How to Move Beyond Quotas and Box Checking to Move Toward Corporate Board Diversity

Corporate Board Diversity

Diverse boards are more financially successful According to a range of studies. This has led to a convergence of forces that are pushing companies towards more diverse boards. These include protests and actions 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 do not have diverse boards. Nasdaq announced that last year, 75 percent of companies listed on their exchange would not have met the market’s arguably simple diversity requirements. In addition, the representation of Black, Latinx, and Asian individuals remains disproportionately low, despite those groups comprising significant portions of the US population.

One solution is quotas which will require companies to reveal their board-level diversity using an established template and to have at least two directors who self-identify as female or as minority members, or explain why they aren’t. Utilizing quotas for diversity is not the best solution. It can raise legal issues and limit the advantages of having more voices on the board.

It’s time to move past boxes-checking, quotas, and other nonsense to a more thoughtful, purposeful approach in governance. This means focusing less on how many women and minorities are sitting at the table and more on how these voices can be leveraged to boost the performance of the company. This requires a shift in culture which includes creating a space in which it is safe to engage in challenging discussions and to explore different perspectives.

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