Corporate Board Diversity

Corporate Board Diversity

As companies confront new challenges, it is increasingly important for them to have a board that is able to identify and address issues and opportunities by tapping into a broad range of perspectives. Boards should be diverse in terms of race and gender, but also include people with a variety of skills, backgrounds knowledge, perspectives, and expertise.

Despite the substantial gains made in the diversity of boardrooms It is clear that there is much work to be completed. Spencer Stuart reports that women and directors from minority ethnic or racial groups account for less than one quarter of the board seats in Fortune 500 companies. Similarly, women and people who are of color are not as well represented in senior leadership positions.

Consumers and investors are increasingly pushing for greater diversity on boards and executive offices and corporate governance is an issue of great interest. They are increasingly demanding specific information on these metrics and are also voting their money to push companies to boost diversity on boards.

Certain states have enacted legislation to encourage diversity on boards. But quotas are controversial, and can result in the perception that non-white and women directors are selected as “token” selections, rather than for their merits. Additionally, they can make it difficult to find qualified candidates especially when the focus is on achieving the target numbers. In many instances just focusing on diversity can lead to boards that are ineffective and ineffective.

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