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Corporate Board Diversity

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Corporate Board Diversity

In order to meet the challenges faced by companies it is crucial to have a board of directors who can identify and address complex issues and opportunities. This requires a wide perspective. In addition to racial and gender diversity, boards need to include people who are experienced across a variety of sectors and who possess diverse skills as well as backgrounds, experience, and perspectives.

Despite the impressive gains in boardroom diversity however, it is evident that companies have much more work to do. Spencer Stuart reports that women and directors from underrepresented ethnic or racial groups comprise less than one quarter of the board seats in Fortune 500 companies. In the same way, women and people of color are not represented in senior leadership roles.

Consumers and investors are increasingly pushing for greater diversity in the executive suites and boards and corporate governance is a hot topic. They are increasingly demanding more detailed reporting on these metrics and many are putting their dollars to pressure companies to promote more diversity on their boards.

Some states have even passed laws to encourage or mandate diversity on boards. However, quotas can be controversial and can result in the perception that women and non-white directors are selected as « token » selections rather than for their merits. They can also make it difficult to find qualified candidates if they are based on achieving a target number. In many instances, focusing only on diversity can result in boards that aren’t focused and ineffective.

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