Corporate Board Diversity

Corporate Board Diversity

Companies recognize that diversity on boards results in better decision-making and increased stakeholder involvement. It also creates a more innovative environment. However, many companies are still struggling to ensure that diversity is a reality in their boardrooms. A confluence of forces has been pushing boards toward greater diversity. There have been protests and activism by women and people of color, including the Black Lives Matter movement; pressure from shareholders and other market players; and legislation from the state.

However, despite these improvements, the composition of boards still lags behind the overall population of United States. According to the latest Spencer Stuart study, white people hold 84 per cent of the Fortune 500 board seats. The number of women, ethnic/racial minorities members and minorities on the board has not risen in the last five years.

As a result, a few institutions are beginning to increase the pressure on boards to promote diversity and to adopt policies that promote it. CalPERS is the $330 billion pension fund which represents California public employees, sent letters to 504 companies that are listed in the Russell 3000 Index with low levels gender diversity on their boards.

To increase diversity in the boardroom companies must expand their search beyond the traditional network of executive peers. They should also seek out consultants to identify new candidates. They must also eliminate selection criteria and procedures that have hindered diversity in the boardroom and adopt new best practices. Additionally, they should think about the creation of formal onboarding programs that board.international aid diverse directors in becoming fully comfortable with the board’s work and culture.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top