Corporate Board Diversity

Corporate Board Diversity

Companies are aware that diverse boards can improve decision-making and improve stakeholder engagement and can create more innovative workplaces. However, many struggle to bring diversity into practice in their boardrooms. A number of forces have been pushing boards toward more diversity: activism by women and peoples of color, such as the Black Lives Matter Movement; pressure from investors and other market participants; and legislation.

But despite these gains the composition of boards remains a bit behind the overall population of the United States. According to the latest Spencer Stuart study, white people hold 84 percent of Fortune 500 board seats. Additionally, the proportion of minorities, ethnic or racial, women and other minorities on the board hasn’t increased substantially www.board.international/how-to-encouraging-an-effective-advisory-board/ over the past five years.

Some institutions are stepping up the pressure they put on boards to adopt policies that encourage diversity. CalPERS is an account worth $330 billion that represents California public employees, has sent letters to 504 companies included in the Russell 3000 Index with low levels gender diversity on their board.

To increase diversity on the boardroom, companies must broaden their search beyond the traditional network of executive peers. They should also hire consultants to find new candidates. They must also eliminate selection criteria and procedures that have hindered board diversification and adopt new best practices. They should also think about formal onboarding programs to assist diverse directors become comfortable to the board’s culture and functioning.