all of these exclusions and why it matters for LGBTQ people to be included at all these levels of diversity.”

On B Corp and Out Leadership

“Why that matters in my opinion is if I was going to sit with CEOs, and we’ve worked with over 800 now over the last 12 years, if I was going to sit with a CEO and say that LGBT equality is a business issue, I need to be a business too. It’s very different to have the nonprofit warm fuzzies, as we said earlier, conversation. If I’m a business, I pay taxes just like they do. I have to grow just like they do. We reinvest our profits. That’s, to me, an important story.”

“the most important piece of the B Corp rating is what are you actually doing, and that’s something I think it’s really important  and I think it’s why so many more companies are looking at the B Corp status. There are a number of companies that are looking to convert to B Corp not just the Ben & Jerry’s and Patagonia are B Corp, but there are significant numbers of corporations that are considering it now.”

Out Leadership, Tools and Research

“One of the tools that Out Leadership built almost six years ago was our corporate guidelines for board diversity, and we include in the back of that, an actual matrix that is inclusive of all the elements of diversity that we recommend, both acquired and inherent diversity, skills, background, national origin, all of the pieces, and I encourage private companies to think about that and to use that as they’re thinking about diversification of their boards.”

“Our Quorum initiative last year launched our first ever Quorum Summit. Out Leadership has summits annually in New York, London, Hong Kong Paris and Sydney, but with our talent issues, we built a summit as well and last year’s summit, we launched the first ever LGBTQ board research called Visibility Counts. This year on March 22nd, we’ll be launching the second annual Visibility Counts piece of research.

There are a couple of key pieces that the most important last year and I think this year is that we did map last year of the Fortune 500 on their board diversity policies. That was the first time that it had ever been done in history, by the way, and not just LGBTQ, we mapped across race, gender, ethnicity, orientation, veteran status, disability status, et cetera.

This year’s report, we are mapping the Fortune 1000 and the entire NASDAQ so all 5,300 listed companies on the NASDAQ. Now, I will point out that the NASDAQ doesn’t even have that data themselves. We went to them first and asked if they had it and they don’t. We did it for them and the Fortune 1000 as well.

I can give you a quick little preview. Only about 2.4% of NASDAQ companies include LGBTQ and the definition of diversity and only about 15% even include gender, so they’ve got an awful lot of work to do, which I think is why Dina wanted to make this an effort and they’ve put it over time. It’s not just a point in time. They have, I think, a four-year lead in, but they’ve got a long way to go, which I think is going to be surprising when we release the full report.”

Transcript:

Joe: [00:00:00] Hello, and welcome to On Boards, a deep dive at what drives business success. I’m Joe Ayoub and I’m here with my co-host Raza Shaikh. On Boards is about boards of directors and advisors and all aspects of governance. Twice a month this is the place to learn about one of the most critically-important aspects of any company or organization; its board of directors or advisors, as well as the important issues that are facing boards, company, leadership and stakeholders.
Raza: Joe and I speak with a wide range of guests and talk about what makes a board successful or unsuccessful, what it takes to be an effective board member, what challenges boards are facing and how they’re assessing those challenges and how to make your board one of the most valuable assets of your organization.
Joe: Our guest today is Todd Sears. Todd is the founder and CEO of Out Leadership, the first [00:01:00] company in history whose sole product is LGBTQ+ equality. Out Leadership connects leaders across the world’s most influential industries to foster business growth, cultivate talent, and drive equality forward and currently counts 96 of the world’s most powerful companies in the world as its members.
Raza: Todd has spent over 20 years working at the intersection of finance and equality. He began his career as an investment banker before joining Merrill Lynch as an advisor. There he created the first team of financial advisors on Wall Street focused on LGBTQ+ community and brought almost $2 billion of new assets to the firm from LGBTQ+ couples and nonprofit organizations.
Joe: Todd serves on various nonprofit boards, including the Williams Institute of UCLA, The Palette [00:02:00] Fund, the Global Equality Fund of the US Department of State, Lambda Legal Defense and Education Fund and the North Carolina Community Foundation. Welcome, Todd. It’s great to have you today as our guest on On Boards.
Todd: Thanks for having me. It’s great to be here.
Raza: Todd, let’s start by introducing your organization, Out Leadership, if you could.
Todd: Sure. Well, as you mentioned in the intro, I started my career in investment banking, private banking. I ultimately ran diversity strategy for Merrill Lynch and then I was head of diversity of Credit Suisse, and then in 2010 I actually was laid off and was sitting on my sofa with the severance check and multiple martinis.
As I found out, all good ideas come from a martini or two. I thought back to the opportunity that I had at Merrill Lynch to, by virtue of creating a business initiative in a very old-school command and control Irish Catholic investment bank like Merrill to support LGBTQ+ equality from a [00:03:00] business perspective, and I thought, “Well, could I do the same thing, but with more companies, not just one?”
So, I looked at Davos World Economic Forum and I thought, “If I could I create that conversation in the LGBTQ+ community?” Because 12 years ago, you did not see businesses speaking up on equality. CEOs were not using their platform and their voice and I wanted to create that, so I used my severance check, started our first summit in March 2011 hosted by the CEO of Deutsche Bank and we had bank of America, Barclays, Citi, Deutsche Goldman Sachs and Morgan Stanley and then grew from there.
Raza: But going back to your Merrill Lynch work, it wasn’t just the warm and fuzzy part, you really tied it to a business opportunity to make it successful, so talk a little bit about that.
Todd: Sure. Well, for those in the audience who understand how private banking works, they give you a phone, a desk, a computer and they say at that time, “Bring in a million dollars a month of new assets, and if after eight months you didn’t have $8 [00:04:00] million under management you’re fired.”
Joe: Whoa.
Todd: It was a little bit of a high-pressure situation, and I think the fail rate at that time was 91%, so it was definitely a bit of a challenge, and at that time from a gay and lesbian couple perspective, there were over 1,049 rights, the gay and lesbian couples did not receive at the federal level because marriage equality was not a reality in the United States.
About 90% or 85% of those rights were financially based; titling, assets, estate, taxation, and so I basically said, “Well, why isn’t anyone speaking to this community?” Because at that time not a single Wall Street bank had ever marketed to or serve the gay community, and so I put together a business plan for how I could build a team to do just that and I thought it really connected the dots between civil rights and opportunity from business perspectives.
I positioned it that way, and the first 12 months we brought in a $100 million so it worked, but what was important to me was that I tracked it, as you mentioned, it was not a warm, fuzzy to me personally, it mattered.[00:05:00]
I did not go to them from a warm, fuzzy perspective. I went to them to say, “This is a bottom line business opportunity”. I’ve often said over the years that companies and businesses will only do and should only do truthfully what is in their bottom line, sustainable best interest on an ongoing basis.
If it’s just a warm, fuzzy or a nice to do, then those go away when markets go down and budgets get cut, so I have always tried to tie my efforts and the work that I do from an equality perspective to that bottom line, and that’s why I think it’s been very successful.
Raza: Todd, well said, and it also sounds like because of those experiences, what you’re doing at Out Leadership is kind of like the latest iteration that you’ve been doing for quite a while. Tell us about other things that you’ve done at that intersection of finance and equality.
Todd: Well, just even pre-Out Leadership, so the Merrill Lynch piece four years in, Merrill who had never sponsored a gay organization prior to us starting this initiative had won awards, was spending millions of dollars to support equality, and we had done all [00:06:00] kinds of strategies with organizations like Lambda Legal to do domestic partner planning all over the country.
We launched the first charitable gift annuity programs in the gay community which helped the gay and lesbian couples have a charitable engagement through their estate and ultimately that I think was probably the next iteration truthfully from just the individual financial planning, and then from a Credit Suisse perspective, I actually expanded not just from an LGBTQ perspective, but from across the diverse spectrum, so I expanded their diversity efforts to include veterans and launched what was the first veteran’s network on Wall Street, which is now called VOWS and has over 400,000 members now.
That opportunity and that idea was not popular at the time. I got a lot of pushback as I have on lots of different topics around diversity for 20 years. There are lots of opportunities to continue to grow the conversation.
Joe: We recently had David Chun as you know, the CEO and founder of Equilar on our show, a fantastic guest and fantastic database, and I know that you work [00:07:00] with David in terms of how your databases are somehow coordinated, not exactly merged. Can you really talk about that?
Todd: Sure. As Out Leadership grew, so I started what was called Out on the Street originally just focused on Wall Street then Out in Law, and then we merged everything under the sort of Out Leadership umbrella so that’s the sort of the business framework.
With the talent framework of our organization, we have three initiatives. One is called OutNEXT, which is for emerging LGBTQ talent. It’s the first and only program of its kind in the world and we have about 6,000 young leaders who have gone through those development programs globally. We have one called OutWOMEN, which similarly connects and convenes and develops LGBTQ women. And the last one, which ties to your question, is called OutQUORUM, and that is the first ever LGBTQ corporate board initiative that I launched almost eight years ago, and there are lots of things we can talk about from a Quorum perspective. We do a lot of advocacy. We convene, we develop these talents of leaders. There’s a huge policy piece of it.
[00:08:00] We’ve worked with Equilar and David on several different fronts. One, you mentioned the database. Equilar has a tremendous board database and a truly, I think, first-class, world-class board search tool that they have developed that companies and leaders can use to access their talent. But what David’s also done is use that database to ideally surface more diversity in the director pools that companies are trying to pull from which despite the talk about board diversity that so many companies are espousing, the actions are woefully lacking, and so it takes organizations like David’s and mine and the Diverse Directors Coalition, which includes black corporate directors, women corporate directors, Latino corporate directors, et cetera, to continue to sort of pull and push these levers.
We’ve worked with David, not just on the folks in the database, but also around self-identification because for LGBTQ people to actually count, we have to be asked, and so from a board perspective, when I started Quorum as one example, there were only two [00:09:00] companies in the entire Fortune 500 that include LGBTQ and the definition of board diversity, only two, and by our very unscientific count, because disclosure is not a thing, there were only 27 Out board members in the entire Fortune 500, which is about 1.2%.
Joe: Wow.
Todd: So, you’re talking about really big challenges in terms of disclosure, reporting and having people have the opportunity to self-identify, and so David has been very helpful with us.
A key piece of the conversation is having the opportunity for LGBTQ leaders to self-identify, and Out Leadership almost five years ago wrote the first research on self-ID globally in partnership with Ropes & Gray. We found that companies asked their LGBTQ employees to self-identify in 38 countries globally, but at the same point at the board level, it is still completely absent.
David has used that data, the research, and actually the policies that we’ve written to try to identify more [00:10:00] LGBTQ board members in the Equilar database, so that we can start to expand that pool of diversity.
Joe: First, I’m so glad you pointed out that one of the things about this amazing database that Equilar has is that people can go in and manage their own profiles, and I think the work you’re doing and the work others have done to put in the ethnic, sexual identification, the other aspects that you can’t do unless someone goes in and does it has changed how people use that kind of database completely.
The initiative at NASDAQ to diversify boards that are listed is made really feasible because of a database like Equilar which partners with NASDAQ on this. So, let’s do this, let’s talk a little bit more about Quorum, which is one that you’ve talked about in terms of your board initiative. Tell us about that.
Todd: As I mentioned, it is the first LGBTQ, actually is still the only LGBTQ board initiative in the world. It is a global [00:11:00] program. We started in the United States. We’ve expanded it into Europe as well as into Australia, and that the framework is quite simple. There are three key pillars. The first is from a policy perspective. We want companies to include LGBTQ leaders in their definitions of board diversity. To that end, our Quorum research that we launched last year, that I’m sure you can link to in some way, maps for the first time ever the board diversity policies of the entire Fortune 500.
Of course, what we found was, as I mentioned earlier, there were only two seven years ago. Now there are 27, significant opportunity for increase in that number. It’s pretty pathetic in my opinion and if people say that LGBTQ people matter but do not have them at the most important area of a company, as you mentioned in your intro, is I think a huge missed opportunity, so we work with companies on those policies.
But we are also trying to create demand in the marketplace so we were able to convince New York City, New York State, [00:12:00] CalPERS, and CalSTRS as well as a few other pension funds, including Yale and others, to add LGBTQ to the definition of diversity they require for their investment mandates, and the idea that these mandates are LGBTQ inclusive creates that demand in the marketplace. If we can now then finally focus on the supply, we have about 1,600 leaders in our Quorum database who have gone through our board readiness fit training with KPMG and Goldman Sachs as well as with Egon Zehnder, and I’m hopeful that now that we finally are getting the policy pieces, the demand is increasing, we can finally start to see some LGBTQ board placements.
We have had a couple of good wins in the last year. Beth Brooke was placed on the New York Times board by Egon Zehnder, which was a pretty nice sort of full circle piece as she has served on Out Leadership’s board, but we also worked with the NASDAQ. They actually use our data in their SEC filing. We work with them on the filing itself. Think our data was quoted seven times in their filing and LGBTQ is part of the [00:13:00] definition of board diversity that NASDAQ now requires.
There are a lot of sort of advocacy pieces. I’m interested right now in particular, AB 979, the California law requiring board diversity. We were a part of, from the drafting perspective, believe it or not, when it was first introduced, the definition of diversity did not include Asian or LGBTQ, and so Ascent Pinnacle and Out Leadership and Quorum worked to have both of those diverse categories added.
But interestingly now, AB 979 is under attack. The State of California is being sued and our leadership is one of the expert witnesses that is testifying to try to protect a law increasing diversity, which is just baffling to me. Every piece of research shown that that shows LGBT and broader diversity bring innovation, de-risk all of the reasons you want diversity on the board, so to be anti-business and sue against the law that seeks to create that, just blows my mind.
Joe: Yeah, a couple of things, first of all, I think that the initiative [00:14:00] to include LGBTQ in the definition of diversity is phenomenal because that’s kind of where the rubber hits the road, so to speak. And I have to say, we did talk about this before the fact that the bill in California didn’t include LGBTQ or Asian is mind-boggling it.
I have to say, it reminds me, we are in 2022. To not include those two groups in a California initiative does seem surprising. The lawsuit not so surprising given who we are and where we are, but maybe that presents an opportunity for you and Out Leadership to really even provide more advocacy. Is that the case at all?
Todd: Well, I hope so. As I mentioned, we’ve been asked to be an expert witness in the testimony for the justice department so we are absolutely doing that. We actually, from an advocacy perspective, it wasn’t [00:15:00] just California that didn’t include LGBTQ folks. The United States Congress had three different bills focused on diversity in 2021. Not one of them, when it was introduced into the committee, included LGBTQ and we had to advocate and we were able to get LGBTQ added to all three of them, including a board diversity one and ultimately I testified to Maxine Waters’ House Financial Services Committee in November about all of these exclusions and why it matters for LGBTQ people to be included at all these levels of diversity.
There is significant opportunity for us to continue to push, and it’s not just in the US, by the way. The FCA, which is the regulatory body for the United Kingdom, had a board diversity consultation paper that they issued in August. Guess what wasn’t included?
Joe: Yeah.
Todd: LGBTQ. Australia, we are pushing and working in partnership with the Australian Institute of Corporate Directors, which is actually the largest corporate director initiative in the world, and they have been working with us for almost four years now to have [00:16:00] LGBTQ added into the ASX and some of the different initiatives there.
It is a global conversation but I will say that the challenges are significant, especially not just in the board level, but when you think about the States, there were 131 anti-LGBTQ bills right now in the United States. Florida yesterday just passed the Don’t Say Gay bill. I mean, we’ve got an awful lot of hatred. Texas is making parents of trans kids considered child abusers, and there’s an awful lot that’s happening in the background around all of these things. It’s not just the policy but, there’s an awful lot of anti-LGBT animosity that continues to grow and push back on these important efforts.
Raza: David, on the positive side though, I think the strategy of tying diversity to business opportunity is great and very effective. I know about a venture group called Gaingels, and I know you are also not only familiar with them, but you’ve been a part of helping start that organization. Tell us a [00:17:00] little bit about Gaingels.
Todd: Sure. Just to clarify, I didn’t help start them, but I was one of the folks that David asked for advice as he was starting. From a diversity bottom line business perspective, as you mentioned, there had been innumerable case studies and initiatives that have clearly directly tied diversity success to bottom line impact, stock prices, you name it, and so the Gaingels initiative when David started it was actually focused on investing in LGBTQ-owned businesses or LGBTQ founders.
As it has evolved, he has expanded that mission, and I think in a very deft way actually, he really reframed it to investment platforms being diversified by LGBTQ investors.
What he does with the Gaingels’ network is it works with some of the biggest PE and venture funds in the world and has the opportunity to add an element of diversity investment into their capital and so it’s a much broader strategy than just focusing on LGBTQ-owned [00:18:00] businesses.
I think what’s so smart about it is that it mainlines, it makes these major multi-billion dollar investments and these PE companies and the venture funds have this element of diversity and he ties, by the way, that investment to those companies being LGBTQ friendly, having the right policies, having a diversity strategy, having diversity on their boards as a condition of that investment,
Raza: Do folks have to be a part of the LGBTQ+ community to be able to invest with Gaingels?
Todd: They do not, there are an awful lot of allies who do as well. It’s very much a mission-aligned investment opportunity, in my opinion. It’s for LGBTQ people and people who think that diversity and inclusion matters.
Raza: I learned that so far they’ve actually deployed upwards of $500 million of capital into companies so I think this again is a great example where if you tie diversity with opportunity [00:19:00] it can work tremendous magic.
Todd: I agree. I applaud them for their efforts. They are a member of out leadership as an organization, which is wonderful, and we’ve also been working with some of their CEOs as well that they have invested in to try to bring that sort of full circle so that we can actually help the leaders who now have this investment capital with doing good and doing well at the same time for their companies and their shareholders.
Raza: That is a perfect coalition that you built.
Todd: Thank you.
Joe: My understanding is that Out Leadership is a B Corp. I think a lot of our listeners probably know what it means, but it would be helpful if you could kind of tell us since you actually are a B Corp and we can talk a little bit about that.
Todd: Sure. So, a B Corp is quite simply for-profit for impact so it means that Out Leadership reinvest our profits into our mission. We are not a non-profit C3 organization and that is by design. Twelve years ago, when I started Out Leadership, we were actually the first LGBTQ B Corp and we are still the only LGBT global B Corp.[00:20:00]
Why that matters in my opinion is if I was going to sit with CEOs, and we’ve worked with over 800 now over the last 12 years, if I was going to sit with a CEO and say that LGBT equality is a business issue, I need to be a business too. It’s very different to have the nonprofit warm fuzzies, as we said earlier, conversation. If I’m a business, I pay taxes just like they do. I have to grow just like they do. We reinvest our profits. That’s, to me, an important story.
I would also add that since our founding, Out Leadership donates 20% of our net profits that we don’t reinvest to LGBTQ nonprofits as well.
We are a B Corp. We reinvest our profits in our mission, and then we spend significant tens of thousands of dollars donating to LGBT nonprofits that we think are doing amazing work.
Joe: You put your money where your mouth is, so to speak. The other thing about the B Corp is that it’s a pretty list of things that you have to comply with in order to maintain your B Corp status. Can you just talk a little bit about that because I think that’s a very important aspect.
Todd: I agree and [00:21:00] I’m glad you brought it up. It’s a pretty in-depth, as you mentioned, process. It’s every two years, but every year there’s an interstitial survey you’d have to fill out, but it takes my team about six weeks to go through all of the questions. We have to provide supporting information, documentation. We have to prove all of our policies, not just the policies, we have to prove impact, which is something I am very proud of because we’ve actually been ranked in the top 10% of B Corps every year since our founding because of the impact that we make.
And I differentiate that between nonprofits. There’s Charity Navigator out there for nonprofits, but that’s much more focused on how they spend their money, not about what they actually achieve, and the most important piece of the B Corp rating is what are you actually doing, and that’s something I think it’s really important and I think it’s why so many more companies are looking at the B Corp status. There are a number of companies that are looking to convert to B Corp not just the Ben & Jerry’s and Patagonia are B Corp, but there are significant numbers of corporations that are considering it now.
Joe: Yeah, I’m not sure everyone realizes that [00:22:00] Ben & Jerry’s and Patagonia are B Corp so I’m glad you mentioned that, and I think impact aspect of being a B Corp, I’m so glad you mentioned it because that actually is just different from nonprofit, and I just think that it’s a great thing for people to understand. It’s not always that clear. And my understanding is that they check and if you don’t meet the criteria, you can be delisted.
Todd: That is correct, yes. That you have to score a minimum score across the different pillars that they rank you on or you can be kicked out of the program. It’s a real thing.
Joe: Let’s get back to getting board members on private and public company boards. How are you able to measure the impact that Out Leadership is having on that aspect of what you’re doing?
Todd: Well, I’d say a few things. One, the fact that we’re at least part of the conversation now, and by we, I mean, LGBTQ people, but also the broader board diversity conversation. Ten years ago, you did not have this [00:23:00] conversation, first and foremost, You did not have groups like the 30% club in the United Kingdom focusing on women on boards and their goal, by the way, was having 30% of FTSE 100 board seats be held by women and they achieved that in seven years, which was tremendous.
But I will point out a key reason they were able to do that is term limits. In the United States we don’t have them so the turnover in the Fortune 500 is significantly small. I think my colleague, Matt Fust, who co-leads our Quorum effort for us, has a quote that I think is true, “You are more likely to get struck by lightning than get placed on a Fortune 500 board.” The turnover is so significantly low.
For us ever to actually start to have some of these board diversity conversations tying it to reality, some of the structural changes that boards have to think about are really, really important. There’s the structural piece and I can talk about other pieces as well, but I’d start with that.
Joe: Yeah, but there are a lot of opportunities outside the Fortune 500. There are more private companies, for profit companies, and [00:24:00] there are public, you know that, and that is a great opportunity for anyone that wants to be on a board and wants to be a part of the board ecosystem. How is that progressing? Because there are so many private companies that are paying attention to their boards that are starting real boards, fiduciary boards for the first time so that would seem to offer an opportunity as well.
Todd: It absolutely does. I believe there are 250,000 companies between a hundred million and a billion in revenue in the United States right now so it’s significantly more than the Fortune 500 as you point out. But I think there are several key pieces. I think one is resources. Smaller companies don’t always have the resources to hire a search firm, and we should talk about the search firm industry in this conversation as well, and also don’t always have, in my opinion, the most expensive board search matrix and the skill matrix.
One of the tools that Out Leadership built almost six years ago was our corporate guidelines for board diversity, and we include in the back of that, an actual matrix that is inclusive of all the elements of diversity that we recommend, both acquired and inherent [00:25:00] diversity, skills, background, national origin, all of the pieces, and I encourage private companies to think about that and to use that as they’re thinking about diversification of their boards.
It’s not just you have some of the finance background, but do you have generational difference? Do you have all the different industry expertise that you need, et cetera, et cetera, all of that is diversity. It’s not just race, gender, and orientation, but if you don’t have an actual matrix to start from the best practice, I think that’s the first thing these companies have to start to think about.
Joe: Yeah, that’s a great tool. It’s a really excellent way to help people kind of focus on it and understand what true diversity actually means.
Todd: I think we built that in consultation and in partnership with so many of the successful companies. For a smaller company, it’s a great way to say, “Great, that’s the best practice I don’t have to reinvent the wheel. Let’s literally just see a doctor and implement that:, which is our goal. We want to be practical.
Joe: Exactly. You mentioned the executive search industry, which obviously is going to be an important aspect of driving diversity. Let’s talk about who you’ve talked to and who [00:26:00] you’ve worked with and how they partnered with you or worked with you.
Todd: Well, it’s been an evolution. When I started the Quorum initiative eight years ago, I think my second year I made it a point to get a meeting with every head of every search firm, and then I did, and to affirm at that time, the response was, “Well, that’s nice. Until our clients ask for it, we’re just not interested.”
As a market capitalist guy, I get that. I understand you’ve got to go where the market is, but I was not just frustrated, I was just surprised. I thought, “Gosh, wouldn’t somebody want to be innovative? Wouldn’t somebody see that this is ultimately going to happen and wouldn’t somebody want to be first?”
Ultimately I found that someone, Jill Ader, who was the chairwoman of Egon Zehnder, two and a half years ago we connected. She’s a new chairwoman. She’s the first global woman chairwoman of a search firm in history, and she’s just brilliant and she looks at things quite differently, and she said, “Well, gosh, of course, we should focus on all diversity matters and how do we help?”
We have built a great partnership with Egon Zehnder over the last two and a half years. They’ve been a sponsor of our [00:27:00] Quorum effort. They have their Egon Zehnder board diversity index that they have built and then actually they’ve used our data so it’s the first index in history from a board search perspective to include LGBTQ people in their tracker.
I think it’s really shifted the industry. I think I would be shocked if 12 months from now, if we didn’t have another chat, if we didn’t have every search firm partner on board and helping us. I will also say that I take those things as a bit of a challenge. I did follow back up with each of them to say, ” Lloyd Blankfein, the CEO of Goldman Sachs was my first board member seven years ago,’ and I just sat down with him. I said, “Does this matter to you? Guess what it does?” Noel Quinn, the global CEO of HSBC is on our board and Peter Grauer, the chairman of Bloomberg and all of these 800 leaders, they all say this matters. When you say your clients aren’t asking for it, you’re not asking the right people or you’re not listening, they are asking for it, and so the ability of the network that we have built at least make that case. I think it has also shifted that dialogue.
Joe: That is terrific.
Raza: Todd, you do a lot for LGBTQ+ diversity, [00:28:00] but you go beyond that. Talk a little bit about general diversity and how you’re helping even beyond LGBTQ.
Todd: Well, I would say, I look at LGBTQ leaders as the canary in the coal mine of a corporate culture, and what that means is we, as a community, are invisible, we are invisible until we come out to you and become visible, and so if you start with that premise and that idea, what you do for an invisible minority impacts all the visible minorities.
We actually have research that shows if a straight white male says that he is an LGBTQ ally, the overall engagement of women and people of color in his organization goes up because what you’re doing for people you can’t see and who, by the way, despite all of the anti-black violence, et cetera, gay people are still literally illegal. We don’t have full civil equality in the United States and can be imprisoned or killed in 67 countries around the world. It’s a pretty personal [00:29:00] challenge that LGBTQ. people have just to show up at work and be who they are.
All of that connects from a diversity perspective so what you do for women from a gender perspective can impact the trans and gender non-binary people in your organization, but vice versa as well, so if you are supportive of gender nonconforming people, that helps you rethink gender norms in an organization, which ultimately helps women.
All of these things are just interconnected and I think where companies, I think, make a mistake is that they try to bifurcate it or only focus on one piece or say, “You know what, we’re just going to focus on gender because women are half of the population.” Well, sure, that’s great, but you can’t walk and sit down at the same time. You actually can’t do these things simultaneously, and I’ve tried to always, everything from an Out Leadership perspective, do is always focus on intersectionality because you can’t really extricate any one group from the other.
Raza: I think on top of that, you could be black and gay, you could be a woman and gay, so the [00:30:00] LGBTQ dimension crosses all other dimensions in a vertical manner as well so that’s an important reason. That’s a distinct dimension of diversity.
Todd: I agree, and again, that sort of underscores the need to have all of these things connected because LGBT people do if you’re absolutely everywhere. There was a Gallup poll that was released three weeks ago that said that 21% of Gen Z identify as LGBTQ.
Joe: Wow,
Raza: That’s tremendous. Todd, Out Leadership is coming up with a comprehensive survey of policies of diversity that companies have. Could you give us a preview of that? What are you doing and what data are you seeing?
Todd: Sure. Our Quorum initiative last year launched our first ever Quorum Summit. Out Leadership has summits annually in New York, London, Hong Kong Paris and Sydney, but with our talent issues, we built a summit as well and last year’s summit, we launched the first ever LGBTQ board research called Visibility Counts. This year [00:31:00] on March 22nd, we’ll be launching the second annual Visibility Counts piece of research.
There are a couple of key pieces that the most important last year and I think this year is that we did map last year of the Fortune 500 on their board diversity policies. That was the first time that it had ever been done in history, by the way, and not just LGBTQ, we mapped across race, gender, ethnicity, orientation, veteran status, disability status, et cetera.
This year’s report, we are mapping the Fortune 1000 and the entire NASDAQ so all 5,300 listed companies on the NASDAQ. Now, I will point out that the NASDAQ doesn’t even have that data themselves. We went to them first and asked if they had it and they don’t. We did it for them and the Fortune 1000 as well.
I can give you a quick little preview. Only about 2.4% of NASDAQ companies include LGBTQ and the definition of diversity and only about 15% even include gender, so they’ve got an awful lot of work to do, which I think is why Dina wanted to make this an effort and they’ve put it over [00:32:00] time. It’s not just a point in time. They have, I think, a four-year lead in, but they’ve got a long way to go, which I think is going to be surprising when we release the full report.
Raza: Todd, this is so great because it’s not that you can just find these data lying around, you had to go into each SEC filing to actually get through what their actual policy says. I think this is a tremendous amount of work where we’ll be happy to link it up and give it to our listeners as well.
Todd: Please do. Yes, we literally went through every SEC filing and every policy statement by hand because there’s no other way to do
Joe: Todd, it’s been great speaking with you today. Thank you so much for joining us.
Todd: Thank you for having me. I appreciate the opportunity and I hope that organizations find OutLeadership.com and join our efforts.
Joe: Excellent. And thank you all for listening to On Boards with our special guests, Todd Sears.
Raza: We have a request for our listeners. Please take a moment to rate and review On Boards Podcast on Apple Podcast app.[00:33:00] If you’ve enjoyed listening to it, it really helps others discover our podcasts. Also, you can visit our website at onboardspodcast.com. That’s onboardspodcast.com. We’d love to hear your comments, suggestions, and feedback.
Joe: Please stay safe. Take care of yourselves, your families, and your communities as best you can. And Raza, you take care too.
Raza: You too, Joe.
Joe: Thanks.

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