Corporate Board Diversity
Diverse boards are more financially successful, according to a number of studies. This has led to a convergence of forces which are pushing companies towards more diverse boards. These include protests and activism by people of color and women in the form of pressure from investors and shareholders, and the perception of companies with diverse boards as «good» for society.
Despite all this momentum, a lot of companies don’t have very diverse boards. Nasdaq reported that, in the year 2000 75 percent of the companies listed on their exchanges would not have met the stock markets’ arguably simple requirements for diversity. Black, Latinx, Asian, and other minorities aren’t represented despite their substantial proportions in the US population.
Quotas offer one option. They will require companies to reveal the diversity of their boards using an approved template, and to have at least two directors who self-identify as women or members of minority groups that are not represented, or justify why they aren’t. However, relying on quotas as the only way to ensure diversity can raise legal issues and risks diluting the advantages of having more voices at the table.
It’s the time to move beyond quotas, box-checking, and more to a thoughtful purposeful, deliberate approach to governance. It is about focusing on the voices of minorities and women rather than how many are sitting at the table. This requires a shift in culture that includes creating an environment in which it is safe to have provocative conversations and consider different perspectives.