Why is board diversity important?

The case for boardroom diversity has never been stronger. As recent protests sweep across the nation, corporations and other organizations are struggling to address the challenge of racial equity in the context of an environment that is already impacted by the recent pandemic. For this reason, leadership must quickly adopt investment strategies that will not only address present day challenges, but plant future seeds to eradicate issues of exclusion from the economic table. Here are some FAQ’s about the need for diversity on corporate America’s boards.

Frequently Asked Questions

Do markets improve when race is embraced?

Clearly, companies that practice diversity, especially at the policy level, outperform their counterparts under all of the metrics that contribute to growth and profitability. Several recent studies have confirmed this fact (McKinsey Study, Boston Consulting Group, Deloitte Study and the Stanford University Study).

Companies enhance their brand image as well as public perception when their decision-making process is inclusive. When we don’t see people of color represented on the Board of Directors, the Board’s policies are not viewed as being inclusive.

How will boardrooms change with more racial diversity?

A diverse Board allows interpersonal peer-to-peer contact and collaboration. This drives relationship-building with those most affected by policies that the Board generates.

Familiarization on a personal level is essential in transferring these experiences to the larger group.

How should we correlate customer and board diversity?

There is a direct linkage between policy and customer expectations. Leadership’s role is to respond to customer input in a way that accommodates customer expectations, thereby generating marketshare. Marketplace demographics are changing rapidly in all business sectors. Customer diversity is the driving consideration for including diversity as a core element of decision-making. All of this drives customer value.

How can boards and leaders help heal the racial divide?

To effectively address the issue of racial and social equity, while sustaining the progress we have made thus far, will require companies to go beyond simply writing a check for a good cause or making a public pronouncement about the organization’s policies. Board leadership must develop and build upon a strategy that ensures “a seat at the table.” This act alone demonstrates shared interest. . . resulting in shared purpose. . . leading to shared ownership.

How does board diversity enhance ESG understanding?

ESG has become a defining element in determining an organization’s shareholder value and it begins at the level of governance. Corporations with an effective diversity strategy emphasize ESG as a defining element of customer-centered governance. The Board of Directors is where core values are set and performance metrics are designated. Board diversity permeates the entire DNA of the organization up to and including environmental and social initiatives that are underway. For this reason, America’s most successful corporations embed diversity into these measured performance pillars as a routine business practice.

Will the HDI place me on a board after I complete the program?

The process to get on a publicly traded or private company board can be lengthy and requires time and engagement on the part of the Fellow. The HDI does not guarantee a board seat, but it does provide Fellows with strategic advantages and insights needed to prepare for their future board seat and to serve with confidence.