Rooney Rule Regression: Takeaways for Corporate Board Diversity

Bloomberg Law

March 7, 2022

By Julie Goldsmith Reiser, co-chair of Cohen Milstein’s Securities Litigation & Investor Protection practice, and Lori Nishiura Mackenzie, co-founder of the Stanford VMware Women’s Leadership Innovation Lab.

The NFL’s Rooney Rule, requiring that at least one person of color be interviewed for head coaching vacancies, has lost its effectiveness in the NFL but should still be used by corporate boards to improve diversity, say Julie Goldsmith Reiser, partner at Cohen Milstein, and Lori Nishiura Mackenzie, co-founder of the Stanford VMware Women’s Leadership Innovation Lab. They offer guidance on using it purposefully and authentically.

With the NFL plagued by years of scandal and backlash for its treatment of Black players, it comes as no surprise to see owners back in the spotlight battling a discrimination lawsuit. Former Miami Dolphins head coach Brian Flores sued the NFL and three teams for racial discrimination, sparking much larger conversations about diversity in hiring and the NFL’s “Rooney Rule.”

The NFL implemented the Rooney Rule in 2003, requiring that at least one person of color be interviewed as part of the hiring process for vacancies in head coaching positions. It appeared to work. From 2001 to 2005, the number of Black head coaches in the NFL, while still small, tripled from two to six. After more than a decade of success resulting in nearly 25% representation of Black coaches in the NFL, the rule undeniably faltered from 2017 to 2019, with the percentage of Black head coaches dropping from 21.9% to 9.4%, where it remains today.

As an attorney who works with shareholders to hold companies accountable promoting diversity, equity, and inclusion in the workplace and a strategist who helps companies thrive through building communities with strong cultures, we recommended that companies adopt an evolved version of the Rooney Rule for their own efforts to diversity corporate boards.

There are a number of lessons that corporate boards should draw from the NFL’s experience with the Rooney Rule to avoid similar backsliding.

A True Commitment Is Essential

We continue to believe the Rooney Rule can work if it evolves and is part of a broader, authentic commitment to diversity.

First, how did the rule lose effectiveness? The interview process now appears to reflect tokenism where White team owners interview Black candidates only to avoid a fine from the NFL, not because the Black coaches have a legitimate chance to secure a head coach position. Research shows that when there is only one minority candidate in a pool of four finalists, their odds of being hired are statistically zero.

While interviewing just one candidate from an underrepresented group does not change the status quo, interviewing at least two has a greater likelihood of leading to change. Interviewers are less likely to see any particular candidate as “the Rooney Rule” applicant and instead, consider their qualifications. And since the candidates are indeed qualified, just overlooked due to biases, their skills can now shine. A truly diverse slate can also help the candidate’s performance and help interviewers be fair.

The revised Rooney Rule of at least two candidates (or even better, 50%) from underrepresented groups is a crucial step in the right direction. But for boards to succeed in their efforts to diversify, they must shift from a compliance mindset to one of truly valuing diversity. Then they must create the processes to prevent biases from creeping into their decision making, focusing on continual improvement rather than a one-time, quick fix.

How to Support Diversity Efforts

Here are some ways to support diversity efforts in the boardroom.

Focus on Skills, Not Titles

An anonymized skills matrix, such as the NYC Boardroom Accountability matrix, allows the search committee to assess important skills across all existing, and then prospective, board members.

This can be effective for two reasons. First, it allows boards to assess candidates based on their unique skills, not broad-based experience such as prior board experience or titles, such as having been a CEO or board member for another company. With women and people of color in low numbers on boards and in the CEO seat, this can open the door to more candidates.

Second, it can help boards more effectively identify what they need, which can lead to a more productive interview process. Boards should also retain a neutral party to populate the skills matrix of prospective board members in an anonymized way, to minimize implicit gender and racial bias.

Curate a Diverse Interview Committee

Not only will diversity on the committee lead to better decision making; it can also reduce biases. Being from an underrepresented group does not automatically make a person less biased, but because women and people of color have often experienced bias, they are more likely to practice techniques to block it.

And having a diverse committee can support the candidates in moving past stereotype threat to imagining that they could truly belong on the board and contribute in a meaningful way.

Move From a ‘Quick Fix’ to Inclusion

These proposals can lead to a stronger hiring process, but the work does not end here. Once a candidate is chosen, companies should commit to ongoing efforts to support the new member with a thoughtful onboarding process that aims to fully integrate the new board member.

The board should also engage in designing inclusive norms and educate incumbent members about the value of hearing from different viewpoints in order to truly benefit from the increased diversity.

Research and experience show that diversity efforts must be intentionally incorporated and customized into the recruitment process to make lasting, meaningful change.

A six-year study by Credit Suisse reflected that companies with women directors on their boards outperformed shares of their peers with all-male boards by 26%. Likewise, a Morgan Stanley study found that U.S. companies with three or more female directors outperformed the earnings of companies without female directors by 45% per share.

These outcomes show that representation yields stronger performance—a metric that surely the NFL owners care about too.

Read Rooney Rule Regression: Takeaways for Corporate Board Diversity.