Corporate Board Diversity
Companies recognize that diversity on boards can lead to better decision-making and increased stakeholder involvement. It also helps create an environment that is more innovative. Many companies are still struggling to make diversity in their boardrooms into a reality. A variety of forces have been pushing boards toward greater diversity. There have been protests and activism by women and people of color, including the Black Lives Matter movement; pressure from shareholders and other market participants; and state legislation.
However, despite these improvements however, the composition of many boards remains behind the general population of the United States. According to a recent Spencer Stuart study, white people still hold 84 per cent of look at this now the Fortune 500 board seats. The proportion of women, ethnic/racial minorities members, and minorities on the board have not grown over the past five years.
In the wake of this, some institutions are beginning to step up the pressure on boards to encourage diversity and adopt policies that support it. For 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 encourage boardroom diversity To encourage diversity in the boardroom, companies must expand their search options beyond the traditional networks of executive colleagues and recruit consultants from outside to search for new candidates. They should also eliminate selection criteria and processes that have blocked board diversification in the past, and implement new best practices. They should also think about creating formal onboarding programs to aid diverse directors in becoming fully acclimated to the board’s workings and the culture.
