Corporate Board Diversity

Corporate Board Diversity

Companies are aware that diverse boards improve decision-making and increase stakeholder engagement and foster more innovative environments. However, many struggle to achieve diversity in their boardrooms. A swarm of forces have been pushing boards toward greater diversity. These include protests and activism by women and people of color, such as the Black Lives Matter movement; pressure from shareholders and other market participants; and legislation from the state.

However, despite these advances, the composition of most boards still lags behind the overall population of the United States. According to a recent study by Spencer Stuart, white individuals still hold 84 percent of the Fortune 500’s board seats. The number of women, ethnic/racial minority members and minorities on the board have not grown over the past five years.

Certain institutions are increasing the pressure they place on boards to adopt policies that support diversity. For https://board.international/ instance, CalPERS, the $330 billion pension fund for California public employees, has sent letters to 504 companies that are part of the Russell 3000 index with low levels of gender diversity on their boards.

To increase boardroom diversity, companies should expand their search beyond the traditional network of executive peers. They should also engage consultants to identify new candidates. They must also eliminate selection criteria and processes that have hindered diversity in the boardroom and adopt new best practices. They should also think about formal onboarding programs to help diverse directors get acclimated to the board’s culture, and functioning.