Corporate Board Diversity

Corporate Board Diversity

In order to meet the challenges facing companies it is essential to have a board of directors who can identify and address complex issues and opportunities. This requires a broad perspective. In addition to racial and gender diversity, boards need to include people who are experienced across a range of industry sectors and who possess diverse skills backgrounds, experiences, and perspectives.

Despite the huge gains made in boardroom diversification however, it is evident that there is much work to be done. According to Spencer Stuart, women and directors from underrepresented racial or ethnic groups still account for less than a quarter of board seats at Fortune 500 companies. Women and people of colour are also underrepresented in senior leadership posts.

Consumers and investors are demanding more diversity in executive suites and boards, as corporate governance is a hot topic. In a growing number of cases, they are asking for detailed reporting on these metrics, and many are voting with their money by putting pressure on corporations to increase diversity on their boards.

Certain states have passed legislation to encourage diversity on boards. However, quotas can be controversial and they can lead to the perception that non-white and women directors are being selected as “token” selections instead of due to their merits. Moreover, they can make it more difficult to find qualified candidates, especially if the emphasis is on achieving targets. In many instances, focusing only on diversity could result in boards that are not focused and ineffective.

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