Women and minorities make up only a slim fraction of corporate America's board membership, a status quo that's remained virtually unchanged over the past eight years. Experts predict this will hurt companies as they expand into overseas markets and as the ethnic makeup of the United States changes.
In its new biennial study of the gender and ethnic makeup of Fortune 100 and Fortune 500 company boards, the Alliance for Board Diversity found that white men hold more than two-thirds of board seats in both groups. Women hold 20 percent of Fortune 100 board seats, and minorities, who comprise 37 percent of the country's population, only hold 16 percent.
Ron Parker, president and CEO of The Executive Leadership Council, one of the organizations that comprises the Alliance for Board Diversity, said companies today understand the importance of diversifying in order to gain global market share but often overlook diversity when it comes to their own governance.
"They're missing the perspective of the growth engine that's going to fuel their enterprises," he said. "Different perspectives bring the opportunities for innovation."
"Boards that are more diverse generally make better decisions. Typically, groupthink is the enemy of good decision-making," said Eric C. Peterson, manager of diversity and inclusion at the Society for Human Resource Management.
Ironically, Peterson said, companies might think they have a top-notch board of directors because everyone always agrees. In reality, dissenting voices generate better dialogue, more ideas and a more dynamic corporate culture.
"If non-traditional board members are more likely to ask challenging questions of top management, boards themselves may seek diversity to better perform their roles," Harvard University sociology professor Frank Dobbin said via email.
Inertia also is to blame for the under-representation of women and minorities on corporate boards, Dobbin said. "Change in corporate board diversity has been slow because many boards have no term limits," he said. "Because turnover is slow, board diversification is slow." Companies are also hesitant to shake up the status quo in a poor economy, he said.
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