08 Dic Corporate Board Diversity

Corporate Board Diversity

Companies are aware that diversity on boards results in improved decision-making and higher stakeholder involvement. It also creates a more innovative environment. But many still struggle to bring diversity into practice in their boardrooms. A multitude of forces have been pushing boards towards greater diversity: activism from women and other people of color, such as the Black Lives Matter Movement; pressure from investors and other market participants; as well as state legislation.

But despite these gains https://board.international/how-to-increase-corporate-board-diversity/ the composition of most boards is still not up to par with the overall population of the United States. In fact, according to a study conducted by Spencer Stuart, white individuals still hold 84 percent of the Fortune 500’s board seats. The number of women, ethnic/racial minority members, and minorities on the board has not increased in the last five years.

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

To increase diversity on the boardroom, companies must expand their search beyond the traditional network of executive peers. They should also hire consultants to help them find new candidates. They should also remove the selection criteria and procedures that have impeded diversity on the board and adopt new best practices. They should also think about formal onboarding programs to assist diverse directors become familiar with the board’s culture and workings.