About Corporate Board Diversity

Diverse boards are more financially efficient, according to a number of studies. This has led to a fusion of forces that push companies towards more diverse boards: protests and activism by women and people www.board.international/how-to-encouraging-an-effective-advisory-board/ of color; pressure from shareholders and investors; and the notion that boards with diverse representation are “good” for society.

Despite all the momentum however, a majority of companies do not have boards that are a lot more diverse. Last year, Nasdaq found that 75 percent of the companies on its exchange wouldn’t have satisfied the market’s easy diversity requirements. Black, Latinx, Asian and other minorities aren’t represented despite their huge numbers in the US population.

Quotas offer one option. They’ll require companies to reveal the diversity of their boards using a standard template, and to have at least two directors who self-identify as women or belong to minority groups that are not represented, or give reasons for why they don’t. But relying on quotas for the only way to ensure diversity can raise legal issues and risks diluting the advantages of bringing more voices to the table.

It’s time to move beyond boxes-checking, quotas, and other nonsense to a more thoughtful, purposeful approach in governance. This means focusing less on how many minorities and women are sitting at the table and more on how these voices can be leveraged to improve the company’s performance. This requires a change in culture that includes creating an environment that allows employees to explore different perspectives and have challenging conversations.