diversity

Diversity and Meritocracy

A few weeks ago a campaign supporter suggested that our messaging was off. He said we are alienating half of our audience by insisting on boardroom diversity. Instead, he said, board directors should be chosen by meritocracy, based on ability and skill. If we selected our leaders based on meritocracy, he was sure that women would find their place on boards and in executive suites. Problem solved.
 
The word diversity has been bantered around for decades in discussions about corporate leadership. We’re told that diversity is a business imperative, that it’s good for business. In 2009 the SEC required companies to disclose their approach to diversity, without ever defining it. Diversity could mean anything. It was for the company to define, and the term can take on an empty ring.
 
2020 Women on Boards was the first organization to put a stake in the ground and define diversity to mean a minimum of 20% women on public company boards. Other groups added their own definitions and there are now diversity initiatives that call for 25%, 30%, 40% and parity for women on boards, many of these initiatives coming from European countries where strict quotas are enforced by law.
 
Those who talk about meritocracy when it comes to board service are perpetuating the myth that boards are chosen based on a specific set of criteria. It is not like applying to college. Each board has a unique set of challenges that are best addressed by a diverse group that brings a vast range of skills and experiences to the table. Most board members are selected because other board members know them or know of them. There’s nothing meritocratic about it.
 
Speak out against all male boards. Vote your proxies and send a message to companies that gender diversity is a priority!

How to Diversify Without Really Complying

In 2010 the US Securities and Exchange Commission implemented a measure to ensure companies disclose information about how they consider diversity when they pick board members.  The rule did not define diversity as meaning gender or race.   Therefore, as per this NY Times blog post, we now have companies “interpreting diversity as having a varied background or experience.”
 
With so many studies documenting the advantage of a gender diverse board, companies would be far better off undertaking a stretch of their boards, rather than simply extending the definition of diversity.

Actions Speak Louder Than Words

Apple Inc. recently announced that they would be amending their nominating and corporate governance committee charter to include language conveying the need for gender and racial diversity. The charter will state that Apple is “committed to actively seeking out highly qualified women and individuals from minority groups to include in the pool from which board nominees are chosen.” But Apple isn’t acting from its own volition. At the annual shareholders meeting, two investor groups, Trillium Asset Management and the Sustainability Group, proposed a diversity vote that would force Apple to take the necessary steps to ensure gender equality among its board members. Rather than leave it to the vote, Apple came out with its charter amendment.
 
And now Apple will likely find one or more worthy, meticulously qualified women and/or minorities. However, two questions remain: why wasn’t gender and minority diversity already an issue for Apple? And why did it take so long to become one? How quickly will Apple act, since they currently only have one woman on their board?
 
We hope other companies follow Apple’s lead without being forced, and proclaim a commitment to a diverse board. We all know, however, that while charter language is good, actions speak louder than words.

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