Corporate Board Diversity
To tackle the challenges that companies face it is essential to have an executive board that are able to identify and tackle complex issues and opportunities. This requires a broad range of perspectives. Boards must be diverse in terms of gender and race however, they should also have members with a wide range of skills, backgrounds as well as expertise and perspectives.
Despite the impressive gains in boardroom diversity, it is clear that there is still a lot of work to be done. Spencer Stuart reports that women and directors from underrepresented ethnic or racial communities account for less than one quarter of board seats in Fortune 500 companies. Similarly, women and people of color are underrepresented in leadership positions at the top.
Consumers and investors are pushing for greater diversity in the executive suites and boards and corporate governance is an issue of great interest. More often, they’re seeking detailed information on these metrics, and many are voting with their money by pushing companies to create more diverse boards.
Certain states have even enacted legislation to encourage or require diversity on boards. They can be controversial and give the impression that women and non-white directors are chosen “token selections” rather than based on their merits. They can also make it difficult to find qualified candidates if they are based on achieving a target number. In many cases, focusing solely on diversity could result in boards that are unfocused and ineffective.