Despite research that shows the positive effects of greater board diversity—companies with it are more likely to have strong financial performance and fewer instances of bribery, corruption, shareholder battles, and fraud—some directors remain unconvinced about the value diversity brings to a company overall.
A new PwC survey of nearly 900 directors found that a majority of them—73%—recognize that diversity is beneficial. Of that segment, 94% said gender and racial diversity brings unique perspectives to the boardroom, 82% agreed that it enhances board performance, and 59% tied it to better company performance.
Yet a small but startling share—16%—said that gender and racial diversity has no benefits at all. (Another 11% said his or her board didn’t have diversity and therefore didn’t remark on its upside.)
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What’s perhaps just as concerning is how directors split at a more fundamental level, with large swaths of respondents—33% and 24%, respectively—saying socioeconomic diversity and racial diversity are “not at all important” to fostering diversity of thought in the boardroom.
Those findings may help explain respondents’ apparent satisfaction with the current levels of diversity on corporate boards. More than half of directors—58%—said that their board has achieved racial diversity, but outside research from executive search firm Spencer Stuart shows that just 15% of board seats at the top 200 S&P 500 companies belonged to racial minorities. Women held just 21% of S&P 500 board seats last year (up from 20% the year prior).
“We’re definitely on the journey to mak[ing] change, but some of the results were quite astounding,” says Paula Loop, leader of PwC’s Governance Insights Center.
But there are some hopeful clues buried among the alarming conclusions. They suggest that as more marginalized groups—women in particular—continue to pick up board seats amid pressure from institutional investors like State Street Global Advisors and BlackRock, they could provide more pro-diversity perspectives.
This year’s study found that female board members are more likely than male directors to say that gender and racial diversity has had a positive effect on the board and on the company at large, and they are more likely to recognize certain demographic attributes as “very important” to achieving diversity. Forty-two percent of women, for instance, said racial diversity was vital, versus 20% of their male counterparts.
Male directors, meanwhile, displayed more resistance to the corporate diversity push in general. Of the 27% of directors who said there is too much attention on gender diversity, 97% of those respondents were men.
By Claire Zillman
Source: Fortune
At a recent training I was facilitating, I invited people to ask me anything anonymously using polling technology. While the questions always give me great insight into where people are struggling with issues of diversity, equity and inclusion (DEI), this question seemed more universal: “What do I do if my manager is not inclusive?”
Our society’s tendency to look to men for expertise is one of the things that holds women back in our careers. But we can all help give women’s knowledge and accomplishments greater visibility, which will cause people of all genders to view women as experts and turn to women for expertise more.
Right now, diversity, equity, and inclusion (DEI) initiatives are under growing scrutiny. Some companies are pulling back from DEI initiatives amid nervousness around shareholder activism and possible investor or customer pushback. Highlighting the benefits of DEI to an organization’s performance and the wellbeing of employees is the best way to address this negativity.
