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Nov 05, 2013

Could board diversity actually be decreasing?

Making a business case for board diversity, which 2020 Women on Boards is hosting panels to discuss, may prove more effective than pushing for quotas



According to executive search consulting firm Spencer Stuart, a recent survey of corporate secretaries, general counsel and chief governance officers placed minority and female candidates atop their wish lists for new directors; 56 percent of boards sought minority candidates and 54 percent sought women.
 


With so many boards apparently looking for diverse candidates, why does it seem difficult to increase the number of women and minorities on boards?  In fact, according to another study from talent management solutions firm Korn Ferry International, diversity on boards may actually be decreasing. In a statement announcing the results of a study of the boards of the largest US companies, Korn Ferry reports, ‘Ninety percent of new directors are white compared with 77 percent of this group in 2011. Moreover, diversity has dropped in virtually every category year-over-year: The percentage of new women directors dropped from 27 to 23; African-Americans from 11 percent to 6 percent; Asians from 7 percent to 1 percent; and Hispanics from 4 percent to 3 percent. Only international diversity has increased, with new, non-American directors representing 20 percent of recruits, up from 16 percent in 2011.’
 


The issue of board diversity has been gaining momentum worldwide. Since Norway successfully imposed quotas that required 40 percent female board membership, other nations like Canada, the UK and the US have been considering taking similar steps. However, there is significant opposition to using quotas in all of these nations, so a number of other initiatives to get corporations to increase the number of women on their boards have begun taking shape.
 


One effort in the US is being spearheaded by 2020 Women on Boards, a national campaign to increase the percentage of women on US company boards by 20 percent by the year 2020.



The group is holding a series of panel discussions next week in various cities with the focus on making the business case for board diversity.



On November 12 in New York, a panel discussion titled ‘How diversity in the boardroom affects performance’ will feature Stephen Brown, senior director, corporate governance at TIAA-CREF; Richard Leblanc, associate professor, law governance & ethics, York University; Virginia Gambale, managing partner of Azimuth Partners and corporate director at JetBlue and Remedy Analytics; and Mary Steele Guilfoile, chairman of MG Advisors and corporate director at Interpublic, Valley National Bancorp and CH Robinson Worldwide. Bloomberg editor-at-large Carol Hymowitz will lead the conversation about the potential benefits of diverse board membership. Making a business case for board diversity may prove more effective than pushing for quotas. It is a conversation that will likely take place at more companies going forward.
 


In Canada, Sylvia Groves, president and creative director of Governance Studio, is promoting ‘Diversity One’, the concept of encouraging companies to take one decisive step toward improving board diversity – committing to interview diverse candidates each time a board position becomes open. In a statement announcing the Diversity One movement, Groves notes that ‘Focusing on one small change, rather than a multitude of options, makes it easy for boards to move forward. By requiring only an interview, not a hiring requirement, the policy ensures that the best candidates make it onto the board.’
 


Groves is making the Diversity One concept paper available to anyone who wants to review it. 

She will also be making public a listing of all companies that sign up to adopt the Diversity One policy.
 


As women continue rising to leadership roles at corporations worldwide, it only makes sense that they would also begin to fill spaces on boards as well. The organizations above have information on why diversity on boards makes a difference. Consider what they have to say before you fill your next board seat.
  


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Matthew Scott


Editor


Corporate Secretary