Corporate Board Diversity

Corporate Board Diversity

Companies are aware that diversity on boards contributes to improved decision-making and higher stakeholder engagement. It also creates a more innovative environment. Many companies still struggle to make diversity in their boardrooms to be a reality. A swarm https://board.international/how-to-encouraging-an-effective-advisory-board/ of forces have been pushing boards toward greater diversity. There have been protests and activism by women and people of color, including the Black Lives Matter movement; pressure from shareholders and other market participants and legislation from the state.

However, despite these improvements, the composition of boards is still not up to par with the overall population of United States. According to a recent study by Spencer Stuart, white individuals still hold 84 percent of Fortune 500’s board seats. The number of women, ethnic/racial minority members, and minorities on the board has not grown over the past five years.

As a result, some institutions are beginning to step up the pressure on boards to encourage diversity and adopt policies that encourage it. CalPERS, an account worth $330 billion that represents California public employees, recently sent letters to 504 businesses listed in the Russell 3000 Index with low levels gender diversity on their boards.

To increase boardroom diversity, companies must broaden their search beyond the traditional network of executive peers. They should also engage consultants to identify new candidates. They must also eliminate selection criteria and processes that have hindered board diversification and adopt new best practices. They should also think about formal onboarding programs to assist diverse directors get acclimated with the board’s culture and workings.