Corporate Board Diversity
Companies recognize that diverse boards improve decision-making, increase stakeholder engagement, and help create more innovative environments. Yet, many are struggling to make diversity a reality in their boardrooms. A confluence of forces has been pushing boards towards greater diversity. This includes protests and activism by women and people of color, including the Black Lives Matter movement; pressure from shareholders and other market participants and legislation from the state.
However, despite these improvements, the composition of most boards still lags behind the total population in the United States. According to the latest Spencer Stuart study, white people still hold 84 percent of Fortune 500 board seats. Additionally, the click here for more info proportion of women and ethnic/racial minorities on the board hasn’t increased significantly over the last five years.
Some institutions are now increasing the pressure they place on boards to adopt policies that encourage diversity. CalPERS, an investment fund worth $330 billion which represents California public employees, recently sent letters to 504 companies included in the Russell 3000 Index with low levels of 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 employ consultants to identify new candidates. They must also eliminate selection criteria and procedures that have impeded diversity on the board and adopt new best practices. They should also look into formal onboarding programs to help diverse directors become comfortable to the culture of the board and its workings.