In my last two posts -- Dangerous Categories: Diversity and Stereotypes in the Boardroom and Dangerous Categories II (Wow, Men Are Still From Mars and Women From Venus?) -- I discussed a forthcoming paper with Lissa Broome and John Conley on corporate board diversity. As I noted, all of our interview subjects (with one partial exception) agree with the abstract proposition that board diversity is a good thing. On the more specific question of why it is good, there is broad agreement—a master narrative of sorts--that board diversity results in functional improvements to board or corporate operations—a qualitative “business case” for board diversity. Though the particulars of the functional story vary across respondents, many accounts bear a strong resemblance to Justice Powell’s original exposition of diversity in the Bakke case: a diverse group of people will engage in a richer discussion that will be informed by the multiple perspectives for which their demographic diversity is a proxy.
But it has proven difficult to get beyond this very general narrative; our respondents have been able to provide few detailed or substantive examples of this presumed benefit of diversity. Perhaps this reluctance to examine critically the benefits and drawbacks of board diversity results from the dangerousness of the categories associated with diversity--gender, race, and ethnicity. The “different perspectives” argument requires the assumption that people of diverse demographic backgrounds really are different in some meaningful way—but difference is a concept that must be handled with great delicacy. Those who are not members of traditionally unrepresented groups do not want to be accused of stereotyping or essentializing by identifying particular unique contributions of members of those groups; no one wants to say anything like “they are especially good at that.” Conversely, those who are members of traditionally unrepresented groups have a vested interest in presenting themselves as not being different: not as token members of a group, but as individuals who have been selected based on their own merit.
Nevertheless, when we pressed our respondents we did find a few concrete examples of how contributions of particular female and minority board members may have benefitted the corporation. Nearly all of these examples, which we excerpt in detail in the article, relate directly or indirectly to employee, community, or customer relations. Perhaps most meaningfully, female and minority board members were credited with positive contributions in improving employee relations, and in causing the corporation to focus more deliberately on the diversity of its workforce as it considered retention, promotion, and succession issues. For reasons we elaborate in the paper, this latter point could well suffice as a business justification for the vigorous pursuit of board diversity. Consequently, we find it somewhat curious that this rationale does not figure more prominently in our respondents’ abstract business case (in contrast to the more prominent but less concretely supported Bakke narrative).
As Don Langevoort notes in his commentary to our article, this muddle is surely due in part to the lack of a coherent, over-arching explanation for how boards themselves add to firm value. (A point Larry Ribstein also makes in his excellent blog post about our paper over at Truth on The Market). Moreover, as Langevoort explains, much of the value added by the board is likely to occur in response to some exogenous crisis and, in any event, outside of the formal boardroom setting. If so, then the “real action” of the board will be unobservable by the group and unlikely to display much that is attributable to gender or ethnicity.
Langevoort’s description of the relative unimportance of demographic diversity in a board’s response to crisis situations is consistent with a comment from one of our respondents (a Hispanic female). When asked about diversity concerns when she served on the board of a company experiencing deep financial distress, she said:
If you could for a moment imagine yourself in a fast flowing river drowning looking for a lifeboat, you wouldn’t care what color it was and you wouldn’t care who was in the lifeboat. All you need is a lifeboat.
In other words, this crisis demanded action rather than introspection about diverse perspectives.
Finally, Langevoort’s suggestion that board meetings are routine and ceremonial is also consistent with our respondents’ accounts. We note in the paper some of the seemingly “trivial” contributions to board discussion that our respondents cited as evidence of the value of diversity. Perhaps these are the best examples our respondents can offer because so much board discussion is, in fact, largely trivial.
Why our respondents do not offer more meaningful stories of diversity’s impact outside of the boardroom we can only speculate. One possibility, of course, is that minority and female board members are not invited to be part of the relevant out-of-meeting conversations. This theory is consistent with the account of an African-American male director who told us that he knew that some board members went out in the evening for meals and did not invite him to join them. Overall, however, other female and minority respondents did not echo this narrative of exclusion. Needless to say, this possibility, if true, does not bode well for the Bakke “richer conversation” rationale for board diversity invoked so frequently by our respondents, and by many researchers as well.
That wraps up my series of posts about this draft. Thanks for listening – and feel free to send comments my way.
Related Posts:
Dangerous Categories II (Wow, Men Are Still From Mars and Women From Venus?)
Dangerous Categories: Diversity and Stereotypes in the Boardroom
Duke-UNC-Duke Energy Board Diversity Conference Today
Quotas, Board Diversity, and Corporate Performance
“Meddling Women” In The Boardroom
Sotomayor, Diversity, And Group Dynamics: Why Do We Care? What Do We Know?
Do The Right Thing – So Long As It’s Free
Money Is Diversity, Or Diversity Is Money?
What Corporate Insiders Say About Why Diversity Matters
Wrapping It Up: The Struggle To Explain Why Difference Makes a Difference
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