94% corporate boards aim to increase diversity, confirms Deloitte

Approximately 94% of companies are aiming to increase their board diversity, reveals Deloitte’s latest Board Practices Report: Common threads across boardrooms, which provides data on some of the most pressing issues that organisations face in the current environment. Of these, 61% are looking to increase gender diversity, which far exceeds race and ethnicity (48%) and professional skills/experience (43%).

Boards seeking to increase diversity most commonly look to referrals from current directors (77%), suggesting that networking is still key to board succession, although search firms came in a close second (73%), revealed the report.

These findings follow Deloitte’s Center for Board Effectiveness Missing Pieces Report, published earlier this year (January 2019), which demonstrated that the number of Fortune 500 companies with greater than 40% diversity has more than doubled since 2012. 

RECOGNISING DIVERSITY BENEFITS

The report reveals the increasing recognition of the benefits of a diverse board. “More than ever, boards are acting to refresh their composition with different backgrounds, experiences and perspectives,” commented Deborah DeHaas, Vice Chairman and National Managing Partner at the Center for Board Effectiveness, Deloitte. “The results of this effort will help boards develop new approaches to address both their fiduciary responsibilities and other strategic risks and opportunities.”

Industry-specific experience topped the list of board recruitment priorities. The most sought-after skills include: business leadership, accounting, digital or technology strategy (artificial intelligence, cryptocurrency and social media), cyber and information technology (infrastructure, operations).

While other types of professional experience, such as marketing and HR, may be overdue for board representation, and could contribute to diversity, ‘they do not seem to be gaining traction as stand-alone recruitment priorities’, stated the report. 

OTHER KEY STATISTICS

Strategy was cited as the ‘top topic’ discussed at every board meeting (41%), followed by regulatory matters (23%), capital allocation (20%), and mergers and acquisitions (17%).

In terms of shareholder engagement, the most common topic shareholders have discussed, or asked to discuss, is board composition and diversity (54%), followed by financial performance (47%), corporate social responsibility and social impact (42%), strategic priorities/plans (37%) and climate change and other environmental matters (35%).

Regarding issues of transparency, 56% anticipate their companies will increase disclosure related to corporate social responsibility, sustainability and social impact in the next 12-18 months. 

Finally, some 42% of boards are increasing the focus on corporate culture as it pertains to their company’s strategic priorities. According to the report, some of the main ways that boards evaluate and participate in the company’s culture are through hotline reports (78%), findings from investigations (68%) and cultural surveys (58%).

The results of the survey are based on the responses from 102 public companies represented in the membership of the Society for Corporate Governance.

For more information, or to download the Board Practices Report, visit https://www2.deloitte.com/us/en/pages/center-for-board-effectiveness/articles/us-board-practices-report-common-threads.html?id=us:2el:3pr:bpr:eng:boardef:032019