Corporate Board Diversity

Diverse boards are more financially profitable, according to a number of studies. This has led to a convergence of forces which are pushing companies to adopt more diverse boards. This includes protests and activism by people of color and women as well as pressure from investors and shareholders and the perception that companies with diverse boards as “good” for society.

But, despite all that momentum, many companies do not have diverse boards. Nasdaq reported that, in the year 2000, 75 percent of companies listed on their exchange would not have met the market’s arguably simple diversity requirements. Also, representation of Black, Latinx, and Asian individuals remains disproportionately insignificant, despite the groups representing significant proportions of the US population.

Quotas offer one option. They will require companies to reveal the diversity of their board using an approved template, and include at least 2 directors who self-identify as women or members of minority groups that are underrepresented, or https://board.international/how-to-encouraging-an-effective-advisory-board/ justify why they aren’t. However, relying solely on quotas as the sole way to ensure diversity raises legal issues, and could reduce the benefits of bringing more voices to the table.

It’s time to move beyond boxes-checking, quotas, and more to a thoughtful, purposeful approach in governance. It means focusing on the voices of minorities and women rather than the number of people sitting at the table. This requires a shift in the culture that creates an atmosphere where it is safe to consider different perspectives and have difficult conversations.