To CEOs: Diversity—The road to a performing board

The new dynamic today for corporate boards is to consider the benefit of employees and communities in addition to their shareholders. It is important to remember that the board of directors' primary role is to provide oversight and leadership. In that regard, the composition of the board is paramount. Research has shown a strong correlation between a gender diverse board, positive financial performance, and better crisis management.

Founded on the business case for diversity, the Thirty Percent Coalition’s members have been working collaboratively with hundreds of companies for the last decade.

When progressive companies are committed to optimizing their boards, they still face obstacles in moving forward. However, there is a methodical process that will clarify objectives, leading to a positive outcome. Supported by facts, these results can be useful in communication with stakeholders.

Changing the board’s composition - starting the process

Before starting any discussion

  • Evaluation of governance policies– Bylaws – is recommended to make sure they support any changes to board composition.
  • It is also important to decide if the board is collectively equipped to navigate the company through the market evolution.
  • As part of this process, directors could be asked to look at company markets and future revenue streams to determine if the company is on target for sustainability and growth.

Market analysis – current and future

  • Appropriate teams can be tasked to identify market trends.
  • The company’s strategic plan can be assessed and updated for its validity in a changing environment.

Defining the company today and tomorrow
Some of the questions to consider:

  • Obsolescence of technology/services;
  • Pipeline for new products/services;
  • Agility throughout the company to react to market shifts;
  • Human capital resources needed to be competitive and attract the best talent.

Identifying leadership competencies

  • Most boards need a wide spectrum of competencies including financial expertise, human resources, marketing, technical, and cyber security, among others.
  • Current board members’ professional competencies can be cross referenced in relation to the company’s current and future needs. This will determine where the gaps are and the risks for sustainable growth.

Board realignment
If the board needs fundamental changes supported by the Bylaws, the following can occur:

  • Identification of board members who no longer match the company’s current and future needs;
  • When a board member needs to be removed before the term ends, refer to the company Bylaws.
  • Deciding to remove a board member should be a majority decision and be based on documented facts.

Filling the vacancy with a diverse candidate
A board needs the best person for the job. However, research has shown that there is a high correlation between a gender diverse board and company performance. Today, there is a large candidate pool of highly qualified women to serve on corporate boards. Here is what can be done:

  • Use Executive Search firms specializing in diversity;
  • Tap into a professional network for board candidates;
  • Contact women’s and advocacy organizations for board candidates.

The Thirty Percent Coalition has been privileged to implement a collaborative strategy for diversifying corporate boards with influential ESG Institutional Investors and top Private Equity firms in the US and abroad. These Coalition members represent over $6 trillion in assets under management.

The increased diversity on corporate boards and the momentum that is building across the country is highly encouraging. The challenge is great but the reward even greater when a diverse board is successfully leading the company into the future. From a personal perspective grounded in deep experience in capital markets and corporate governance, I believe that having a plan is the best way to accomplish objectives.

Charlotte Laurent-Ottomane
Executive Director
The Thirty Percent Coalition

...we find that banks with more gender diversity on their board perform better once the composition of these boards reaches a critical level of gender diversity, corresponding to a board female share of around 13-17 percent.

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