Corporate Board Diversity

As companies face new challenges, it’s becoming more essential for them to have a board that is able to be able to identify and respond to the challenges and opportunities by tapping into a wide range of perspectives. In addition to racial and gender diversity, boards should include people who are experienced in a variety sectors, and who have various skills as well as backgrounds, experience, and perspectives.

Despite the substantial gains made in boardroom diversity however, it is evident that there is much work to be accomplished. Spencer Stuart reports that women and directors of underrepresented racial or ethnic groups make up less than a quarter of board seats in Fortune 500 companies. Similarly, women and people who are of color are not as well represented in senior leadership positions.

With the spotlight on corporate governance, investors and consumers are urging for greater and more diverse executive suites and boards. More often, they’re asking for detailed reporting on these measures, and a large number are voting with their money by pushing corporations to increase diversity on their boards.

Some states have introduced legislation to promote diversity on boards. Quotas can be controversial and may give the impression that women and nonwhite directors are chosen “token selections” rather than on their merits. Moreover, they can make it difficult to find qualified candidates especially if the emphasis is on meeting target numbers. In many cases, focusing exclusively on diversity can lead to boards that are not focused and ineffective.