Corporate Board Diversity
To meet the challenges that companies face, it is important to have a board of directors who can identify and tackle difficult issues and opportunities. This requires a wide spectrum of perspectives. In addition to gender and racial diversity, boards should include people who are experienced across a variety of industry sectors and who possess diverse skills backgrounds, knowledge, and perspectives.
Despite the significant improvements in diversity on the boardroom It is clear that companies have much more work to do. According to Spencer Stuart, women and directors from underrepresented racial and ethnic groups make up less than a quarter of all board seats at Fortune 500 companies. Women and people of colour are also underrepresented in leadership positions.
Consumers and investors are insisting on greater diversity in boards and executive suites and corporate governance is a hot topic. They are increasingly demanding specific report on these metrics and many are putting their dollars to pressure companies to boost diversity on their boards.
Certain states have passed laws to encourage diversity on boards. Quotas are controversial and create the impression that women paperless board meetings and nonwhite directors are chosen as “token selections” rather than on their merits. Furthermore, they can make it more difficult to find qualified candidates, especially when the focus is on achieving targets. In many cases, focusing solely on diversity can lead to boards that are ill-focused and ineffective.
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