ICAEW is challenging the view that adopting quotas is the most effective way of bringing about greater diversity on boards, saying that when it comes to encouraging wider views and perspectives at the top level in companies there should be no rules.
The institute sets out its argument in a thought leadership paper, How diverse should boards be’, in which it argues that developing and implementing diversity objectives is something each company needs to do for itself rather than simply playing a numbers game.
Jo Iwasaki, ICAEW’s head of corporate governance, said: ‘Because boards mainly operate behind closed doors, people outside the boardroom will look at what is outwardly visible to assess the effectiveness of the board. An apparent lack of diversity raises doubts about a board’s ability to meet today’s business challenges. Even with quotas a board can look diverse, but will often have the same values and attitudes.’
Iwasaki said the critical issue was for the board to ensure that different views can be expressed, heard and considered. Having an open attitude can contribute to a board being effective in achieving long term business success by reducing the risk of ‘group think’, as well as helping companies be better accepted in a society which is also increasingly diverse.
‘Diversity is not easy to achieve and building a pipeline of diverse and talented individuals across an organisation, not just on the board, takes time. Companies are seeking to overcome challenges, set in attitudes deeply rooted in society – but these issues should not deter companies from trying,’ Iwasaki said.
ICAEW is inviting discussion and comments on its paper, which is here: http://www.icaew.com/technical/corporate-governance/dialogue-in-corporate-governance/how-diverse-should-boards-be
