Corporate Board Diversity

As companies face new challenges, it is increasingly important for them to have a board that can identify and address the challenges and opportunities by tapping into a broad range of insights. Boards should be diverse in terms of race and gender as well as include individuals who have a range of skills, backgrounds, expertise, and perspectives.

Despite the impressive increase in diversity of the boardroom however, it is evident that companies have more work to do. According to Spencer Stuart, women and directors from underrepresented racial or ethnic groups still account for less than a quarter of all board seats at Fortune 500 companies. People of color and women are also underrepresented in leadership posts.

With the spotlight on corporate governance, investors and consumers are pushing for more and better diversity in executive and board rooms. They are increasingly demanding more detailed reports on these metrics, and many are putting their money to push companies to encourage more diversity on boards.

Certain states have passed legislation to promote diversity on Corporate Board Diversity boards. Quotas are controversial and may give the impression that women and nonwhite directors are selected “token selections” instead of based on their merits. Moreover, they can make it harder to find qualified candidates particularly if the focus is on meeting target numbers. In many instances just focusing on diversity can lead to boards that are ineffective and not focused.