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Corporate Board Diversity

To meet the challenges that companies face, it is important to have an executive board that can identify and tackle difficult issues and opportunities. This requires a wide spectrum of perspectives. Boards need to be diverse in terms of gender and race and include individuals who have a range of skills, backgrounds experience, knowledge, and perspectives.

Despite the substantial gains made in boardroom diversity, it is clear that there is still a lot of work to be accomplished. According to Spencer Stuart, women and directors from underrepresented racial or ethnic groups are still responsible for less than a quarter of all board seats at Fortune 500 companies. People of color and women are also underrepresented in senior leadership positions.

With the spotlight on corporate governance, consumers and investors are calling for more and better diversity in boards and executive suites. More often, they’re seeking detailed information on these metrics, and many are deciding with their dollars by pressing corporations to increase diversity on their boards.

Some states have even introduced legislation to encourage or require diversity on boards. But quotas are controversial, and can result in the perception that women and non-white directors are being chosen as “token” selections instead of due to their merits. Additionally, they can make it difficult to find qualified candidates especially if the emphasis is on meeting target numbers. In many cases, focusing solely on diversity can result in boards that aren’t focused and ineffective.