Corporate Board Diversity
As companies face new challenges, it is increasingly important for them to have a board that is able to identify and address the challenges and opportunities by tapping into a broad range of insights. In addition to gender and racial diversity, boards must comprise people who have worked across a variety of industry sectors and possess different skills backgrounds, experiences, and perspectives.
Despite the significant gains in boardroom diversification It is clear that there is still much work to be completed. According to Spencer Stuart, women and directors from underrepresented racial or ethnic groups account for less than a quarter of board seats at Fortune 500 companies. Equally, women and those who are of color are not as well represented in leadership positions at the top.
With the spotlight on corporate governance, investors and consumers are urging greater and more diverse executive and board rooms. They are increasingly demanding thorough report on these metrics and a lot of them are using their money to push companies to increase diversity on boards.
Some states have introduced legislation to promote diversity on boards. Quotas can be controversial and give the impression that non-white and women directors are chosen “token selections” rather than based on their merits. Moreover, they can make it more difficult to find qualified candidates especially if the emphasis is on achieving targets. In many instances just focusing on diversity could result in boards that are unproductive and not focused.
