Why don't corporate boards include more women and minorities (1)

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• Business Ethics
• CASE STUDY (20 Marks)
• Why don't corporate boards include more
  women and minorities? At a recent meeting of the
  Business and Organizational Ethics Partnership at
  Santa Clara University's Markkula Center for
  Applied Ethics, panelists took on this question
  in a panel called "Board Diversity." The
  moderator was Katharine Martin, a partner and
  board director at Wilson Sonsini Goodrich
  Rosati. The panelists were Barry Williams, board
  director for PGE and president and former
  managing director of Williams Pacific Ventures
  and Abby Adlerman, founder and CEO of Boardspan.
  Williams, who is African American, discussed his
  service on the boards of a dozen public companies
  during his career. He is now reaching "the age or
  time limit" for corporate boards, he said, and he
  wants to make sure younger minorities have the
  same opportunities he had.

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• Williams conducted a "one-person study" of
  Bay Area companies and found that only 24 percent
  had an African-American director. The number is
  lower among tech companies. He added statistics
  for other minorities and women and showed the
  results to other directors and CEOs. He also
  compiled a list of black directors currently
  serving on boards, plus a list of black CEOs and
  chief financial officers, two common positions
  from which board members are drawn. "Most people
  I talked to were surprised at the extent of the
  underrepresentation," Williams said. "They
  couldn't understand why they weren't getting
  these names from the search firms." Since he
  completed this study, he has worked with others
  to broaden the effort to include other regions.
  "My overall impression is that a lot of people
  are doing a lot of work on this issue, but I'm
  not seeing as much success as I'd like," Williams
  said. He said leadership by CEOs is needed
  "CEOs listen to fellow CEOs more than to someone
  like me" as well as pressure from institutional
  investors. He also stressed the importance of all
  groups working together on board diversity, so
  that there isn't just one "diversity slot" on a
  board.

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• "Somehow we're all fighting against each
  other for that one spot," Williams said. Adlerman
  said boards need to see the need for diversity
  "One of the things I've learned is that you can't
  have a solution if you don't have a problem," she
  said. "I don't think we've really put our finger
  on the pulse of the problem." She cited common
  statistics used to build awareness the huge
  influence women have in the economy as employees
  and consumers compared to their small presence on
  corporate boards. "We have lots of advocates and
  awareness, but no viable solutions," Adlerman
  said. "These are not really the board's
  problems." The real problem, Adlerman said, boils
  down to risk. "It is risky to bring another board
  member on unless you can get exceedingly
  comfortable with their ability to contribute and
  work style. Sitting directors want to minimize
  the chance of disharmony," Adlerman said. "We
  know it's not a supply problem There are plenty
  of talented people," Adlerman said. "I don't
  think it's a demand problem I believe
  intellectually plenty of white men sitting on
  boards would like to have more diverse boards."

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• The problem, Adlerman said, is how to help
  boards manage the risk of bringing in someone
  they don't know. "I think that if we can really
  get to understand the risks that are perceived,
  we're going to make some really good progress."
  During the discussion, the panelists revisited
  the arguments for having a diverse board. "A
  significant amount of work now says that diverse
  groups make better decisions," Williams said.
  "Today's young people want to work in highly
  ethical, highly principled companies, and
  diversity is a big aspect of that." "We are
  bringing a broader perspective to the
  boardroomthat's the benefit of diversity,"
  Adlerman said. Martin asked a follow-up question
  about the supply issue whether there really are
  enough women and minority candidates for boards
  with the specific experience boards are seeking
  in different industries. Tech companies, for
  example, may seek board members with engineering
  backgrounds. Williams said company management was
  the more appropriate place to be looking for
  specific technology expertise. "To me the worst
  boards are when you have 10 people who think
  alike and have the same experiences," Williams
  said.

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• Answer the following question.
•  
• Q1. Give your views on the case.
•  
• Q2. Why diversity in board room is required?
  Discuss.

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