I am finding great pleasure in teaching and coaching executives that aspire to become corporate directors. I never imagined that the corporate community, motivated by investors and regulators, would make diversity in corporate governance a legitimate corporate goal. Never before have we seen companies’ annual reports and proxy statements contain as much information about diversity, equity and inclusion. This may be the dawning of a new day in corporate America!
I do have a few concerns. First, to ensure this surge in diverse corporate governance is not merely a short-lived social fad, the business case for diversity must remain front and center. Yes, having more women and more people of color on boards is the morally right thing to do. But all available data reveal that having diverse backgrounds and diverse opinions in the boardroom also enhances corporate performance. At the end of the day, corporate directors are elected or selected by, and represent, a company’s shareholders who are the owners of the enterprise. Of course fairness and justice are core values of any company, but it is profits that keep companies in business. Diversity will never be a substitute for profitability and, therefore, efforts to increase diversity must also contribute to business success.
My second concern is that effective onboarding of diverse board candidates may require an expanded approach to standard onboarding practices. So many companies have become accustomed to electing experienced directors that, in many instances, there is really no rigorous onboarding of new directors at all. That can be significantly disadvantageous for directors who have no board experience and whose backgrounds have not exposed them to the various types of board cultures that are prevalent in the corporate world. I am often surprised by some of the topics that surprise my students when I address them in my course. And when speaking to diverse directors that are currently serving, they often express that they wished they had more preparation prior to their service as directors. That is one of my key teaching objectives in my online course, How to Become a Corporate Director.
Finally, I have observed that in the post-civil rights era, there have been initiatives that referenced the disparities among black people to justify strategies that create opportunities for all “underrepresented” groups including women and “people of color.” Today, we find ourselves more than half a century beyond the reckoning of the 1960s only to find many of the disparities for black Americans being as significant as they were when Martin Luther King, Jr. was assassinated in 1968. If we are to close the gaps for people who exist within the widest gaps, more companies will have to address the specific barriers that prevent blacks from attaining seats at the tables of governance. This can be controversial if not handled correctly as there are those who will quickly assess this as “reverse discrimination.” But the data driven approaches to closing economic and opportunity gaps will protect us from infringing on the rights of some to advance opportunity for others. The results will be stronger and more productive for companies that are being led by people who reflect the complexity and diversity of the marketplace.