About Corporate Board Diversity

Diverse boards are more financially efficient, according to a number of studies. This has led to a convergence of forces which are pushing companies towards more diverse boards. This includes protests and activism by people of color and women, pressure from investors and shareholders and the perception of companies with diverse boards as “good” for society.

However, despite all that momentum, many companies still don’t have very diverse boards. Nasdaq stated that in the year 2000 75 percent of the companies listed on their exchange did not meet the stock market’s seemingly simple diversity requirements. Black, Latinx, Asian and other minorities are not represented despite their large numbers in the US population.

One solution is quotas which will require companies to report their diversity at the board level using a standard template and have at least two directors who self-identify as female or minority groups, or explain why they aren’t. But relying on quotas for the sole way to ensure diversity poses legal issues and could reduce the advantages of bringing more voices to the table.

Instead, it’s time to get past boxes and quotas in favour of a more deliberate, targeted approach to governance. It is about focusing on the voices of women and minorities, instead of focusing on how many are in the room. This requires a culture shift and a new environment that allows employees to think differently and engage in challenging discussions.

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