Prudential Financial: Prioritizing Diversity in the Boardroom
“Our culture is our oxygen. It makes it possible for us to achieve things that are difficult for other companies to replicate.” This is a point often made by Prudential Financial Chairman and CEO John Strangfeld, who considers diversity to be both a differentiator and an essential component of the company’s culture. He also understands that the path to a collaborative, inclusive culture starts at the top. To ensure this philosophy extends well beyond the C-suite, Strangfeld has surrounded himself with a leadership team who understands the power and the wisdom of teamwork and diversity.
Prudential’s commitment to diversity is also evident in its Board of Directors. A full two-thirds of Prudential’s board is diverse, and 80 percent of its non-employee directors represent diverse groups. This degree of diversification at the board level—where there is more often a dearth—is deliberate. For a company working to meet the needs of a diverse customer base, Prudential sees having a variety of talent and experience in the boardroom as a competitive advantage, leading to better decisions and stronger performance.
While Strangfeld’s focus on talent and culture has been front and center since his appointment to CEO in 2008, a strong sense of purpose is nothing new to the 143-year-old organization. Prudential was founded on the belief that financial security should be attainable for everyone, including working-class families, the company’s original customer base. An inclusive, high-performing culture is as vital to that mission today as it will be in years to come, says Strangfeld:
We firmly believe that our talent and our culture will be the most important factors in our long-term success. They drive our performance and differentiate us in the marketplace.
One senior leader shaping the organization around these tenets is Margaret “Peggy” Foran, Prudential’s Chief Governance Officer, SVP and Corporate Secretary. In her role, Foran works with the Board to strengthen Prudential’s governance principles and practices. Noting that Prudential’s Board Selection Committee actively considers diversity as a criterion for the recruitment and nomination of directors, Foran says:
For boards, having a range of perspectives is critical to achieving best-in-class operations. Boards use consensus to operate, and they need the best information available. In most instances, this is achieved by surrounding themselves with people who have different viewpoints and expertise, all of which are needed to analyze every part of a problem.
In fact, it was partly Prudential’s commitment to diversity that attracted Foran, already an accomplished corporate governance executive, to the company in the first place:
The company recognized a long time ago that the smartest decision was to have the best talent, and the best talent and decisions come from individuals with differing perspectives. It may take longer, but in the end, you’re going to get a better result.
Foran, a long-time advocate for the use of “plain English” in disclosure documents, began to reshape Prudential’s reporting practices upon joining the company in 2009, notably by disclosing and expanding on the critical role diversity plays in the company’s board selection and nomination processes.
Of course, communicating about diverse board candidates is considerably less difficult than sourcing them. According to Foran, the process has gotten much easier as boards, including Prudential’s, have continually demanded that their search firms source diverse candidates.
We’d developed a skills matrix with characteristics that were critical to us, like integrity and a strong sense of ethics, and took that to search firms. Despite explicitly asking for diverse candidates to be in the mix, we would get the same old list. Sometimes you’d have to ask a second and third time, or change search firms. Now, many large search companies ‘get it’ and they’re asking for the same things. But it took years of board members saying, ‘This is what we want, and we’re not giving in on anything.’
Prudential has certainly not budged on this position. In 2016, Gilbert Casellas—an Independent Director since 2001—became Chair of the Corporate Governance and Business Ethics committee, where he oversees Prudential’s Board refreshment. Casellas, a former Chairman of the U.S. Equal Employment Opportunity Commission, encourages the Board to identify talented and diverse candidates, and they have done so to great success. Of the Board’s 12 members, two directors are Black, one is Asian-American, two are Latino, three are women, and one is a member of the LGBT community.
Of course, this type of diversity is not the case for many organizations. Foran acknowledges that one of the biggest barriers to building a diverse board is the outdated mindset that only certain types of leaders make good board members:
Some companies only look at CEOs as candidates, and as we all know, there aren’t a lot of diverse CEOs. You’re not going to get a great mix. To build a diverse board, companies have to be open to a range of experiences.
While Prudential is focused on setting the tone for diversity from the top, it is clear that a commitment to diversity and inclusion is infused throughout every function and level of the organization. From having diversity and inclusion goals tied to senior executives’ long-term compensation, to a thriving supplier diversity initiative, to an Emerging Manager Investment Program (which deploys a significant portion of assets with women and minority investment managers who meet high performance standards and have a track record of strong financial returns), Prudential boasts a wide array of programs prioritizing diversity.
Prudential has earned countless awards in recognition of its efforts, including the number one ranking in the Fortune list of the “World’s Most Admired Companies” in the “Insurance: Life and Health” category, for the past three years. In 2017, the company received the “Governing Board Diversity Champion Award” from the California Department of Insurance, which recognizes an insurance company for its successful and innovative approaches to diversifying its governing board.
Prudential has also been named among DiversityInc’s “Top 50 Companies for Diversity” every year since 2001, and in 2018, the company was named among the “Best Companies for Multicultural Women” by Working Mother for its proactive efforts to recruit diverse talent.
Recently, Prudential extended its paid parental leave to an industry-leading 10 weeks, another demonstration of its commitment to attracting a diverse range of top talent. For its efforts, the company continues to be recognized by Working Mother as a “100 Best Company,” and was named to “Fatherly’s 50 Best Places to Work for New Dads” for the first time this year.
Seeing her company at the forefront of this kind of (much-needed) progress makes Peggy Foran exceedingly proud:
Are things perfect for women and people of color? No. But companies have started to recognize that there’s competition for the most talented folks, and an inclusive culture is critical to attracting them. I think of my own daughters. Even when they looked at colleges, they considered diversity and organizational culture. Boards need to recognize that. This is important to this generation. For talent, the world is changing. I believe companies like Prudential are at the top in terms of talent attraction.
For Prudential, it is critically important to see its commitment to diversity reflected in its Board of Directors. For the Board and senior executives, it is equally critical that decisions they make help cultivate a diverse, inclusive, and attractive organization where all talent can thrive. This powerful combination creates a win-win for employees and the company today and for years to come.