FEATURE
Steps to Improve Board Diversity in 2021 By GEOFFREY R. MORGAN
self-identify as meeting certain diversity requirements (female, under-represented minority or LGBTQ+) and to provide ongoing disclosure about diversity statistics pertaining to their boards of directors. Nasdaq cited a desire to “enhance investor confidence.” Given the broad support, there is every reason to believe that the rule will be adopted as proposed. Boardroom diversity is no longer a best practice. It is a mandate. Below is a practical roadmap for board leaders committed to making diversity and inclusion a part of the fabric of their boardrooms.
UNDERSTAND DIVERSITY WITHIN YOUR BUSINESS
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hough most of us are content to leave 2020 in the rearview mirror, it is nonetheless a year that has reshaped our economy and our social priorities. This rings especially true in matters of diversity, inclusion, racial equality and social justice. This year has taught businesses from Wall Street to Main Street that mere efforts in these areas are no longer sufficient. Shareholders and consumers expect results. Corporate boardrooms represent one of the greatest areas of opportunity to enhance diversity in corporate leadership. Requirements by states like Illinois
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and California to report on and meet certain boardroom diversity standards are helping to move the needle. Consider this: Today there are no S&P 500 firms reporting all-male boards, and a majority of S&P 1500 boards have at least three female directors. Still, there remains much to be done. Nasdaq has made a significant statement about the importance of boardroom diversity. In December 2020, it filed a proposal with the Securities and Exchange Commission that, if adopted, would require companies listed on the Nasdaq’s U.S. exchange to have, or explain why they do not have, at least two directors who
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First, the board must understand diversity through the lens of its own business. There is overwhelming evidence that leadership diversity is good for business. Too often, however, diversity is narrowly defined, which can lead to resistance and stalled efforts. Looking at board diversity through the lens of existing business opportunities may help board members understand the value that diverse representation can bring to the bottom line. Identify key business goals, objectives and challenges at hand and outline the knowledge, skills and abilities (KSAs) a director should have to help address them. Is the company targeting younger customers? Is it trying to become more digitally focused? How would a candidate with less traditional credentials view a problem the company is facing differently? What qualities does the consumer BACK TO CONTENTS
