Corporate Board Diversity

Companies understand that diversity on boards contributes to improved decision-making and higher stakeholder involvement. It also fosters an environment that is more creative. However, many struggle to achieve diversity in their boardrooms. A number of forces have been pushing boards toward greater diversity. These include activism by women and other people of color, such as the Black Lives Matter Movement; pressure from investors and other market participants; and state legislation.

But, despite these gains however, the composition of click here for more info the majority of boards is still lagging behind the overall population in 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 proportion of women, ethnic/racial minority members and minorities on the board have not increased over the last five years.

Some institutions are now increasing the pressure they apply to boards to adopt policies that encourage diversity. CalPERS, an investment fund worth $330 billion which represents California public employees, recently sent letters to 504 companies included in the Russell 3000 Index with low levels of gender diversity on their board.

To increase diversity in the boardroom Companies must diversify their search sources beyond traditional networks of executive colleagues and recruit outside consultants to find new candidates. They should also eliminate selection criteria and procedures that have hindered board diversification and adopt new best practices. Finally, they should consider creating formal onboarding programs to aid diverse directors in becoming fully familiar with the board’s processes and the culture.