Well, well. Speaking of “emerging data,” as I frequently do, there’s some pretty fascinating information coming out about corporate boards and diversity.
I get a daily business/markets newsletter from Axios .A recent one compared the earnings of companies with different board compositions–the percentages of non-whites and women, and the largest age ranges of those sitting on the governing boards of those companies. (Click through to see a nifty little chart.) And while the report was careful to point out that the results showed correlation, not causation, those results were certainly intriguing.
By the numbers: As a cohort, the companies with more women on their boards saw the smallest year-over-year drop in revenue growth in 2020.
And a group of companies with board members whose ages spanned over 30 years saw an improvement in revenue growth compared to the prior year. The rest saw growth slow.
The businesses with at least 30% of seats filled by non-white executives saw a bigger jump in revenue growth. However, those that had between 20% and 30% non-white board executives fared worse than those with fewer non-white members.
BoardReady cautions that this data might be skewed because so few companies have enough non-white executives on their boards to meet that threshold.
BoardReady used revenue as a yardstick — rather than profits or other markers— in order to avoid distortions of the data due to various adjustments companies made during the pandemic.
So far, efforts by legislators and regulators to encourage more diverse representation on corporate boards have had a relatively limited impact, although the numbers are inching up. (According to the report, women made up 28% of all S&P 500 corporate board members last year, up from 16% in 2010.)
A 2019 Webforum article written by one corporate executive makes the business case for increased inclusion and a broad definition of diversity:
We live in a complex, interconnected world where diversity, shaped by globalization and technological advance, forms the fabric of modern society. Notwithstanding this interconnectedness, there is also growing polarization – both in the physical and digital worlds – fuelled by identity politics and the resurgence of nationalist ideals.
Not surprisingly, our workplaces tend to mirror the sociocultural dynamics at play in our lives outside work. Having built and scaled a multinational enterprise over nearly two decades, I’ve learned that diversity in the workplace is an asset for both businesses and their employees, in its capacity to foster innovation, creativity and empathy in ways that homogeneous environments seldom do. Yet it takes careful nurturing and conscious orchestration to unleash the true potential of this invaluable asset.
In this era of globalization, diversity in the business environment is about more than gender, race and ethnicity. It now includes employees with diverse religious and political beliefs, education, socioeconomic backgrounds, sexual orientation, cultures and even disabilities. Companies are discovering that, by supporting and promoting a diverse and inclusive workplace, they are gaining benefits that go beyond the optics.
The author argues that bringing together people of different ethnicities and different life experiences is a key driver of innovation, and he cites the increasingly varied foods we eat every day, the most successful musical genres (jazz, rock’n’roll, hip-hop) and other innovative aspects of contemporary life as “products of cultural amalgamation.”
Of course–as data I’ve reported upon previously amply confirms–that’s the problem. Resistance to inclusion (not just in boardrooms but in venues of all kinds) is best understood as a visceral and very negative reaction to “cultural amalgamation.”
In fact, cultural amalgamation and the frantic resistance to it are at the root of most of the fault-lines that run through our politics, retard the diversification of boardrooms, and create and fuel social discord. Proponents of capitalism and market economies give lip service to their fidelity to the bottom line, but thus far most companies have turned out to be part of–or at least in thrall to– the cultural resistance.
Time will tell whether performance reports like these move the needle, and whether “It’s the economy, stupid” should really be “It’s the culture, stupid.”