Corporate Board Diversity
As companies are faced with new challenges, it is becoming more essential for them to have a board of directors that can identify and address complexities and opportunities by tapping into a range of perspectives. Boards must be diverse in terms of race and gender, but also include people who have a range of skills, backgrounds as well as expertise and perspectives.
Despite the impressive gains in the diversity of boardrooms It is clear that there is much work to be done. According to Spencer Stuart, women and directors from underrepresented racial or ethnic groups are still responsible for less than a quarter of board seats at Fortune 500 companies. Women and people of color are also underrepresented in senior leadership positions.
Consumers and investors are increasingly pushing for greater diversity in the executive suites and boards since corporate governance is an issue of great interest. They are increasingly demanding detailed reporting on these metrics and a lot of them are using their money to push companies to boost diversity on their boards.
Certain states have even enacted laws to encourage or mandate diversity on boards. The concept of quotas can be controversial and can create the impression that women and nonwhite directors are chosen ”token selections” instead of on their merits. In addition, they make it harder to find qualified candidates, especially when the focus is on meeting target numbers. In many instances, focusing on diversity alone can lead to boards that are unproductive and unfocused.