Corporate Governance

Diversity and the Board of Directors: The Inadequate Pool of Candidates for the Board

By J Robert Brown Jr.

We have been writing recently about the dismal record by US boards when it comes to the representation of women.  In the US, about 12-14% of directors are women.  The usual explanation of this low percentage is the dearth of qualified candidates.  That in turn is explained by the need for directors to have executive officer (preferably CEO) experience, an area dominated by men.  We have noted on this Blog many times that this ignores plenty of other skill sets that would be invaluable to a board.  Moreover, it suggests that boards should be a "mirror image" of the CEO, something that likely weakens boards by minimizing the types of viewpoints that might come out in board discussions.

With that in mind, we notethe piece on Deal Blog by Steve Davidoff where he notes the problems that can potentially arise with directors all having the same background. As he noted:

• If the same type of people are always appointed to corporate boards, will anything change? When the next bubble comes along will these directors critically question industry practices? Or will new directors with more diverse backgrounds continue the perceptible improvement in corporate board decision-making and add value?

His suggestion?  "For all companies hiring new directors, perhaps it is time they told their search consultants that some diversity in background is appropriate."  We couldn't agree more.

Full post as published by The Race to the Bottom on March 09, 2011 (boomark / email).