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

About Corporate Board Diversity

Diverse boards are more financially efficient According to a range of studies. This has led to an array of forces that are pushing companies towards more diverse boards. This includes protests and activism from women and people of colour as well as pressure from investors and shareholders, and the perception of companies with diverse boards as “good” for society.

Despite all this progress, a lot of companies don’t have boards with a wide range of diversity. Nasdaq reported that, last year, 75 percent of companies listed on their exchange wouldn’t have met the markets’ seemingly simple requirements for diversity. And representation of Black, Latinx, and Asian individuals is disproportionately small, despite those groups accounting for significant portions of the US population.

One solution is quotas which will require companies to reveal their diversity levels on the board using a standard template, and have at least two directors who self-identify themselves as women or as minority members, or provide reasons why they don’t. The use of quotas to promote diversity isn’t the best solution. It could raise legal concerns and dilute the advantages of having more voices at the table.

It’s the time to move beyond quotas, box-checking, and more to a thoughtful strategic approach to governance. This means focusing less on the proportion of minorities and women are in the room and more on how those voices can be used to boost the company’s performance. This requires a cultural shift that includes creating an environment that is https://board.international/ safe to consider different perspectives and engage in challenging discussions.