Raising the Board Refreshment Bar: Bringing Diversity Into Committee Leadership

Raising the Board Refreshment Bar: Bringing Diversity Into Committee LeadershipZoom inDownload PDF

Tackling fresh opportunities. That’s what profitable companies do. Delivering consistent, stellar results. That’s what winning companies do. Whatever it takes, winning companies make it happen. With that in mind, there is one opportunity that has been acknowledged by leading companies but not yet fully realized—fielding a board of directors with diverse voices.

Diversity manifests in a number of ways—in experience, in skills, in gender, in ethnicity, in cultural background, in nationality, and in race. But boards are still a ways off from making this a reality. Take the issue of gender diversity. Boards today are still far from parity. In a world where Silicon Valley gives birth to billion-dollar companies in just two or three years, most companies have not delivered a diverse board in twenty. A host of research shows that diverse boards deliver better results—as much as 15 percent better with gender diversity, according to a 2015 McKinsey study—yet the “go-slow” approach suggests a need for continued muscle-building in governance.

According to Equilar, in 2017, 20.9 percent of board seats were held by women at the 500 largest companies by revenue. More important, women held only 8.4 percent of board leadership positions—lead directors or committee chairs. This underrepresentation of not just women but other forms of diversity as well is getting harder to explain given that 61 percent of directors feel a need for greater diversity of viewpoints and backgrounds on their boards, according to a KPMG study. That’s why big investors like State Street and BlackRock have called on boards to address their composition, gender diversity in particular.

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