Corporate Board Diversity

Corporate Board Diversity

Companies understand that diverse boards enhance decision-making, increase stakeholder engagement, and help create more innovative environments. However, many companies are still struggling to achieve diversity in their boardrooms. A variety of forces have been pushing boards towards greater diversity. These include protests and activism by women and people of color, including the Black Lives Matter movement; pressure from shareholders and other market participants; and state legislation.

But, despite these gains however, the composition of the majority of boards continues to lag behind the overall population in the United States. According to an upcoming Spencer Stuart study, white people hold 84 per cent of Fortune 500 board seats. Furthermore, the number of minorities, ethnic or racial, women and other minorities on the board has not increased significantly over the last five years.

As a consequence, certain institutions are beginning to intensify the pressure on boards to increase diversity and to adopt policies that encourage it. CalPERS, the $330 billion pension fund that represents California public employees, sent letters to 504 companies included in the Russell 3000 Index with low levels of gender diversity on their boards.

To increase diversity in the boardroom To encourage diversity in the boardroom, companies must expand their search pools beyond the traditional networks of executive peers and also employ consultants from outside to search for new candidates. They also need to eliminate selection criteria and procedures that have hindered board diversification in the past, and establish new best practices. In addition, they should consider developing formal onboarding programs to help diverse directors become fully at ease investigate this site with the board’s operations and culture.

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