Diversity, equity, and inclusion are growing community values that encourage board rooms to advocate for women and minorities in the C-suite. To better understand executive representation, Lalitha Naveen synthesized results from various academic studies on the effects of board diversity.
Some studies show that diverse boards are valuable because they may discourage groupthink, and instead facilitate innovation by challenging value-reducing proposals. Yet, other studies have shown that diverse boards have resulted in decreased shareholder value.
To overcome concerns with diversity, Naveen encourages firms to continue recruiting women and minorities at all levels who are able to enhance a firm’s value. By doing so, leadership can cultivate a diverse pool of qualified applicants from which to promote future executives.