diversity at work
Diversity is still rare in corporate boardrooms
While diversity in entry, mid level, and managerial levels in corporate America seems to be making some slow but sure progress, corporate America’s boardrooms are disproportionately stocked with white males.
A recent study by the InterOrganization Network (ION) examined the makeup of 539 independent directors elected in 2006 to the boards of public companies in the United States and found that only seventeen percent of those elected to boards in 2006 were women. The results of the study indicate that board members of our nation’s public companies prefer individuals who look just like them and continue to elect white males to their boards.
Although experts have long indicated that diversity is an investment in people that adds value to a corporation, companies continue to be very slow to add minorities, the disabled, homosexuals, and women to their boards. Not only will a diversified board send a clear message to a company’s diversity employees that advancement is possible, but it will also help change the way boards make decisions.
According to the ION report, having three or more women directors in a corporation can enhance corporate governance and bring about fundamental change in boardroom dynamics. I suspect the same holds true when directors from any diversity group are placed on corporate boards.
Increasing the amount of diversity on corporate boards will bring new perspectives, thoughts, and ideas for success to the corporate boardroom. If like thinking people are placed on a board together, the board will probably consistently generate similar opinions and decisions. By contrast, putting a diverse group of people together on a corporate board allows a company to benefit from a variety of different points of view and increases the chances that the board will come to sound progressive decisions.
Boardroom diversity also provides companies with innovative ideas and helps companies to anticipate, to understand, and to effectively respond to their customers’ needs. One would think that knowing and understanding this information, companies would be rushing to nominate diversity candidates for director positions.
Unfortunately, it appears that this is not the case.
I am confident that companies would switch directions if there were an overwhelming body of evidence that putting diversity candidates on their boards would make them money. But while there are many studies that support this notion, there are not as many irrefutable studies on the ROI of boardroom diversity as there are for, say, smoking and its direct link to cancer.
In my humble opinion, the only way that companies will truly discover the benefits of having diverse boards is by putting what the experts say to the test. Companies should place more diversity candidates on boards and measure the financial results of their new diversified boards. I’ll bet they find it makes a positive financial difference.
A recent study by the InterOrganization Network (ION) examined the makeup of 539 independent directors elected in 2006 to the boards of public companies in the United States and found that only seventeen percent of those elected to boards in 2006 were women. The results of the study indicate that board members of our nation’s public companies prefer individuals who look just like them and continue to elect white males to their boards.
Although experts have long indicated that diversity is an investment in people that adds value to a corporation, companies continue to be very slow to add minorities, the disabled, homosexuals, and women to their boards. Not only will a diversified board send a clear message to a company’s diversity employees that advancement is possible, but it will also help change the way boards make decisions.
According to the ION report, having three or more women directors in a corporation can enhance corporate governance and bring about fundamental change in boardroom dynamics. I suspect the same holds true when directors from any diversity group are placed on corporate boards.
Increasing the amount of diversity on corporate boards will bring new perspectives, thoughts, and ideas for success to the corporate boardroom. If like thinking people are placed on a board together, the board will probably consistently generate similar opinions and decisions. By contrast, putting a diverse group of people together on a corporate board allows a company to benefit from a variety of different points of view and increases the chances that the board will come to sound progressive decisions.
Boardroom diversity also provides companies with innovative ideas and helps companies to anticipate, to understand, and to effectively respond to their customers’ needs. One would think that knowing and understanding this information, companies would be rushing to nominate diversity candidates for director positions.
Unfortunately, it appears that this is not the case.
I am confident that companies would switch directions if there were an overwhelming body of evidence that putting diversity candidates on their boards would make them money. But while there are many studies that support this notion, there are not as many irrefutable studies on the ROI of boardroom diversity as there are for, say, smoking and its direct link to cancer.
In my humble opinion, the only way that companies will truly discover the benefits of having diverse boards is by putting what the experts say to the test. Companies should place more diversity candidates on boards and measure the financial results of their new diversified boards. I’ll bet they find it makes a positive financial difference.
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Comment by Kim on February 21, 2009 at 4:02pm -
I'd like to invite anyone passionate about this topic to an event that Corporate Board Member magazine is hosting on May 4-5, 2009. In an effort to promote the benefits of inclusion of women and minority groups, including but not limited to African Americans, Asians and Asian Pacific Americans, Hispanics, Latinos and Ethnic Minorities, Corporate Board Member has established a “Diversity Council” to conduct research on the topic and provide editorial coverage of the issue in our magazine and on our website. The Board Diversity Symposium will be a culmination of the magazine’s efforts to achieve the following goals:
1) Help educate public company boards while creating in-house mechanisms to identify highly qualified women and minority candidates for corporate director positions;
2) Work with major search firms and governance consultants to match potential directors with public company boards
3) Assist in connecting sitting diverse board members with prospective minority board candidates to pass along experiences and helpful tips.
Topics to be explored at the 2009 Board Diversity Symposium will include:
The ROI of a Diverse Board
Attracting the Right Talent
Accessing the Boardroom: Tips for Prospective Candidates
The Board’s Role in Evaluating Workplace Diversity Efforts
Globalizing a Diversity Strategy: Cultural Issues to Consider
Board Membership for prospective directors
Implementing a Diversity Strategy from the Top Down
Globalizing Your Diversity Strategy
Peer Collaboration Sessions allowing ample networking for sitting nominating chairs and prospective directors
Audience Profile
The conference will target two groups:
1) Board Chairmen, Nominating/Governance Committees, CEOs, Human Resource Directors, General Counsel and Corporate Secretaries of Publicly Traded Companies
2) Women and Minority Candidates who would like to be a director and Companies that would like to nominate female/minority executives within their company as candidates for potential board seats
3) Sitting minority corporate directors who serve on public companies
The event is very reasonably priced even in these economic times and even for someone who wishes to attend independent of company financial support. For more information, you can visit our website: http://www.boardmember.com/conferences/upcoming-events/boardroom-diversity-symposium/overview/
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