Wrapping It Up: The Struggle To Explain Why Difference Makes a Difference (Sotomayor And The Value of Diversity, The Final Installment)

In my prior post on this topic, What Corporate Insiders Say About Why Diversity Matters, I noted that (though our work is still preliminary) our research suggests that corporate insiders appear not to have arrived at a master narrative to explain the pursuit of diversity on boards of directors. Instead, their accounts stress a variety of factors and feature few concrete examples.  Elements of each of the diversity rationales discussed in my post, Money Is Diversity or Diversity Is Money?, appear, but it is largely a theoretical narrative without concrete detail -- a story without substance.  When invited to elaborate, subjects have digressed into instances that had little to do with race or gender, and in fact have often distanced themselves from demographic variables.  And none expressed anything more than a hope that diversity would correlate with business performance.  Despite their focus on the business case for diversity, overall our subjects do not tell that story concretely or consistently, instead falling back on a story that is more similar to “it seems like a good thing to do.”

And, indeed, it may be.  As noted, the empirical research on board diversity presents methodological hurdles and conflicting results, leaving many questions unanswered.  Accordingly, there’s no empirical consensus on whether board diversity improves firm performance.  All we can say is that, if there is a business case to be made for board diversity, most of our respondents do not make that case with much specificity.

And perhaps this should not be entirely surprising.  After all, I began this series of posts by lamenting the lack of specificity and rigor in most discussions, prompted by the Sotomayor nomination, about the possible role of diversity on the Supreme Court.   And that is a much more familiar institution to most than the corporate boardroom.  Moreover, some diversity rationales – for example, fairness, representational, and social good rationales -- that feature prominently in discussions of diversity’s benefits in public, educational, or political institutions are more problematic, both practically and theoretically, in the corporate board context.

In closing, a striking summary of boardroom discussions about board diversity came from a white female director with significant experience providing professional advice to corporate boards. The specific question posed was why one particular board had sought diversity. Her account suggests that the business world does not have a well-reasoned board diversity rationale—in fact, in her view, the question of rationale is never even discussed:

I suspect you haven’t gotten many introspective answers on that because, in fact, you’re never going to have a board that will honestly question whether or not there is a value associated with that.  And people will accept it and move on.  Everybody says the same thing because, again, I’m in boardrooms a hundred times a year and I hear the same discussion.  And what they say is we have skill sets that we want and if we can find a diverse candidate who fulfills them without sacrificing the skill sets that we’re looking for that would be terrific.  And the analysis doesn’t go any further.  It just isn’t discussed.  So anything I tell you about why I think diversity adds value is going to be [my] thoughts because it was not a topic of discussion.  [Sentence that identifies company deleted.]  So to the extent we’re talking about sort of that wide swath of middle America, then it’s nice to have a board that is in some respects emblematic of that but we’ve never discussed it.

That concludes my posts in this series.  Thanks for reading, and don’t forget to also read our papers (here and here) on board diversity, which include a much more extensive use of the interview transcripts.  And send us feedback and comments – despite the work we’ve already done, we still have years of work ahead of us.  As a way of saying “thanks” for your attention so far, I leave you with this wholly unrelated, but funny, clip on “Diversity Day” from The Office.

To read my prior posts in this series see:
I.                    Sotomayor, Diversity, And Group Dynamics: Why Do We Care? What Do We Know?


II.                  Do The Right Thing, So Long As It’s Free

III.                Money Is Diversity or Diversity Is Money?
IV.                 What Corporate Insiders Say About Why Diversity Matters

Comments

[Ediberto Roman]

An interesting group of posts. They raise important issues, especially for those that teach in the corporate area and contend with soft legal concepts such as social responsibilty. In light of these writings, I would ask the authors what value, if any, they would place on board dversity. Perhaps that was not the goal of this research or the posts for that matter. However, this reader is nonetheless left wondering what would be authors exhaustive answer to this issue.

Ediberto Roman

[Kim Krawiec]

Thanks for your comment, Ediberto. You’re correct that the project is designed as a purely descriptive ethnographic one – what do corporate insiders say about whether board diversity is important and, if so, why? And then, secondarily, to illuminate logical or internal inconsistencies in those narratives. So the project wasn’t designed to answer the bottom-line question of whether board diversity adds value and, in fact, can’t answer it.

Having said that, I think that our next paper will touch on at least two counterexamples to the story of incoherence that we put forward in the first paper. Those two relate to the role that a diverse board may play in (1) diversifying the senior management pool when determining issues of succession, and (2) recruiting, training, and retaining women and minorities in management, including lower-level management.

We did not see these counterexamples with all diverse boards. Not all female or minority directors mentioned these as issues of interest, whereas others were clearly quite committed. Moreover, it takes more than one director to make a difference here – it takes other willing board members and, with respect to item (2) above, a willing CEO as well. So we don’t see this across the board, but we saw it enough to be interesting, I think.

I should add that, even if it is true that diverse boards perform these functions better than nondiverse ones, the respondents’ claims that this is good for business are themselves contested claims. But at least now we’re talking about redistributing opportunities on a broad scale – you can imagine that at least some people would consider this a worthy goal, even in the absence of a bottom-line profit impact.

So I hope that our next paper will provide further insight. Best, Kim