In this post, I’m going to put on my moderator hat in order to tease out some common themes and differences across today’s posts and to press the contributors (including me) to elaborate on or defend some of their statements and assumptions.
Let me start, first, with the elephant in the room of board quotas. As Aaron’s posts make clear, this is an approach followed by many countries, but not the US, which has, not surprisingly, opted instead for a disclosure regime. Darren also writes about quotas, so he’s given this some thought as well. And in the comments, Lisa asks whether the potential for popular backlash against quotas in the US would be so strong as to make them counterproductive.
So, I’d like to invite all of our guest bloggers to engage the quota question more directly, as well as ask a pointed question – what purpose do you expect quotas to serve? Lisa notes that board diversity is an end in itself that provides social and other benefits. And if that is the rationale, then I suppose we need look no further. Indeed, one thing I have noticed about board diversity debates in other countries is that these social benefits of board diversity (it provides opportunities for women and minorities, it counteracts unconscious or other bias, it provides diverse role models, etc) are often front and center in the discussion.
In the US, however, that is not the case. Board diversity efforts in the US are nearly always supported with a “diversity is good for business” rationale. Our respondents, for example, uniformly adopt some version of the “good for business” justification, and only rarely, if ever, invoke social, ethical, or fairness justifications.
The ubiquity of the business rationale is especially interesting in light of the empirical research on diversity’s effects on the bottom line. I should note here that I am substantially more skeptical than either Aaron or Lisa about diversity’s bottom-line benefits in the boardroom, which in my view are unproven under most conditions and in some cases are contradicted by existing quantitative research showing that board quotas reduce profitability.
So, to my fellow board diversity bloggers: what is your basis for concluding that board diversity is good for business? Or am I misinterpreting your statements? Aaron mentions empirical support for diversity’s boardroom effects in terms of “decision-making and overall firm governance,” so perhaps he can elaborate on that. Lisa, while somewhat more agnostic, does link to the wildly popular Catalyst studies showing correlations between diversity and performance, presumably implying that such correlations mean something.
Which brings me to Daria’s comments about method, which I will engage more fully in a separate post. But, in short, I think the ethnographic method is perfectly suited to the question we seek to engage, which is -- given the lack of empirical support for diversity’s effects on shareholder value – how do directors themselves explain the “diversity enterprise?”
Whether or not their lack of a coherent story is surprising (Daria thinks not, John disagrees, I’m sort of agnostic) it is quite telling. And to me, the story it tells is one in which the business case is ultimately irrelevant to the quest for diversity in the boardroom, though that is not what anyone says. And that, I think, is a very interesting story.
The “What’s The Return On Equality?” Mini-Symposium: