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28 Sep 2023

Corporate Board Diversity

To address the challenges facing companies in the face of competition, it is vital 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 possess a range of skillsets backgrounds, experiences, and perspectives.

Despite the significant gains in the diversity of boardrooms, it is clear that there is much work to be done. Spencer Stuart reports that women and directors from underrepresented ethnic or racial communities make up less than a quarter of the board seats in Fortune 500 companies. Equally, women and those of color aren’t represented in senior leadership positions.

Consumers and investors are insisting on greater diversity in boards and executive suites, as corporate governance is a hot topic. They are increasingly seeking detailed information on these measures, and a large number are voting with their money by pushing companies to create more diverse boards.

Certain states have enacted legislation to promote diversity on boards. Quotas are controversial and can create the impression that non-white and women directors are chosen “token selections” rather than on their merits. They can make it more difficult to find qualified candidates in the event that they are based on meeting a set number. In many cases, focusing exclusively on diversity can lead to boards that are ill-focused and ineffective.