The Conference Board Governance Center Blog

Nov
17
2011

Improving Board Diversity

Board diversity in the United States has remained relatively unchanged, despite a variety of developments affecting United States public companies, including an increased emphasis on business justifications for diversity and increased disclosure requirements related to diversity,  according to a recent Director Note entitled Revisiting Justifications for Board Diversity published by The Conference Board.   The Director Note also reports, however, that the existence of an outlined strategy for implementing a diversity initiative was an important factor in the overall success of such an initiative, according to one study.

To assist companies seeking to increase gender diversity of their boards, The Conference Board announced this week the release of an innovative scenario modeler developed by The Conference Board and Georgetown University’s McDonough School of Business in partnership with The SAIS Center for Transatlantic Relations at Johns Hopkins University.  The model draws on historical data from 2,749 U.S. public companies to examine the evolution of gender diversity on U.S. corporate boards each year between 2011 and 2040. The interactive model allows users to adjust board characteristics to assess how departures from today’s prevailing corporate governance trends could accelerate or impede the progress toward greater gender parity in coming decades.

“Board diversity is becoming a greater concern,” said The Conference Board CEO Jonathan Spector. “There are many factors that determine how quickly gender diversity can be increased.  Our model was built to help companies identify those factors and gauge their impact on the future make up of their boards. In offering this scenario modeler for board diversity, we’re hoping companies will be able to examine this issue, and all its complex components, in a newly critical and analytical way. We want to empower companies to set bold, attainable goals that will leverage diversity at the highest level to grow their businesses.”

“On the boards of Fortune 500 companies,” Spector added, “the percentage of women has risen painfully slowly in the last 15 years — from 9.6 percent in 1995 to 15.7 percent in 2010. At current rates of change, it will take not years, but decades, to approach true gender parity.” Indeed, the model calculates that if, over the next eight years, 25% of the Fortune 500 board seats that became vacant annually were filled by women, the percentage of female directors in that sample would be approximately 23% in 2020. This outcome is well below the 40 percent expected in those European countries that have recently adopted legislation introducing a gender-diversity quota system for corporate boards.

The model is available for download at http://www.conference-board.org/board-diversity. It inaugurates a wider Board Diversity Initiative from The Conference Board; as part of the initiative, and in collaboration with the SAIS Center for Transatlantic Relations and others, The Conference Board is engaging with nominating committee chairs, business leaders, and other experts in the field to develop new research and formulate forward-looking recommendations.



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