PJ Neal

Thoughts from a more-than-occasional writer

Inclusive Culture and DE&I: Gold Medal Boards Take the Lead [Russell Reynolds Associates]

Around the globe, diversity, equity, and inclusion (DE&I) has grown to become a critically important boardroom topic given the increasing focus by legislatures, regulatory bodies, stock exchanges, investors, and the general public. Many of these stakeholders have enhanced their expectations around DE&I because of the growing body of research that shows improving DE&I results in improved business performance, not to mention the reality of an increasingly diverse workforce and labor market. (Please see our earlier study on this topic, undertaken in partnership with State Street and the Ford Foundation, “The Board’s Oversight of Racial and Ethnic Diversity, Equity, and Inclusion.”)

Given increases in investor and stakeholder expectations, directors are focusing in equal measure on DE&I in the boardroom and DE&I in the enterprise. It is therefore no surprise that the majority of directors we surveyed reported that their board diversified itself in at least one of five ways (gender, age, ethnicity, nationality, or sexual orientation) over the last 24 months.

Yet as with so many other topics, Gold Medal Boards (boards whose directors rate their board effectiveness as a 9 or 10 on a 1-10 scale, and report the company as having outperformed relevant TSR benchmarks for two or more consecutive years) went above and beyond: 67% reported diversifying by gender (compared to 59% of all respondents), 50% diversified by age (compared to 43%), 34% by ethnicity (compared to 25%), 29% by nationality (compared to 28%), and 4% by sexual orientation (the same as all respondents).

Read the full paper, published by Russell Reynolds Associates, and co-authored with Rusty O’Kelley, Rich Fields, Laura Sanderson, Beatrice Ballini, Margot McShane, Ryoko Komatsuzaki, Hans Roth, and Elena Loridas.