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Business Insider: America's Lack of Boardroom Diversity Isn't Just a PR Problem, It's a Business Problem That Will Make Companies More Vulnerable in a Downturn

14 Dec 2022
CEOs report to corporate boards, and research indicates that the makeup of those boards matters.

Originally found at Business Insider

Behind almost every Fortune 500 CEO is a group of powerful people calling the shots: the executive board. And the makeup of those boards matters. Their worldviews and personal backgrounds shape the actions of the heads of companies, who report to boards.

But despite an increase in the racial diversity of directors on corporate boards over the past few years, most boards still aren't representative of America's population. Instead, they're mostly male and mostly white.

Of 5,403 board members at Fortune 500 companies, 69% were male and 78.5% were white, according to analysis by Mogul, a recruitment platform that seeks to place executives from underrepresented backgrounds. More than a dozen companies had no board members of color, according to the report, which relied on 2021 data.

America's economy is missing out as a result, and that matters as the country faces a potential economic downturn, where every dollar matters. McKinsey research in 2020 finding that companies with diverse leadership performed better than their peers. But some business leaders are working to diversify boards, among them Bessie Watts, the director of the external-board-of-directors program at Vista Equity Partners, a global investment firm.

Continue reading the original article at Business Insider.

Read the original research in Academy of Management Journal.

Read the  Academy of Management Insights summary.

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