More companies are making efforts to diversify their board. In 2019, 59 percent of new directors on S&P 500 boards were women or men of an ethnic or racial minority group, according to the U.S. Spencer Stuart Board Index.
Companies seeking to increase their board diversity should look for people who differ in demographic characteristics, but are also cognitively diverse, Jared Landaw, a partner, COO and general counsel of activist investment firm Barington Capital Group, wrote in a June 11 Harvard Business Review article.
He said it is commonly assumed new board members with diverse gender, racial and ethnic characteristics will bring new perspectives to a boardroom, but too often those individuals are added to the board based on their similar backgrounds to incumbent directors.
"While labor intensive, diligent director recruiting can help boards identify candidates that maximize the diversity they bring to the boardroom. If a board approaches addressing diversity concerns solely as a 'check-the-box' exercise, we believe it is doing a disservice not just to itself but also to the company and its shareholders," he wrote.
Mr. Landaw outlined five recommendations to improve a board's cognitive and demographic diversity:
1. Recruit directors who are demographically diverse and have strong business backgrounds.
2. Identify demographically diverse directors who have expertise in areas that meet the company's current and future needs.
3. Recruit from new talent pools outside of board member networks.
4. Determine if candidates are cognitively diverse from other members by having discussions with them on background and life experiences.
5. Have multiple directors partake in interviews and conduct interviews in different settings.
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