Corporate Board Diversity

To meet the challenges facing companies it is essential to have a board of directors that can recognize and address complex issues and opportunities. This requires a wide spectrum of perspectives. Boards should be diverse in terms of race and gender as well as include individuals with a wide range of skills, backgrounds as well as expertise and perspectives.

Despite the substantial increase in diversity of the boardroom It is clear that companies have much more work to do. Spencer Stuart reports that women and directors of underrepresented ethnic or racial communities make up less than a quarter of board seats in Fortune 500 companies. Similarly, women and people of color aren’t represented in senior leadership roles.

Consumers and investors are insisting on greater diversity in boards and executive suites as corporate governance has become an issue of great interest. They are increasingly demanding more detailed reporting on these metrics and many are putting their dollars to pressure companies to boost diversity on their boards.

Some states have even introduced legislation that encourages or requires diversity on boards. Quotas are controversial and may give the impression that non-white and women directors are picked as “token selections” instead of on their merits. They can make it more difficult to find qualified candidates in the event that they are based on achieving a target number. In many instances it is the case that focusing solely on diversity can lead to boards that are not effective and not focused.

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