Corporate Board Diversity

Corporate Board Diversity

Companies understand that diverse boards enhance decision-making and increase 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 towards greater diversity: activism by women and other people of color, such as the Black Lives Matter Movement; pressure from investors and other market participants; and legislation.

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

As a result, a few institutions are beginning to step up the pressure on boards to increase diversity and to adopt policies that support it. CalPERS is an investment fund worth $330 billion that represents California public employees, has sent letters to 504 companies listed in the Russell 3000 Index with low levels gender diversity on their board.

To increase diversity in the boardroom, companies must broaden their search beyond the traditional network of executive peers. They should also https://board.international/how-to-increase-corporate-board-diversity/ hire consultants to find new candidates. They should also remove the selection criteria and processes which have impeded diversity on the board and adopt new best practices. They should also look into formal onboarding programs to help diverse directors become more comfortable with the board’s culture and functioning.