Corporate Board Diversity
Companies are aware that diverse boards enhance decision-making and enhance stakeholder involvement and foster more innovative environments. However, many struggle to bring diversity into practice in their boardrooms. A multitude of forces have been pushing boards towards greater diversity. These include activism by women and people of color, like the Black Lives Matter Movement; pressure from investors and other market participants; and state legislation.
But, despite these gains the composition of most boards remains behind the overall population of the United States. According to a recent Spencer Stuart study, white people still hold 84 per cent of Fortune 500 board seats. The proportion of women, ethnic/racial minorities members and minorities on the board have not increased in the last five years.
In the wake of this, some institutions are beginning to increase the pressure on boards to increase diversity and to adopt policies that support it. CalPERS, an investment fund worth $330 billion that represents California public employees, has sent letters to 504 companies that are listed in the Russell 3000 Index with low levels gender diversity on their boards.
To increase diversity on the board To encourage diversity in the boardroom, companies must diversify their search sources beyond traditional networks of executive peers and hire consultants from outside to help find new candidates. They should also eliminate selection criteria and procedures that have hindered diversity on the board in the past, and https://board.international/ implement new best practices. They should also consider formal onboarding programs to assist diverse directors get acclimated to the culture of the board and its workings.