About Corporate Board Diversity
Diverse boards are more financially successful according to a variety of studies. This has led to a fusion of forces pushing companies to more diverse boards: activism and protests by women and people of color; pressure from shareholders and investors; and the belief that companies with diverse boards are “good” for society.
Despite all that momentum, many companies don’t have diverse boards. Last year, Nasdaq found that 75 percent of the companies listed on its exchange could not have been able to meet the market’s seemingly easy diversity standards. Black, Latinx, Asian, and other minorities aren’t represented despite their large proportions in the US https://board.international/how-to-increase-corporate-board-diversity/ population.
One solution is quotas which would require companies to publicly disclose their diversity levels on the board using the same template and have at least two directors who self-identify as female or minority groups, or justify why they don’t. However, relying on quotas as the only way to ensure diversity raises legal issues, and could stifle the benefits of having more voices at the table.
It’s time to get past quotas and box-checking in favor of a more thoughtful and focused approach to governance. It involves focusing on the perspectives of minorities and women rather than the number of people sitting at the table. This requires a culture shift that includes creating an environment where it is safe to consider different perspectives and engage in challenging discussions.
